Interview with Peter Van Nest President, Bernafon Maico Inc.
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AO/Beck: Peter, thanks for giving us a little time this evening. I'd like to find out a little bit about you. Tell me about your experience in the hearing health care field?
Bernafon/VN: I've been in the industry for about ten years and I've been the President of Bernafon for just about a year now. I've had experience in the industry as a customer service representative, then inside sales, account management, field sales, regional sales manager, product management, and then my present position. I received my MBA from Nova University in 1993.
AO/Beck: What can you tell us about market penetration, the status quo, and how to do a better job regarding market penetration?
Bernafon/VN: Looking at the HIA statistics, we have current market penetration of about 20 percent. We have been stuck at 20 percent for many years, and we'll talk about that in a minute. Nonetheless, the goal which HIA sees as sustainable and reasonable is 3 to 5 percent growth per year, for the next three to five years.
AO/Beck: Are those the right projections from your viewpoint as a manufacturer?
Bernafon/VN: I think we all need to 'grow the pie' so that all of us can prosper. We have not made much headway regarding market penetration in the last decade. For instance, we have changed the marketplace from monaural to binaural, but we really haven't see the 'doubling' of production which should accompany binaural fittings. In other words, we've increased the number of units sold per patient, but we haven't really been able to increase the number of patients - and increasing the number of patients is where the big win is for the professionals and the industry. Additionally, the price per instrument has grown dramatically over the last decade so the retail price from 10 to 15 years ago is now the wholesale price. This too may have contributed to the lack of growth we've experienced. In essence, the industry growth has been flat for a year or two.
AO/Beck: If indeed the market is flat and our market penetration is stagnant, how can we get this on the right track again?
Bernafon/VN: We really need to do two things. We need an industry-wide strategy whereby we initiate a higher profile for 'hearing healthcare' and we need to blend together the services and products we provide to the patients. That is, the patients and the providers need to understand we are not selling a hearing instrument. As professionals, we are selling 'better hearing' through the professionals and through the products. Hearing healthcare should not be a product in isolation, rather it should be the blending of the instrument and the professional who provides the instrument to the patient.
AO/Beck: What is the role of the manufacturers in the effort to promote better hearing to the end-user?
Bernafon:VN: Participating manufacturers are supporting the HIA (Hearing Instrument Association) proposal to fund BHI (Better Hearing Institute) through contributions of one dollar per hearing aid. BHIs focus is to promote better hearing and they do bring that message to the public. The anticipation would be about one and a half million to perhaps two million dollars from the manufacturers to help spread the message about better hearing through BHI.
AO/Beck: What else needs to be done to help promote the profession and the products?
Bernafon/VN: We need ASHA, AAA, ADA, and IHS to keep spreading the message and we need to focus on the message of 'a better quality of life through better hearing'. Certainly it helps every time we get on the Today Show, or the Nightly News and other well known venues with hearing healthcare news and exciting new products - the media loves it and it's a fast and effective way to spread the word to the end user.
AO/Beck: What should the audiologist (or dispenser) on the front line do to help expand the market?
Bernafon/VN: They need to develop a niche based on a paradigm of operational excellence, product leadership, or based on a customer intimate model of excellence. In other words, the frontline people need to identify the paradigm they want to be identified as, and work towards that goal through their marketing and advertising efforts.
AO/Beck: Give me an example or two of these paradigms?
Bernafon/VN: McDonalds uses an operational excellence model - you get the same high quality hamburger all over the world in any of their locations. They are run efficiently and identically, the customer always knows what they can expect. To effectively compete, Burger King communicates 'Have it your way' or a customer intimate approach to the market. The result is larger industries as consumers see more marketing messages delivered, and have more choices to select.
AO/Beck: It seems like a dichotomy if the manufacturers promote the 'better hearing healthcare' message which is a general broad message, while the audiologists identify themselves as a 'niche' practice. Do you think this is our best strategy or should we all send the same message?
Bernafon/VN: There is a bit of a dichotomy, but it helps us to recognize and promote our different concerns while ultimately sending the right message to the patient. Working in a partnership serves to improve the recognition of our products and services while potentially 'increasing the pie', rather than the continuous division of the same old pie.
AO/Beck: When you speak about blending the products and services - How do you see the impact of the internet hearing aid sales impacting the industry?
Bernafon/VN: I think your point about the internet underscores the need to address the 'value' of blending the product and service to the patient. Ideally we'd like to have the patient think about us in terms of 'hearing health care' not just a retail product. Those internet applications that add value to the hearing experience will improve our delivery and service systems to the patient.
AO/Beck: Peter, where are we going as an industry with regards to new products?
Bernafon/VN: Well, I think we'll very quickly get away from having cables to connect the hearing aid to the computer. That ought to be a big relief for everyone dealing with programmables and digital hearing aids. I think as an industry we'll soon see more internet-based fittings whereby the patient can get online to your office and get the tune-up done through cyberlinks between the audiologist in their office and the patient in their home. The cyber-link will allow more efficient and more interactive fittings. I also hope manufacturers will soon realize the 'economies of scale' regarding a sort of 'standardized' digital chip across their worldwide operations, which would be contracted for a million or two at a time allowing each to 'tweak' the chip to their fitting system and needs. We would all realize big wins through streamlining and efficiencies.
