Customer satisfaction holds
November 17, 2009
by Josh Sosland
ANN ARBOR, MICH. — Customer satisfaction with food products held unchanged in the third quarter, holding well above the overall national average, according to data from the University of Michigan.
At a score of 83, the American Customer Satisfaction Index for food manufacturing was unchanged from the second quarter of 2009 and unchanged from 83 in 2008. The score represented a stabilizing in consumer satisfaction following a sharp increase in the second quarter.
The overall level of satisfaction in food manufacturing has held within a very narrow range since the initial baseline figure of 84 in the summer of 1994. The baseline was the all-time high and 81 was the low, scored repeatedly in 1997, 1998, 1999, 2000, 2002, 2003 and 2004.
Food manufacturing fared better than overall customer satisfaction, which scored a 76 in the third quarter, down 0.1% from the second quarter but up 1.4% from a year ago. The food index also was better than the overall manufacturing/non-durable goods index, at 81.5, down 1% from last year.
Among significant gainers in consumer satisfaction versus a year ago were soft drinks, up 2.4% at 85, and breweries, up 1.2% at 84. By contrast customer satisfaction in cigarettes fell 7.7%, to 72, from 78 the year before. Since 1996, the cigarette score had held in a tight range of 75 to 78.
Within the food category, H.J. Heinz Co. maintained its grip on the No. 1 slot, with a consumer satisfaction score of 89, unchanged from 2008, off 1 point from 2007 but up 2 points from 2006. Tied for second place with scores of 87 were three companies — The Hershey Co., up 2 points from 2008; Mars, Inc., up from 86; and Quaker Foods, part of PepsiCo, Inc., unchanged from 87 last year. A third food company to gain in the third quarter of 2009 was Nestle S.A. At 85, Nestle’s score was up from 83 last year.
The largest tumble in the third quarter was by ConAgra Foods, Inc. At a score of 78, ConAgra was down 7.1% from 84 in 2008. The score of 78 ties the all-time low for any food company. Tyson Foods scored a 78 in 2006 and 2007 but was up to 82 in the third quarter of 2009.
“It is very unusual for food manufacturers to have large swings in customer satisfaction, because products usually do not change much over 12 months,” Dr. Fornell said. “However, price increases and elimination of certain offerings can certainly have a negative impact. The Banquet frozen dinners product line, which has traditionally been associated with discount pricing was among those affected. On average, price increased by 25% contributing to a decline in sales that led to cost-cutting in other areas.”
Dr. Fornell said changes ConAgra made may have had a positive short-term impact on earnings, but he warned “it is usually difficult to counteract the negative effects of falling customer satisfaction over time.”
ConAgra had a different view of the company’s performance.
“We are continually doing consumer research and judge our products based on their in-market performance,” a company spokesperson said. “We’re very pleased with volume and market share growth across key brands.”
Because of the improvement in second quarter consumer satisfaction overall, the University of Michigan had projected a spending increase of 3.25%. The forecast was “much higher than most other predictions but not quite high enough,” said Claes Fornell, a professor at the Stephen M. Ross School of Business at the University of Michigan.
The forecast fell slightly short of the robust third-quarter consumer spending growth, which was 3.35%.