Refractive surgery providers spend a lot of guesswork trying to determine the size of the consumer market for LASIK. Although this effort is admirable, judgments are often made based on data that can be misleading, such as current or past procedural volumes, the population in the market area surrounding the practice, a recent positive (or negative) national news story, or marketing tactics employed by other providers. These local impressions are difficult to validate and often don't reflect what is going on in markets in other areas of the country.
TECHNOLOGY ADOPTION
A better approach to judging the consumer market for refractive surgery is to study business models that assist marketers in understanding consumers' adoption of new technologies. One such model is the Technology Adoption Cycle, also known as the Innovation Diffusion Curve. Originally devised to predict the adoption of new strains of seed potatoes among American farmers, the Technology Adoption Cycle model has become a textbook standard for marketers who want to predict how many consumers over time will adopt particular innovations. As Figure 1 shows, this model resembles a bell curve and divides the consumer population roughly by standard deviations. Each segment is defined by psychographics (ie, when consumers tend to buy) on the x-axis and by demographics (ie, the size of the segment) on the y-axis.
For example, VCRs, which are now present in 90% of American homes, are near the end of their technological lifecycle. If you bought a Betamax VCR (Sony Corporation, Tokyo, Japan) in the 1970s, you were defined as an innovator. Standards for these machines were still being developed, and unfortunately your investment didn't last very long. But, if you put off buying a VCR until your local grocery store started offering videotape rentals for $0.99, your delay in adoption defined you as part of the late majority of consumers.
The Technology Adoption Cycle is a useful model because it helps marketers understand the rate at which refractive surgery is growing in the marketplace. Original estimates indicated that all spectacle-wearing adults could benefit from laser vision correction and suggested a potential market size of 150 million Americans. Experience during the past 10 years, however, has shown that the true market for LASIK, accounting for age and refractive error, is more likely 60 million. This is still a very large market potential in any consumer category and should not deter any provider's interest or enthusiasm.
INNOVATORS
Through 2004, refractive surgery (including LASIK and its predecessors PRK, RK, and ALK) has collectively attracted more than 4 million Americans, for a market penetration of approximately 7%. Where does that figure fit in the Technology Adoption Cycle model? The innovators represent the first 1% to 2% of consumers of a new innovation, the ones who are the very first on their blocks to own or try the new product. In refractive surgery, these were the patients who had RK or ALK, participated in laser clinical trials, or went abroad to undergo laser vision correction prior to its gaining FDA approval. Innovators are risk takers; they are the consumers most willing to try something new, even if it isn't “ready for primetime.” Although not great in number, these people are critical to a market because their adoption proves to the rest of the population that the product does indeed work. In the eyes (so to speak) of my friends and family, I was one of those “guinea pigs” who went to Canada 10 years ago and had PRK. Refractive surgery innovators were among those most willing to seize the opportunity to get rid of their glasses. Marketing and customer service didn't matter to them as much as availability.
EARLY ADOPTERS
The group that comes after the innovators is called the early adopters. They also buy early in a product's lifecycle, but are not the “technologists.” Rather, they make decisions based on their own intuition and imagination. They can truly understand the benefits of a new technology and will buy it if it strongly matches their needs and concerns. The early adopters represent the next 15% of the consumer population. The Technology Adoption Cycle model shows that refractive surgery, at 7% market penetration, is currently approaching the midpoint of the early adopter segment.
MAINSTREAM CONSUMERS
Before exploring the early adopter in greater detail, we need to define the mainstream consumer, who makes up two-thirds of the market and is divided evenly between early-majority and late-majority buyers. Both early- and late-majority consumers are driven by a strong sense of practicality; they know that many innovations end up as fading fads, so they will wait until a product category is well established before buying. Late-majority consumers have additional requirements: they want the product to come from big, established companies that provide high levels of technical support. The sheer size of the mainstream consumer segment is what makes it so desirable to marketers. Much of the original R&D investments of a product have been recouped, so profit margins increase along with volumes in a maturing market. Cell phones are enjoying this stage right now; more than half the population carries one, and advertising is ever-present as a handful of large players battle for the mainstream consumers.
