Selling to People, Not Trees

By August 16, 2006Innovation

Here’s an interesting article from the Wharton Alumni magazine that profiles a real innovator in consumer marketing research: J.D. Power II, of “J.D. Power & Associates” fame.

One particular quote stuck out in our minds. It’s the story of when Power was working for chainsaw maker McCulloch Motors Inc., which was having trouble cracking the consumer market. As the article notes,

Power advised the company to expand its product line of lumberjack saws to include lightweight models for do-it-yourselfers after spotting a basic flaw in McCulloch’s operations: The company forecast chainsaw sales based on the number of lumber trees it could find. “I said, ‘You don’t sell to trees, you sell to people,'” Power told McCullough executives. Power’s research also showed that the saws needed to be smaller, less expensive, and able to tolerate long periods of idleness. McCulloch listened, and sales took off.

What began as a rating for auto companies has evolved into a consumer marketing research firm with expertise in categories as diverse as cellular communications, satellite and cable TV, hospitals, banks, home builders, hotels, and airports.

Today, JD Power and Associates today has 750 employees in 12 offices worldwide and generates more than $190 million a year in revenues, according to published reports-a fivefold increase over the past decade. The firm has expanded in China, India, and other burgeoning economies.

Similar to J.D. Power, Today’s manufacturers are successful because they think globally. Today’s successful manufacturers have also embraced exporting. That includes people like Sandra Westlund-Deenihan who export to more countries than she has employees!

If you’re not engaged in exporting, the NAM has some excellent resources that you can find here.

As for J.D. Power & Associates and the road ahead, Mr. Power has since sold his company to McGraw Hill. He indicates in the article that the biggest issue as we move into the information age is that, “we’re finding a lot of questionable information out on the Internet claiming to be research.”

He’s also wary of companies that change research data as it passes up the line of the organization. “We used to say that they tortured the data until it confessed,” Power remarks.

When asked how mature companies stay innovative, Power appears to take a page from the famous Harvard Business Review cases study Marketing Myopia by noting that “companies like ours need to get out of the survey research business and move into the solution business, the information business.”