AO/Beck: Well, if the cost per instrument went down significantly, say 50 to 60 percent, what would happen to market penetration?
Bernafon/VN: The probable result would be increased industry growth over time, but that's not a certainty. While price has been noted a barrier to amplification for many patients, I do not believe that the industry has achieved the appropriate economies of scale to move the industry to the next level. In fact, I believe one benefit of industry consolidation results in reduced prices for products and services. Several examples may been found in similar industries: funeral homes, optical & dental are three such examples.
AO/Beck: Regarding the current technologies, do you believe there is a digital advantage from the patient's viewpoint?
Bernafon/VN: We know there are more features available with digital instruments. But the features in and of themselves are of no value unless the patient perceives them as a benefit. If you cannot convince the patient that the benefit is of value, then it has no relation to the retail price point. If I can make digital features into benefits for the patient - then for that patient, the digital advantage is real. The value of the instrument and the technology is based on the patient's perception of benefit. Again, we put our best foot forward when we market and sell the instruments as a blend of product and service.
AO/Beck: Peter, on a different topic, if you look into your crystal ball, what happens if the 'hearing aid' becomes a 'personal communication device'?
Bernafon/VN: I don't know what would happen. There could be a number of factors that could dramatically change our industry. My concern is that because we don't have a large enough critical mass of end-users or patients, we may or may not be able to weather large storms as an industry. If the distribution model changes dramatically from professional distribution to over-the-counter distribution, we as an industry may find the whole marketplace changing very quickly, and not necessarily for the better.
When the optical industry went from contact lenses to disposable contact lenses, they didn't 'grow the pie', they just redistributed the pie. Of course the optical industry is a 15 billion dollar industry, and we are only a 1.5 billion dollar industry, so they (the optical industry) were able to deal with those changes successfully. It'll be interesting and exciting to see how these changes impact the hearing health care industry. Personally, I am very optimistic about our industry. I think this is an exciting and challenging time for all of us. Between 2010 and 2020 the baby-boomers will impact the market tremendously and if we are careful and prepared for growth, we'll all benefit from the changing demographics.
AO/Beck: Peter, if anyone wants to follow-up directly with you, what's the best way to get in touch with you?
Bernafon/VN: The readers can send email to me at petervn@bernafon-us.com.
Bernafon/VN: I've been in the industry for about ten years and I've been the President of Bernafon for just about a year now. I've had experience in the industry as a customer service representative, then inside sales, account management, field sales, regional sales manager, product management, and then my present position. I received my MBA from Nova University in 1993.
AO/Beck: What can you tell us about market penetration, the status quo, and how to do a better job regarding market penetration?
Bernafon/VN: Looking at the HIA statistics, we have current market penetration of about 20 percent. We have been stuck at 20 percent for many years, and we'll talk about that in a minute. Nonetheless, the goal which HIA sees as sustainable and reasonable is 3 to 5 percent growth per year, for the next three to five years.
AO/Beck: Are those the right projections from your viewpoint as a manufacturer?
Bernafon/VN: I think we all need to 'grow the pie' so that all of us can prosper. We have not made much headway regarding market penetration in the last decade. For instance, we have changed the marketplace from monaural to binaural, but we really haven't see the 'doubling' of production which should accompany binaural fittings. In other words, we've increased the number of units sold per patient, but we haven't really been able to increase the number of patients - and increasing the number of patients is where the big win is for the professionals and the industry. Additionally, the price per instrument has grown dramatically over the last decade so the retail price from 10 to 15 years ago is now the wholesale price. This too may have contributed to the lack of growth we've experienced. In essence, the industry growth has been flat for a year or two.
AO/Beck: If indeed the market is flat and our market penetration is stagnant, how can we get this on the right track again?
Bernafon/VN: We really need to do two things. We need an industry-wide strategy whereby we initiate a higher profile for 'hearing healthcare' and we need to blend together the services and products we provide to the patients. That is, the patients and the providers need to understand we are not selling a hearing instrument. As professionals, we are selling 'better hearing' through the professionals and through the products. Hearing healthcare should not be a product in isolation, rather it should be the blending of the instrument and the professional who provides the instrument to the patient.
AO/Beck: What is the role of the manufacturers in the effort to promote better hearing to the end-user?
Bernafon:VN: Participating manufacturers are supporting the HIA (Hearing Instrument Association) proposal to fund BHI (Better Hearing Institute) through contributions of one dollar per hearing aid. BHIs focus is to promote better hearing and they do bring that message to the public. The anticipation would be about one and a half million to perhaps two million dollars from the manufacturers to help spread the message about better hearing through BHI.
