Car Makers Pay Close Attention to J.D. Power and His Surveys
Wilcod, Gregory J., THE JOURNAL RECORD
By Gregory J. Wilcox
Los Angeles Daily News
AGOURA HILLS, Calif. _ While watching the telecast of 1984's Super Bowl, James David Power III heard something shocking: his company's name.
"On the screen comes a commercial that said, `According to J.D. Power Associates, Subaru is second only to Mercedes-Benz in customer satisfaction.' I nearly died," Power recalled with a chuckle. "Mercedes was a little upset."
That was the first time a car manufacturer made such a mass media fuss about one of the Agoura Hills, Calif.-based marketing company's surveys. The making and selling of automobiles has not been the same since, industry analysts and manufacturers agree.
"According to J.D. Power Associates" has become a familiar refrain in automobile and sport-utility advertising. Foreign and domestic vehicle manufacturers now unleash multimillion dollar ad campaigns if they finish atop one of Power's various surveys, which rate customer and dealer satisfaction.
Analysts say Power's focus on consumer attitudes played a big factor in the improvement of domestic cars during the last 10 years.
"Dave Power came along and injected a level of third-party intrusion, and it changed some of the realities of just what the public was happy with and unhappy with," said Jim Wangners, senior managing partner at Detroit-based Automotive Marketing Consultants. "The manufacturers do take it seriously and most recognize that if you don't finish well in the studies, it's a serious setback."
Manufacturers try to improve their products so they can score as high as possible in the surveys, he said.
Ted Orme, spokesman for the National Automobile Dealers Association, said the industry pays attention to Power's work.
"It's certainly had a major impact. Nobody likes to be on the bottom of the list. They have their detractors but I don't think anyone can deny they are a force," Orme said.
For example, in May 1989 the Buick LeSabre jumped from 44th to second place on one of Power's surveys, making it the American-made car with the fewest reported problems. By August, sales of the model had doubled.
It is this kind of result that gets manufacturers' attention.
"Any kind of third-party evaluation is going to be important to a manufacturer," said John Hanson, product news manager for Toyota Motor Sales, U.S.A. Inc. "Everybody in the industry looks at these very closely and would like to do well."
Power, a former financial analyst at Ford Motor Co., started his consulting and marketing business 26 years ago by focusing on the automobile industry. Over the years the company has expanded its surveys to cover a variety of products and services, including computers, airlines, tires, cellular telephones, medium duty trucks and motorcycles.
Today about 240 Power employees work in offices in Agoura Hills, Tokyo, Torrance, Detroit and Westport, Conn. Power said the company's revenue has been growing about 25 percent per year over the last five years despite a weak economy. He projects revenues of $35 million this year.
Power's foreign markets include Japan, Canada, the United Kingdom and Belgium.
Operations in the Japanese market are in their fourth year and Power expects them to generate between $4 million to $5 million this year.
"Last year was profitable for us so we feel very happy with the operation," he said.
Power has a joint effort with Research Development Inc., a Japanese company. The partnership also has projects in Korea and plans to expand into Malaysia and Thailand.
Power also conducts about 10 auto industry seminars annually on a variety of topics. One, Strategic Retail Roundtable, gathers the nation's top 200 dealers four times a year for two days.
Additionally, the company produces a monthly Power Report and California Report and is in the process of marketing the Power Information Network. …