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Where leaping to conclusions is my primary form of forward motion.
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A Clarification on Zounds Sales Strategy and Some Industry Statistics
What Do You Mean, I Have To Change The Toner?
I Am So Happy
What Do You Mean, I Have To Change The Toner?
I Am So Happy
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Monday, April 9, 2007
A Clarification on Zounds Sales Strategy and Some Industry Statistics
A few weeks back I was in the office on Saturday when my phone rang. On the other end was a fellow named Jay Turner, VP of Marketing for Zounds. Like any good marketing VP, Jay had been following web traffic on Zounds and came across my blog entries. As I said previously, I have no direct relationship with the company and no one there knew who I was. Even though I have a small investment, it is as part of a limited partnership and my name appears nowhere in the Zounds' records. So Jay had been looking around my blog trying to figure out who I was and why I was interested.We had a nice conversation and Jay offered some statistics to clarify points raised in the earlier discussion. What follows are quotes from a follow-up e-mail Jay sent me. I have not independently verified these numbers but I have no reason to doubt them. Zounds did extensive market research before launch and has an advisory board that consists of medical professionals from both the ENT and audiologist fields. Further, 2006 sales statistics published in The Hearing Review show 2.37 million hearing aids sold in the US, so Jay's number of 7%=150,000 is conservative.
Per our conversation, industry research indicates 7% of hearing aids in the US (150,000 units annually) are sold through Ear, Nose, and Throat (ENT) Physicians that employ Audiologists. They buy high-end hearing aids for $1250 wholesale from the Big 6 manufacturers and mark them up to $2500 to $4000 per aid, or 2X to 3X. This same wholesale/retail pricing is used in the independent Audiologist/Hearing Instrument Specialist (HIS) channel.So, my hypothetical assertion of paying a referral fee is misleading. Zounds sells to physicians just as all other major hearing aid suppliers.
Zounds provides excellent patient care through licensed Audiologist/Hearing Instrument Specialists, the best technology, and affordable prices to fixed income seniors through Primary Care Physicians (PCPs) and ENTs. Zounds sells the product and diagnostic/fitting service at wholesale (no referral fee, no Medicare/Medicaid reiumbursement, no Stark law conflicts, etc) and the PCP/ENT marks them up to MSRP $999 per aid, making far less, but for many still appealing, mark-up than the Big 6/ENT/Audiologist/HIS business model. There is nothing illegal or unethical about Zounds distribution strategy. Yes, Zounds technology, distribution, price point, and consumer marketing will be disruptive. Unfortunately, there is a lot of misinformation and emotional reaction to Zounds' business model. Overall, Zounds is trying to provide a better product, service, and price to the millions of people who suffer from hearing loss.
Another point Jay made in our conversation is that 10%-15% of high-end hearing aids are returned. This is not far off the number quoted by Tom Shearman (5%-10%) for all hearing aids. I would expect return rates for $2,000-$4,000 items to be somewhat higher.
And so the experiment continues. I remain a believer in the Zounds technology and approach, but the market will decide if it's ultimately the right approach. The fact that there is a great deal of emotion and misinformation regarding both the company and the product supports my belief that this is a fundamental disruption for an industry that is ripe for change.
Posted by: 
Terry Frazier at 4:44 PM
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Categories: Business & Finance, Health and Fitness, Technology
Terry Frazier at 4:44 PM
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Monday, April 2, 2007
What Do You Mean, I Have To Change The Toner?
Several years ago I purchased a mid-range laser printer - a Brother HL-6050DN. My work requires that I review hundreds of documents for some projects and trying to do that on a screen, no matter how big and nice, is an awful experience. So I print them. I don't know how many pages I've printed, but I've gone through dozens of cases of cheap copier paper since I bought it in mid-2004.Today I got a warning message on the printer control panel:
"WARNING: TONER LEVEL LOW. REPLACE TONER UNIT."
Wow! I had forgotten you have to do that with laser printers. I guess I thought it would run forever like some perpetual motion machine. Good thing I got a couple of spares when I bought the printer. At this rate parts will be discontinued before I have to buy more. In fact, toner itself may become obsolete.
That's the kind of product I like to buy - works great, never breaks, and runs (nearly) forever before you have to fill it up.
Posted by: Terry Frazier at 8:19 PM
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Categories: Productivity, Technology
Terry Frazier at 8:19 PM
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Saturday, March 31, 2007
I Am So Happy
My new firewall is in! My new firewall is in! (Said in my best Steve Martin voice.) Spent Saturday afternoon playing geek. Now I have clear voice on my VoIP phone, dual ISP connections, and a VPN connection.[More...]
Posted by: Terry Frazier at 9:27 PM
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Categories: Security, Technology
Terry Frazier at 9:27 PM
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