AO/Beck: What else needs to be done to help promote the profession and the products?
Bernafon/VN: We need ASHA, AAA, ADA, and IHS to keep spreading the message and we need to focus on the message of 'a better quality of life through better hearing'. Certainly it helps every time we get on the Today Show, or the Nightly News and other well known venues with hearing healthcare news and exciting new products - the media loves it and it's a fast and effective way to spread the word to the end user.
AO/Beck: What should the audiologist (or dispenser) on the front line do to help expand the market?
Bernafon/VN: They need to develop a niche based on a paradigm of operational excellence, product leadership, or based on a customer intimate model of excellence. In other words, the frontline people need to identify the paradigm they want to be identified as, and work towards that goal through their marketing and advertising efforts.
AO/Beck: Give me an example or two of these paradigms?
Bernafon/VN: McDonalds uses an operational excellence model - you get the same high quality hamburger all over the world in any of their locations. They are run efficiently and identically, the customer always knows what they can expect. To effectively compete, Burger King communicates 'Have it your way' or a customer intimate approach to the market. The result is larger industries as consumers see more marketing messages delivered, and have more choices to select.
AO/Beck: It seems like a dichotomy if the manufacturers promote the 'better hearing healthcare' message which is a general broad message, while the audiologists identify themselves as a 'niche' practice. Do you think this is our best strategy or should we all send the same message?
Bernafon/VN: There is a bit of a dichotomy, but it helps us to recognize and promote our different concerns while ultimately sending the right message to the patient. Working in a partnership serves to improve the recognition of our products and services while potentially 'increasing the pie', rather than the continuous division of the same old pie.
AO/Beck: When you speak about blending the products and services - How do you see the impact of the internet hearing aid sales impacting the industry?
Bernafon/VN: I think your point about the internet underscores the need to address the 'value' of blending the product and service to the patient. Ideally we'd like to have the patient think about us in terms of 'hearing health care' not just a retail product. Those internet applications that add value to the hearing experience will improve our delivery and service systems to the patient.
AO/Beck: Peter, where are we going as an industry with regards to new products?
Bernafon/VN: Well, I think we'll very quickly get away from having cables to connect the hearing aid to the computer. That ought to be a big relief for everyone dealing with programmables and digital hearing aids. I think as an industry we'll soon see more internet-based fittings whereby the patient can get online to your office and get the tune-up done through cyberlinks between the audiologist in their office and the patient in their home. The cyber-link will allow more efficient and more interactive fittings. I also hope manufacturers will soon realize the 'economies of scale' regarding a sort of 'standardized' digital chip across their worldwide operations, which would be contracted for a million or two at a time allowing each to 'tweak' the chip to their fitting system and needs. We would all realize big wins through streamlining and efficiencies.
AO/Beck: Well, if the cost per instrument went down significantly, say 50 to 60 percent, what would happen to market penetration?
Bernafon/VN: The probable result would be increased industry growth over time, but that's not a certainty. While price has been noted a barrier to amplification for many patients, I do not believe that the industry has achieved the appropriate economies of scale to move the industry to the next level. In fact, I believe one benefit of industry consolidation results in reduced prices for products and services. Several examples may been found in similar industries: funeral homes, optical & dental are three such examples.
AO/Beck: Regarding the current technologies, do you believe there is a digital advantage from the patient's viewpoint?
Bernafon/VN: We know there are more features available with digital instruments. But the features in and of themselves are of no value unless the patient perceives them as a benefit. If you cannot convince the patient that the benefit is of value, then it has no relation to the retail price point. If I can make digital features into benefits for the patient - then for that patient, the digital advantage is real. The value of the instrument and the technology is based on the patient's perception of benefit. Again, we put our best foot forward when we market and sell the instruments as a blend of product and service.
AO/Beck: Peter, on a different topic, if you look into your crystal ball, what happens if the 'hearing aid' becomes a 'personal communication device'?
Bernafon/VN: I don't know what would happen. There could be a number of factors that could dramatically change our industry. My concern is that because we don't have a large enough critical mass of end-users or patients, we may or may not be able to weather large storms as an industry. If the distribution model changes dramatically from professional distribution to over-the-counter distribution, we as an industry may find the whole marketplace changing very quickly, and not necessarily for the better.
When the optical industry went from contact lenses to disposable contact lenses, they didn't 'grow the pie', they just redistributed the pie. Of course the optical industry is a 15 billion dollar industry, and we are only a 1.5 billion dollar industry, so they (the optical industry) were able to deal with those changes successfully. It'll be interesting and exciting to see how these changes impact the hearing health care industry. Personally, I am very optimistic about our industry. I think this is an exciting and challenging time for all of us. Between 2010 and 2020 the baby-boomers will impact the market tremendously and if we are careful and prepared for growth, we'll all benefit from the changing demographics.
AO/Beck: Peter, if anyone wants to follow-up directly with you, what's the best way to get in touch with you?
Bernafon/VN: The readers can send email to me at petervn@bernafon-us.com.
