Researcher Gives 'Power' to Car Shoppers
AGOURA HILLS, CALIF.
ASK Dave Power what car to buy, and he's likely to tell you "whatever car best suits your needs." A surprisingly vague answer from a man with the reputation as the guru of automotive research, whose studies can influence the buying decision of millions of motorists - as well as the products they're offered.
Operating out of the northern suburbs of Los Angeles, J. D. Power & Associates churns out hundreds of automotive surveys each year, but a small handful have made the Power name nearly a household word:
Best known is the Customer Satisfaction Index, which asks 30,000 customers how happy they have been with the quality of their car and dealer service a year after it was purchased.
The Initial Quality Survey (IQS) covers 12 potential trouble points, including brakes, engine and transmission, water leaks, and wind noise, after three months of ownership.
The Vehicle Dependability Index asks similar questions after five years of ownership.
Ranking high can be a blessing to a manufacturer - the automotive equivalent of the Good Housekeeping seal of approval.
Take Buick, which was struggling to revive moribund sales when it jumped to No. 1 in the IQS among domestic carmakers three years ago.
"When we started advertising that fact, we started moving up in sales," says Darwin Clark, marketing director for Buick.
But what does No. 1 mean? Buick had actually scored No. 5 overall, falling behind both European and Japanese competitors.
The Chevrolet Lumina sedan, advertised as No. 1 among mid-size specialty cars, scored worse than average among all vehicles.
In the 1990 IQS, the Toyota Cressida was named the No. 1 model, the Mercedes-Benz E-series was the top European product line, and Toyota's Lexus was the overall top brand.
"Everyone can wind up a winner in some category," complains auto analyst Maryann Keller, who cautions, "The ability to use the data [as a marketing tool] becomes more diluted the more claims are made."
To minimize that problem, Mr. Power has established a special unit to review all advertising using his survey results.
Other research firms, such as Maritz Marketing Research in Solon, Ohio, don't allow their survey data to be mentioned in ads, but Power likes the notoriety. It is, it appears, quite good for business.
"He is a must buy,"' says an executive with one of the Big Three US automakers, who authorizes spending more than $100,000 a year to subscribe to Power's independent studies, as well as proprietary projects.
Power billed nearly $16 billion last year and hopes to double that by the mid-1990s. His firm employs more than 100 full-time and nearly as many part-timers at offices in California, Detroit, Europe, and Japan - where he launched a joint venture last year.
Not bad for a Wharton MBA who began crunching numbers for Ford's tractor division in 1959. One of the first things Power noticed was that market research "wasn't plying the role I thought it should" for automakers. The industry "didn't feel it need to pay that much attention to the consumer."
The company that did listen was a chain-saw manufacturer, the McCulloch Corporation, which Power told to make small, lightweight models for sale to the consumer, rather than just North-woods lumberjacks.
In 1968, Power formed his own company and soon found a client in Toyota, a then-struggling carmaker looking for a way to make a dent in the US market. Power gave a simple message: listen to the consumer, and give them what they want.
While the Japanese were soon carving out a niche based on their quality and reliability, a near disaster, ironically, helped make Power's reputation.
In the early 1970s, Mazda was the only producer offering a car powered by a rotary engine. Surveying Mazda owners, Power found they were quite happy - initially. But after 30,000 miles, a disproportionate number of rotary engines were failing. In the process of making repairs, Mazda's parent company, Toyo Kogyo, nearly went broke.
Power's big move came in 1981. Until then, his company - and most of his competitors - were doing proprietary projects for individual manufacturers.
"I felt there needed to be a uniform measure for the entire industry ... that could provide a benchmark," he says. "I had no idea that the use of [our data] in a public fashion in advertising would put pressure on everyone to provide better customer satisfaction.
"We think the '70s and '80s were the decades of quality improvement.... We think the '90s will be the decade of distribution." Distribution is a broad term, Power explains, involving everything from advertising to warranty repairs. And it accounts for about 35 percent of the price the average American consumer pays for a car.
Tightening the distribution system, Power suggests, could shave thousands of dollars off the cost of a car, improve service - and make customers more happy.
And that, it seems, is what J. David Power is all about.