(Continued)

The Big Kahuna, Power & Assoc. dates back to 1968, when it was essentially an industry shill for Japanese carmakers hoping to make inroads into the tough American marketplace. Detroit soon took notice and adopted J.D. Power as its own. Since then, the company has figured out all kinds of clever ways to shine the Big Three's lemons. When the 1989 Buick LeSabre lost big to Nissan in an overall quality survey, J.D. simply created a new category: Best Rated American-made Car. Buick then proudly announced in national ads that the LeSabre had won the best-rated car of the year. J.D. went on to rate cell phone providers, speedboats, mortgage lenders, opticians, homebuilders, digital cameras—name the category, there's probably a prize. And they give them out in 17 countries.

The awards juggernaut was started by James David Power III and eventually bought out by McGraw Hill, owners of Businessweek, Standard & Poor's, and all manner of text books and maps. But the original business model has never changed:

1. Conduct a random direct-mail survey on a product, enticing people to participate with $1 bills.
2. Charge the surveyed companies significant amounts of money for the results.
3. Re-charge survey winners a hefty licensing fee for the right to use the J.D. Power Logo in advertisements. (Power himself has admitted that fees can run anywhere from $25,000 to $300,000 a year.)
4. Reap the benefits of free advertising, without having to do any marketing of your own.

The real genius lay in segmenting the awards to garner as many winners as possible. Cars, for example, are judged in literally dozens of categories, from size to price point, to ensure that nearly every model wins a prize. And J.D. Power only ranks the top five in any category, saving their clients contestants from the humiliation of not being the best. Because losers don't pay licensing fees.