Ratings ruler seeks subjects
Last year, Power spun off the Power Information Network, which gathers data on car purchases from 6,000 dealers to ferret out precise details on the models, options, colors, and other features that consumers prefer. The idea is to mimic supermarket scanners, which measure what consumers buy and manage inventory. The car business is antiquated by comparison, with manufacturers estimating demand and building a broad mix of vehicles that typically sit on a dealer's lot for 60 days or more. That mismatch forces carmakers to offer lavish rebates. Power figures he can solve that problem with enough data at his fingertips, which will require the participation of roughly 15,000 dealers. Already, he says, Ford and other automakers have been able to reduce incentives by using his data to better predict demand.
Since auto-related business has fallen from about 90 percent of revenue 10 years ago to about 70 percent today, J. D. Power is seeking out other industries to slice and dice. Not every one fits the bill. The industry must be mature, there must be a way to contact the buyer, the product must be a significant purchase, and there must be enough competition to propel firms to seek a marketing edge. "You'll never see a chewing gum study," insists Ron Conlin, J. D. Power's executive director of retail stategy.
Despite the careful planning, a few initiatives have fizzled. When the company began rating personal computers in the early '90s, a young firm, Dell Computer, topped its list. Established competitors questioned the high ranking of a virtual unknown, and J. D. Power backed out. Other efforts seem shaky, since the stakes are far lower than a $25,000 investment in a car. J. D. Power assesses long-distance and cellular providers, but so far hasn't had much of an impact, says Ken McGee, a research fellow at the Gartner Group. "I've never heard them raised once," he says. "Where's the evidence they have expertise beyond the auto industry?"
Still, J. D. Power has made unmistakable inroads in several industries. It evaluates new-home builders in 25 markets; 25 of the top 50 builders subscribe, and industry executives admit it has focused attention on quality and service. The firm conducts proprietary research for 30 hospitals and counting, and it sees big promise in home electronics. It sells research on office equipment, digital cameras, and high-end TVs, and it may return to PCs. While it usually muscles its way into a marketplace, occasionally the firm is invited. Some manufacturers ask J. D. Power to assess their industries, believing they'll nab the top score. The company has even turned down requests from makers of banal products like uniforms and tooth whitener, fearing they would sully its image.
The firm is also expanding overseas in China, India, and other burgeoning economies, and its consulting arm represents an additional pillar of growth. But the firm's real challenge may be keeping in touch with the little guy as it evolves into a global, multifaceted enterprise. "Our connection with consumers is the lifeblood of the company," says CEO Steve Goodall. "We need to build a better bond with them." That's one reason J. D. Power has resisted going public. A few of its research projects have angered clients and led them to cancel business, the kind of decision shareholder activists probably wouldn't tolerate. To keep faith with consumers, J. D. Power has started a Consumer Reports-style magazine. And it is recruiting 300,000 Americans for its PowerPanel, a group of consumers who will periodically fill out Internet questionnaires. Whether by mouse or by mail, J. D. Power will stay in touch.
POTENT POINTS
Car ratings and J.D. Power go together like peanut butter and jelly. Here's how the 2003 models fared on quality:
Best: Lexus; Cadillac; Infiniti; Acura; Buick; Mercury; Porsche; BMW; Toyota; Jaguar
Worst: Hummer; Land Rover; Kia; Mini; Saab; Saturn; Mitsubishi; Mazda; Subaru; Jeep
Note: Does not represent all manufacturers. Based on surveys sent to new-car buyers during the first few months of ownership. Measured by problems per 100 vehicles.
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