Elasticity of Demand

Impact of Elasticity of Demand on Price in the Hearing Aid Market |
1/29/2007 |
Amyn M. Amlani, Ph.D., Department of Speech and Hearing Sciences, University of North Texas |

Introduction

There are an estimated 31 million persons in the United States who experience some form of hearing loss, yet only 7.3 million opt to use hearing aids (Kochkin, 2005). The market penetration for hearing aids—calculated as the number of hearing users divided by the number of persons with a hearing loss—is about 23.6% (7.3/31). In other words, for roughly every four patients that enters a practice needing hearing aids, only one will purchase them.

In 1998, Lee and Lotz analyzed the hearing aid industry and found several factors that contribute to poor market penetration. First, no hearing aid can correct hearing loss completely. In other words, hearing aids cannot repair deficits of the ear, but they are able to reduce the loss of hearing. If hearing aids—like corrective lenses—could better correct deficits of the ear, then more people would be willing to use them. This has been and continues to be a major challenge for manufacturers and researchers. Second, there is an acclimatization period for new users of hearing aids. In some cases, this period of adjustment might take longer than the patient is willing to endure and, in other cases, the hearing aid is inappropriately fit for the loss. In any case, the hearing aid may end up in the proverbial drawer, often to the regret of the potential user, the family, and close friends. Third, hearing aid use is often stigmatized for use with old people, for not-so-smart people, or for people who are out-of-touch with their environments. Perceptions of stigmatism often result in a denial of hearing problems (Hetu, 1996; Kochkin, 1993) and a lack of adherence to professional recommendations to use hearing aids (Garstecki & Erler, 1998; Surr & Hawkins, 1988).

To lessen the impact of these factors, it might seem...