How Consumer Reports takes on companies

Devin Leonard of Bloomberg Businessweek writes in the latest issue about Consumer Reports magazine, which in the past few months has taken on both Toyota and Apple and won.

Leonard writes, “By the late ’90s, however, consumer appetites had moved beyond the utilitarian to Lexuses and stainless steel six-burner “professional grade” Viking stoves. Consumer Reports didn’t test such aspirational purchases, and the magazine slipped into the red. In 2001 the organization lost $9.4 million. ‘I think we had gotten a little complacent,’ says Guest. ‘For a long time, we were the only game in town. Now there was all sorts of stuff out there on the Web.’

“Guest, who has previously served as the nonprofit’s chairman, became president that same year and made two important decisions. The first was to get the magazine to lighten up a little. As the real estate market took off, the magazine started covering such heretofore untouchable products as luxury SUVs, wine, and high-end mobile devices like the iPhone. Since the onset of the recession, Consumer Reports has also had fun putting less expensive infomercial-level fare in its pages, such as the Amish heater and the Snuggie. Testers were pleasantly surprised by the heater, saying it did a ‘good job,’ but not to ‘expect any miracles.’ They were less charmed by the Snuggie, which is sold in pairs for $19.99, noting, ‘When washed, it shed. Each time we laundered two Snuggies, we removed a sandwich bag’s worth of lint from the dryer screen.’

“Guest’s second decision was to expand testing to keep up with the torrent of new products hitting the market. Where it once might have weighed in on the television or computer market in an annual special issue, it now continually tests laptops, cell phones, and flat-screen televisions, posting results on the Web as quickly as possible to help subscribers make buying decisions. Consumer Reports‘ online subscriptions have tripled in the past seven years, and the magazine’s future growth clearly lies on the Internet. It’s also where the magazine rushes to post announcements, such as its decision not to recommend the iPhone 4.”

Read more here.