Rebound in Consumer Spending Expected

"Barring extraordinary or unexpected events, it would therefore be reasonable to expect a modest rebound in consumer spending for the remainder of the year." That’s the estimation of Professor Claes Fornell, director of the University of Michigan Business School's National Quality Research Center. He says the latest results of the American Customer Satisfaction Index show that consumers are maintaining satisfaction levels with key brand categories, and that bodes well for the economy and the advertising business.

The ACSI, which held steady at 73 (out of a possible 100), measured customer satisfaction levels this quarter in manufacturing durables (automobiles, personal computers, household appliances and consumer electronics) and e-business (Web portals, search engines and news sites).

Like consumer spending, the relationship between customer satisfaction and stock prices is also evident. "If a large improvement in the ACSI for one quarter is followed by a smaller ACSI gain or by a negative change the next quarter, the stock market has generally gone down," Fornell says. "The first two quarters of 2002 are examples of this. Both show a deceleration of ACSI growth, with the second quarter having no growth at all. The importance of customer satisfaction in a market economy is further underscored by looking at the stock prices of individual firms over time. If a company manages its 'customer assets' poorly, as suggested by low or declining ACSI scores, how likely is it that it manages other assets well? Companies such as WorldCom, Qwest, USAir, Kmart, Charter Communications, Comcast and AOL have all been punished harshly by the stock market. Some have filed for bankruptcy protection. What they also have in common is inferior ACSI performance."

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In the current ACSI, scores for all four sectors in the manufacturing durables category remained the same: household appliances 82, consumer electronics 81, automobiles 80 and personal computers 71. For the third year in a row, the automobile industry matched its record- high score. In fact, the industry average has always stayed within a three- point range, from 78 to 80. BMW, Buick and Cadillac once again scored highest with a mark of 86, while several car brands, including Dodge, Ford, Chevrolet, Pontiac and Hyundai, registered the lowest scores, all at 78.

Mazda and DaimlerChrysler's Jeep division showed the most improvement -- 4 percent -- with ACSI scores of 81 and 79, respectively. In contrast, scores for Mercedes-Benz and Hyundai declined by the same percentage.

Fornell says that while the overall ACSI score for automobiles has not changed much over time, the difference between the highest-scoring and lowest- scoring automakers has shrunk from 18 points in 1994 to just eight points today.

In addition to manufacturing durables, this quarter's ACSI also looked at Internet e-business -- Web portals, and for the first time, search engines and news sites. The ACSI score for portals has climbed from 63 in 2000 to 65 in 2001 to 68 this year, with every portal provider improving from last year. Yahoo again set the pace for this category with a score of 76 (up from 73 a year ago), with Microsoft's MSN improving to 72 (up from 67) and America Online up one point to a still-very-low 59. Among search engines, which scored 68 overall in the ACSI, Google is head- and-shoulders above the rest, registering a mark of 80. Ask Jeeves and Alta Vista were well behind with scores of 62 and 61, respectively.

Finally, news and information sites, which saw the number of online visitors increase dramatically after the Sept. 11 terrorist attacks, had an overall score of 73. ABCNews.com led the way with a mark of 74, followed by MSNBC.com's 73, CNN.com's 72 and a 71 for NYTimes.com and USAToday.com.

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