Taking on the Big Dogs – How to Compete Against Corporate Giants in the Hearing Instrument Business
In today’s Big Box world of giant retailers, many small retailers have come up against what seems to be insurmountable odds. There seems to be no industry safe from the impact of the “big guy”. So today I thought we would discuss an industry not often considered when thinking of Big Box competition, the hearing instrument market. However we could just as easily be talking about clothes, or sunglasses, the same holds true for almost every industry.
Hearing instrument unit sales were up last year – 10.1%, 9.7%, and 8.8% in Q1, Q2, and Q3, respectively. And most of that growth has been in the private sector. If you’re an independent provider, there’s reason for cautious optimism. However, the challenge of facing off with Big Box giants, who are increasingly dominating the hearing instrument market, remains.
One of the biggest problems in competing with Big Box stores is that they often are able to buy units in bulk at reduced prices. This puts independent practices at an obvious disadvantage because most smaller practices are unable to tap into the same bulk discounts.
A second disadvantage is convenience. Big Box stores, such as Costco and Sam’s Club, are everywhere and they offer all-in-one shopping. For many independent hearing practices, this can pose a major obstacle.
Trying to Compete..Here’s the Problem
The problem for independent practices is that many consumers view hearing aids simply as commodities. The expertise that goes along with them tends to be overlooked, especially with the allure of inexpensive instruments. We could discuss how this happened, but that’s another topic and likely one that hearing instrument providers would not want to hear.
But competing on price is simply not the answer. Here’s why: Costco can sell a low-end, in-the-ear hearing aid for as little as $500. Higher-end units can sell for between $900 and $1500 per unit. That may be less than an independent practice would pay for them.
Costco even has its own line of hearing products, branded as Kirkland. The company has become one of the biggest hearing aid distributors on the market, and that’s a result of treating hearing instruments as commodities. Other companies have taken a similar path, and online sellers bring an added dimension to the industry dynamic.
It’s pretty obvious that outpricing these guys is not an option. You’d be out of business in no time. So the key to competing lies not in your pricing but in your ability to distinguish yourself from those who sell hearing aids as commodities. The process of distinguishing yourself comes with its own set of challenges beginning with how to approach the market differently.
So if you run an independent practice, let’s begin with what do you have to offer that the big box stores don’t?
Hearing Instrument Customer Experience
Purchasing a hearing aid at a big box store is not much different than purchasing any other product. You can be purchasing bread and milk one minute, then walk right over and buy a hearing aid. Sure, there are some specialized staff to help you test your hearing and figure out what unit you need, but their function isn’t far off from a sales associate in the electronics or appliance department.
The independent practice is a much more all-encompassing experience for the patient. Lets face it, hearing loss is not something we generally consider as we age and can definitely impact a person on many fronts. How an independent handles their customer experience can and should be sensitive to these nuances. In fact this experience should be exaggerated, leaving a customer with no choice but to share their experience.
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Solve the Right Problems
In competing against the giants, we often have to start thinking outside of the obvious. The big box stores actually have a major disadvantage to their volume which they sell. That is, they have to sell volume. Without volume, they cannot continue to operate in a sector profitably. This is so important to understand! This leaves everything except price, a vulnerability in their market approach.
If marketing is war (which it totally is to a degree), than in war we look for vulnerabilities. The weak spots are where we focus our strategy of attack. In the case of hearing instruments, there are a number of concerns (problems) your future client is pondering. If you know what these concerns are, you can direct your strategy at alleviating and solving these concerns. This is a major distinguishing point. If everything you do from the customer experience, the after purchase processes, and equally important, your marketing and messaging focusses on these areas of your strengths, you will be competing at a level of great weakness to the big box stores.
Additionally to the short term attention you will derive from a marketing approach of solving problems, you will begin to build a long term brand that makes you a dominate force to be reckoned with.
Don’t Betray Your Strategy
Let me paint the story. You get a special pricing offer from your supplier. Its an amazing deal. One that actually puts you in a position to beat the big box on price for this one go round. So you launch an aggressive marketing campaign, and sales come flying in the door.
I’ve seen this happen so many times to the independents. I call this the practice of self sabotage. Self sabotage of their identity, brand, and long term prospect in the market. The pricing war is an ocean, and the ocean is deep. If you tip your toe in the ocean, you might make a ripple, but a wave is sure to put you on your back.
This means that you must stay true to your strategy. You cannot beat the big box in price for any serious period of time, and they do have staying power that you just cannot compete against. So when this special price comes in and you’re ready to pounce, don’t betray your strategy. Use that extra margin to bolster your competitive offering enhancing your distinguishing characteristics. Take the opportunity to use a megaphone, but stay true to your strategy.
In the comments below tell me your distinguishing characteristics that help you to compete against the big box giants. I’d love to hear your take.