Hearing Aid Industry

Topics: Life expectancy, Innovation, Competition Pages: 1 (341 words) Published: April 13, 2013
The hearing aid industry is not an emerging industry anymore but by no means is it at a mature stage. The industry is still growing for several reasons. Aging is the most important cause of hearing impairment and the world population is aging very quickly. Also over exposure to high decibel sounds is driving up the number of hearing impaired people. Moreover, demand from emerging markets is growing as GPD per capita and life expectancy increase. Technology innovations that improve product quality and features are also important growth factors. The willingness to pay increases as the reliability of the devices improves. Prices of hearing aids are extremely high and margins and markups in the industry are big. It’s definitely an attractive industry to invest in.

In terms of prices and product innovation, competition has kept prices at a constant (high) level and innovation at high speed. Most of the players introduce new devices at the same time as their competitors do (yearly). New products are innovative, but also similar to the new products of competitors. Prices for those new products are higher than those of older generations but similar among competing companies. The main industry players have been accused several times of fixing the prices but it has never been proved.

Bargaining power of suppliers is low. The electronic components that one can find inside a hearing aid – microphone, amplifier, chips, cables, etc – are undifferentiated. The cost of switching from one supplier to another is also low, unless there is a contract in place that fixes minimal purchase quantities. However, one should not forget that suppliers of standard electronic components do not depend on the hearing aid industry. For example, they can also sell microphones to the music industry, so that they can avoid price pressures from the hearing aid manufacturers.

Not everything is great in the industry. The main challenge is the stigma that hearing aids have. If the players are...
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