Pepsi Has Pop, Coke Goes Flat in U Mich Study

Customer satisfaction is flat according to the third quarter report of the American Customer Satisfaction Index (ACSI). The ACSI aggregate score remains near its all-time high at 74.4 for a second consecutive quarter. Manufacturing/Non-durable Goods improve 0.6 percent from the third quarter of 2005 to 82.3 on the ACSI 100-point scale, its best score ever and the highest of any sector in ACSI.

Customer satisfaction as measured by ACSI has consistently predicted future consumer spending, and the third quarter results portend little change in spending growth. ACSI forecasted a spending increase of 3 percent for the third quarter, and the Commerce Department’s preliminary estimate for actual spending growth was 3.1 percent. But other factors continue to put pressure on consumers’ ability to spend.

“Higher levels of buyer satisfaction suggest higher spending, but consumers’ inclination to spend is always tempered by the availability of cash and credit,” said Professor Claes Fornell, head of ACSI at the University of Michigan. “Even though the housing bubble is deflating, oil prices are going down and the stock market has been performing well. I don’t expect spending to look too much different for the remainder of the year.”

ACSI measures consumer non-durables every third quarter, and as a sector it consistently achieves high customer satisfaction. Consumer non-durables require very little service either before or after purchase. There are usually multiple alternatives to any given product, switching costs are low, and prices have remained pretty stable.

“When it comes to consumer non-durables, there’s a flavor for everyone. Satisfaction tends to be very high because nobody sticks with a product they don’t like and there’s very little cost associated with switching to another brand,” said Prof. Fornell. “Changing your toothpaste is a lot easier than changing what car you drive.”

The third quarter report shows improvements in food processing (+1.2%, 83), pet food (+1.2%, 83), soft drinks (+1.2%, 84) and personal care & cleaning products (1.2%, 84), which offset declines in cigarettes (-1.3%, 78) and apparel (-1.2%, 80). Breweries, including Anheuser-Busch, Miller and Molson Coors, remain unchanged at 82.

Soft Drinks: Pepsi Has Pop, Coke Goes Flat
Americans love their soft drinks, though some more than others. A product exists for virtually every palette, helping the product category to score 84, one of the highest scoring industries in ACSI. Pepsi jumps 5 percent to 86, sharing the top spot with Cadbury Schweppes (+4%), maker of 7Up, Dr. Pepper, A&W Root Beer and dozens of other well-known brands. The number one soft drink maker, Coca-Cola, drops 2 percent to a five-year low of 82. The gap between cola giants has never been greater.

About the ACSI
The American Customer Satisfaction Index is a national economic indicator of customer evaluations of the quality of products and services available to household consumers in the United States. It is updated each quarter with new measures for different sectors of the economy replacing data from the prior year. The overall ACSI score for a given quarter factors in scores from about 200 companies in 43 industries and from government agencies over the previous four quarters.

The Index is produced by the University of Michigan’s Ross School of Business in partnership with the American Society for Quality and CFI Group, and is supported in part by ForeSee Results, corporate sponsor for the e-commerce and e-business measurements.