Report indicates upswing in satisfaction for manufactured nondurable goods

Customer satisfaction for manufactured nondurable goods typically is high, but the latest American Customer Satisfaction Index (ACSI) says it's getting better than ever.

Generated by the University of Michigan's Ross School of Business in partnership with The American Society for Quality and CFI Group, an Ann Arbor, Mich.-based consultancy, the index measures consumer nondurables every third quarter. As a sector, consumer nondurables recently posted its best score ever.

Product innovation and brand management clearly are behind the upswing.

Consistently high ratings also stem from the fact that consumer nondurables require very little service—either before or after purchase—says Professor Claes Fornell, a director for the ACSI.

"When it comes to consumer nondurables, there's a flavor for everyone," explains Fornell. "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 from one brand to another."

The goal—and what all companies strive for—is high customer satisfaction, which leads to more customer loyalty, increased consumption, and purchasing habits that are seemingly unaffected by price.

The soft drinks industry, as an example, is up one whole percent over a year ago. The smallest of the measured companies, U.K.-based Cadbury Schweppes, improved 4 percent for an individual score of 86, and assumes a share of the industry lead. Though much smaller in market share than the "Big Two" cola companies, Schweppes' customers are as satisfied—if not more so—compared with its larger competition, Fornell says.

Even more impressive is the rise of Pepsi, up 5 percent from a year ago to 86, coupled with a 2-percent drop for Coca-Cola to 82. Fornell says the ACSI gap between the cola giants has never been greater.

"This really is an issue of what Pepsi is doing right rather than what Coke is doing wrong," says Fornell. "Pepsi reduced its reliance on price reductions, and is putting out more new products," says Fornell.

There are two lessons to be learned from this example. The first is that price reduction is a tricky weapon. It may generate short-term gains from luring customers away from a competitor, but can hurt over the long term if customers aren't satisfied and switch products.

"The second lesson is to work at matching customers with products," Fornell says. "The better a company can match a variety of products to different consumer tastes, the more successful they'll be."

Another business strategy comes from the food manufacturing industry, which posted a rating of 83 on the index. Case-in-point is Sara Lee, which saw its individual score rise to 85. Its improvement may be due to the company's efforts to shed less successful product lines—e.g., Bumble Bee tuna and Chock full o' Nuts coffee, both of which have been sold—and focus more on its core business, Fornell says.

Fornell says that strategy is not without its tricks. "While you divest yourself of brands with low satisfaction," he says, "you do lose the consumers who are loyal to that brand."