How Trustworthy Are J.D. Power Awards?
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J.D. Power Awards have been a staple of car advertisements since 1984, when Subaru became the first brand to boast about it’s J.D. Power rankings. Over the course of the next decade, more and more automakers began to mention "J.D. Power and Associates" in their commercials, solidifying them as an industry name.
As of today, J.D. Power has been mentioned in over 350,000 TV commercials and 2 billion print ads, but who is J.D. Power, why do automakers care about his approval, and can consumers trust the J.D. Power rankings when looking for a new car?
History of J.D. Power Awards
As reported by Vox, J.D. Power and Associates was founded in 1968, by James David Power III and his wife, Julie. The "associates" were either mythical, or the couple's young children.
Mr. Power had worked in auto manufacturing and marketing, and had realized there was no detailed market research available to car makers. Alongside his wife, he began mailing out surveys to American drivers, asking them basic questions about their vehicles.
Initially, it was hard to glean any meaningful results from this sporadic and random method of data collection, but over time the couple began to notice trends. For example, in 1973, they discovered that one-fifth of the rotary engines on a Mazda R100 were failing due to bad O-ring gaskets.
This was enough to propel the young marketeers into the national spotlight. Before long, every car manufacturer that operates in the U.S. was purchasing J.D. Power’s customer research.
The Initial Quality Study (IQS)
The Powers sold their company to S&P Global in 2005, receiving $400 million for it. Shortly afterwards "Associates" was dropped from the name. J.D. Power was sold again in 2016, costing new owners XIO Group a hefty $1.1 billion.
Despite the transition from being a family-owned, kitchen-table business, to the flagship brand of a mega-rich corporation, J.D. Power’s surveying method has remained remarkably consistent since 1987, when it launched the "Initial Quality Study" (IQS).
The IQS asks drivers to answer more than 200 questions across eight categories:
- Audio/entertainment/navigation systems
- Climate controls
- Driving experience
Respondents are also asked to note any "problem" they have had with their new car, within 90 days of the purchase date. Results are tabulated, and each car model is ranked accordingly, from best to worst, in each of the categories. The top scoring vehicles receive a J.D. Power Award.
Staying relevant in the digital age
Back in the ‘80s and ‘90s, automobiles were a lot simpler than they are today. Something either worked, or it didn’t, and this was easy enough to evaluate the mechanics based on this.
Nowadays, cars have far more digital components, and as a result, identifying "problems" is trickier. For example, an elderly driver might struggle with touchscreen technology, and identify this as a problem in the Initial Quality Study. This is not necessarily indicative of a faulty part, or even bad design, but rather the customer’s personal preference.
As a result, the J.D. Power rankings have been criticised for not specifying whether the problems they identify are related to mechanical failure, or user experience. It has thus been suggested that a J.D. Power Award is not reflective of true quality in the digital age.
So what does a J.D. Power Award mean?
In car advertising, the J.D. Power name is now so recognizable that survey legitimacy doesn’t seem to matter. This is known as the "mere exposure effect." The more a consumer sees something, the more they like or trust it.
As a result, automakers anxiously await the J.D. Power survey results each year, and then scramble to see how they can include the rankings in their ads. Customers see this, and J.D. Power’s credibility continues to grow, despite flaws in their methodology.
We shouldn’t be too quick to dismiss a J.D. Power Award as just a marketing prop though. J.D. Power’s survey results may be less reliable than they were 30 years ago, but the rankings are still an excellent indicator of customer satisfaction. And this is a very useful metric when assessing which new car to buy.