LAGGARDS
Finally come the laggards. They don't want the new technology and are not worth pursuing from a marketing standpoint. They adopt a product only when the technology is embedded in another product. In the context of refractive surgery, this might mean that they will have a procedure once it is fully covered by their insurance plan or comes as part of a package with an eye examination.
UNDERSTANDING EARLY ADOPTERS
To understand the long-term market potential of refractive surgery, we need to appreciate the impact of the early adopter. Using the Technology Adoption Cycle model can help us clearly understand what has taken place in the market in the first 9 years since the FDA approved the excimer laser for refractive ablations.
As early-adopter consumers began jumping aboard the refractive surgery bandwagon in the late 1990s, the market grew rapidly. Word-of-mouth, especially that generated by the LASIK procedure, led to high public awareness and interest. The merits of LASIK appealed to the early adopters much more than had PRK and earlier surgical technologies for vision correction.
Unfortunately, providers of all types of refractive surgery (individual surgeons as well as some corporate interests) mistakenly thought that the rapid procedural growth of the late 1990s was coming from mainstream consumers and that price would be the main driver of refractive business. Thus, providers lowered their prices between 2000 and 2003, because they expected that market demand would take off. It didn't. In fact, procedural volumes fell during the same time period. This effect is the opposite of what happens in mass consumer markets, where lower prices lead to higher consumption. In concert with declining volumes came negative press about LASIK (night-vision problems and personal disaster stories). The media made it look like there was one bad outcome for every good one. The industry responded with two major innovations: customized treatments and the femtosecond laser, both of which are succeeding in re-establishing interest in the refractive surgery category. They are indeed perceived as safer and better means to LASIK surgery. Average prices as well as total procedural volumes are again rising.
The price-volume relationship refractive surgery saw between 2000 and 2004 is further confirmation that we are still among the early adopter segment of the market. Early adopter consumers want product quality, which translates into providers' ability to address safety (even more than efficacy).
MORE INSIGHT
Two well-known authors have recently improved upon the Technology Adoption Cycle model with insights that have direct relevance to your efforts to win over today's early adopter. The first is Geoffrey Moore, whose Crossing the Chasm1 text helped marketers understand that there is no smooth transition from one consumer segment to the next (Figure 2). Instead, Moore proposed that the needs of each segment are different enough from those of the preceding group of consumers that many innovations never make it past the innovators or early adopters. Apple Computer's Newton (Apple Computer, Inc., Cupertino, CA) comes to mind; it was an early PDA that never survived beyond the technologists and hard-core Apple loyalists. The marketing of the technology was more refined than the technology itself. You can probably list many neat products that you came across that just never lasted in the marketplace or are currently struggling to make it. The Segway Human Transporter (Segway LLC, Bedford, NH) is another example of a product that is trying to succeed among innovative consumers (and is a fun thing to try, by the way).
Refractive surgery was struggling to cross the chasm between innovators and early adopters until LASIK arrived. Although PRK was certainly an improvement over RK, it suffered from reports of postoperative pain and delayed recovery (my own vision took 5 months to stabilize). LASIK's appeal was that it produced an immediate result. Near-instant visual improvement generated incredible word-of-mouth stories about being able to see without glasses right after surgery. In this case, a modified product (ie, using the laser under a corneal flap rather than on the surface of the cornea) helped refractive surgery jump the gap to reach the early adopters.
The second author with valuable marketing insights is Seth Godin, whose books have preached the end of traditional mass marketing in favor of relationship marketing that envelops the consumer. In his book The Purple Cow,2 Godin argues that the value of each consumer segment is not related to its size, but rather to its ability to influence consumption among the next segment. Although innovators don't seem to influence early adopters, the early adopters have a huge impact on the mainstream consumer (Figure 3). Thus, reaching this segment for refractive surgery has much higher marketing value than spending money trying to advertise to the masses.
These insights lead to two key questions: (1) how do providers attract the early adopter in greater numbers, and (2) what will it take to jump the gap and reach the mainstream consumer? There are four possible answers that I will explore: price, technology, time, and customer service.
PRICE
Lowering the price of refractive surgery has failed to attract more consumers. It is far too early in the product cycle for low price to effectively stimulate market growth.
TECHNOLOGY
As described previously, combining microkeratomes with the excimer laser helped refractive surgery cross the first chasm between the innovators and the early adopters. Likewise, the advent of refractive IOLs has the potential to help refractive surgery make the next leap to the early majority of mainstream consumers. Manufacturers are certainly moving toward offering refractive IOLs; even each of the “big three” excimer laser platforms (Star S4 [Visx, Inc., Santa Clara, CA], Ladarvision [Alcon Laboratories, Inc., Fort Worth, TX], and Technolas [Bausch & Lomb, Rochester, NY]) are or soon will be under ownership of a larger entity that also produces IOLs. The fact that 78 million baby boomers are now approaching 60 years of age will create a demand for IOLs that will build the refractive surgery category, because this surgical option excels where LASIK falls short in addressing higher refractive errors, hyperopia, monovision, and presbyopia.
With IOLs, the refractive surgery market potential expands significantly and moves closer to those original estimates of 150 million Americans, which include all corrective-lens wearers. Refractive technology will continue to achieve better, safer, and more predictable outcomes; such advancement is the lifeblood of the ophthalmic industry. But technology alone won't allow refractive surgery to reach the majority of the population, because consumers still have a great deal of fear for anything related to vision. From an adoption standpoint, there is still a long way to go before refractive surgery reaches the mainstream consumer.
TIME
When a patient says, “I want to see 20 years of history before I have LASIK,” he is invoking a majority-segment consumer's practicality. The longer the product has been around, the more “stable” it appears to be and the more likely that it will be supported by well-established companies. With time, it is reasonable to expect more conservative consumers to buy in, but it is simply impossible to predict when or if such a phenomenon will occur.
CUSTOMER SERVICE
As is the theme of many of my columns devoted to refractive marketing, the customer experience is the area that stands out as having the greatest potential to stimulate consumer demand. This belief is primarily due to my own observations that the level of customer service in the typical refractive practice is only fair-to-poor. The powerful nature of the day-1 postoperative visit has not forced providers to worry too much about all the other aspects that compose the refractive surgery experience for their patients. In other words, the product has been so good up to now that providers haven't had to pay much attention to how well they deliver the product.
Moore tells us that the gap between early adopters and the early majority is even larger than the previous chasm between innovators and early adopters, and Godin declares the early adopter to be the key segment among all, based on these consumers' ability to influence the much larger population segment that relies on them as the established reference base. He further claims that broadcast advertising is the wrong medium with which to try to attract the early adopters. Together, these two authors clearly make the case for changing how you approach refractive surgery marketing, from heavy investment in technology to heavy investment in an infrastructure that is focused on the customer. Success here means that you will spend less time and money advertising to attract customers and more energy servicing them.
LIKE I'VE BEEN SAYING…
Many of the issues covered in my monthly Marketing Mishaps column have touched upon this need for improved customer service within refractive surgery practices. I view it as the one aspect of a refractive surgeon's brand that is hard to replicate, making it the true differentiator in the marketplace. More importantly, service is the best vehicle by which to build a sustainable refractive practice over time (Figure 4).
In summary, the future of refractive surgery is going to revolve around the customer and his overall experience. Marketing data from within and beyond the refractive surgery category all point to the need to vastly improve customer service levels from their current state.
Shareef Mahdavi draws on 20 years of medical device marketing experience to help companies and providers become more effective and creative in their marketing and sales efforts. Mr. Mahdavi welcomes comments at (925) 425-9963 or shareef@sm2consulting.com. Archives of his monthly column may be found at www.crstoday.com.
1. Moore GA. Crossing the Chasm. 3rd ed. New York, NY: HarperCollins Publishers Inc.; Revised edition 2002.2. Godin S. The Purple Cow. New York, NY: Penguin Group (USA) Inc.; 2003.
