I reproduce the article “I'm not a fool” by Lluís Pellicer appeared in The Country The 11 November 2008
The bargain of a lifetime made business. Flights low cost, low cost clothing, low cost lawyers… Even massages! An entire industry dedicated to the concept low cost is consolidated in Spain. The price of the products differentiates these companies, that continue to grow around an audience that increasingly seeks the bargain.
Two out of three consumers do so, who buy brands White, they go to supermarkets of super discount and are regulars to sales. Citizens that market studies call low cost So what, However, every day they spend the not inconsiderable amount of 36 millions of euros.
The motto of an advertisement, I'm not a fool, came to define a new type of customer: the one who knows how to value quality, but it is also able to compare and stay with the cheapest. Airlines made the concept fashionable in Europe low cost with a cost structure that is in trouble every time fuel becomes more expensive. Ryanair, Easyjet And Vueling are only three of the best known. The success of these lines forced flag carriers such as Iberia to launch their own cheap airline..
The same has happened in many other sectors, from everyday shopping to mobile telephony, going through fashion. Some companies have devoted years to this segment, but they have taken root after the middle class has made them their own. The crisis at the moment strengthens them. In addition to allowing squaring some family budgets, still leave room for leisure.
Bettina Gölzenberger businesswoman came open a legal services company in Barcelona at an affordable price when it was in an establishment Massages to 1.000. “The image of lawyers is often difficult to access, even somewhat stale. I wanted to do the opposite.: a functional premises, where you can go without prior appointment and with very transparent prices”, Ensures. And he launched Lomaslegal, with a rate of 30 euros per minimum consultation.
But not only this niche market is exempt from competition.. Legálitas, For example, offers its services by 88 euros per year thanks to a cost structure based on economies of scale: Has 250.000 direct customers and others 8 million through agreements with companies. “We realized that only the 20% of citizens went to a lawyer, and in most cases, for serious reasons”, explains its Deputy Director General, Juan Pardo.
The triumph of the low cost has to do with, Precisely, with the popularization of services and consumer goods that were not previously available to everyone. Antonio López, Professor of Sociology at Uned, explains that the emergence of these signatures coincided with the existence of a “bagged customer demand that could not be met by the traditional channel”. A report by the consultancy TSN figures the volume of these consumers in the 22% of the total. A group that concentrates the 18% of spending on consumer goods, the first to have their labels low cost under the umbrella of private labels or white brands. One third of these citizens, In addition, go to superdiscounts As Mercadona, Day Or Lidl.
According to the report, these consumers regularly buy white labels and use Checks discount. The Crisis does nothing but enhance this behavior. Pocket fits, and during the first nine months of the year purchases of consumer products fell by 2,5% in each household with respect to the same period of 2007, according to TSN and the Spanish Association of Manufacturers and Distributors. Private labels gained market share, and the number of people who say they are guided first by the price and who are looking for products on offer grew. Even El Corte Inglés has launched allied, your low-cost brand.
Airlines and mass consumption are the origin of the phenomenon low cost. “It all starts in the United States, in the sixties. With air liberalization, companies emerge that differentiate themselves by price. The phenomenon is then mixed with that of food distribution.”, explains the teacher of Esade Josep-Francesc Valls.
The boom arrives in Europe in the nineties, and along with the airlines arise other first service companies. But these burst with overwhelming force into the twenty-first century.. “The middle class goes into debt, increases their standard of living and spends well above what they did before. Here comes a very important mass of consumers with real purchasing power”, says Félix Cuesta, teacher of the Instituto de Empresa.
And some companies drag others. The biggest example is the Swedish multinational Ikea, that offers more affordable furniture eliminating the costs of assembly and transfer. And immediately, The magnet effect: companies in the sector with very competitive prices with a similar model emerge.
With a lot of noise Advertising, these companies continue to make their way. There are dozens of activities that their low-cost companies have. This label has made a fortune in the sector hotelier, with establishments that are located in the metropolitan areas of large cities. The sector calculates that in 2010 there will be between 40.000 And 50.000 cheap two- and three-star rooms, when in 2006 there was hardly any 8.000 throughout Spain. In this market there are firms that are dedicated only to this segment, As Sidorme, but the big ones have also had to position themselves there. One of the first to do so was Accor, that continues to expand with its brands Ibis, Etape And Formulate 1.
The low cost has been spreading to all corners for some time: computing (Media Markt), mobile telephony (Yoigo, MOREMovil), insurance (Direct Insurance)… Even the automotive industry, in which India and China are taking the lead. The Indian conglomerate Daddy Motors has launched the Tata Nano, a car for four people that costs just over 1.500 Euros. Despite having carried out an aggressive advertising campaign and winks to the immigrant population, a spokesman for the Spanish employers' association of the sector, Anfac, points out that the vehicle has not yet arrived in Europe. And when it does, it will probably be more expensive, since it will have been adapted to safety and environmental regulations. “They are cars destined to supply those markets, with motorization needs”, maintains the employers.
Even so, a study by the consultant Roland Berger points out that the demand for these cars will grow much more than the rest. In 2012 will be required at least 18 millions of units, and not only in emerging countries. Proof of this is that Renault used its Romanian subsidiary Dacia to launch a cheap model that was first to be sold only in developing countries and then marketed in Europe under the slogan The car of the 5.000 Euros. The prices of the cars that your Web, nevertheless, today they exceed the 7.000 Euros.
Internet has been, No doubt, the key factor for the take-off of these businesses, since it has allowed them to reduce costs and directly target a segmented audience. “It has been fundamental. Tremendous. Not just for business. Allows us to dive, get all kinds of information… Finding alternatives”, says Félix Cuesta. The Network has allowed the concept low cost has also reached the financial sector. Banesto, For example, opted for the low-cost direct banking model with iBanesto, which today ranks second among Internet banks, After ING.
Fashion has also signed up to the phenomenon. Even some streets of the big cities are characterized by concentrating H&M and the marks of Inditex, Primark Or Esprit. They have their own name, The masstige (of the combination mass And Prestige). “Consumers are looking for the cheapest, so that then the product is actually a commodity. But sometimes you look for design and prestige, but equally affordable, as the clothes of Zara, For example”, says Cuesta. The messtige is a low cost with an emotional approach, so it is not uncommon for H&M has turned to the divas Madonna or Kylie Minogue to achieve more notoriety.
Is low cost synonymous with low quality?? “Not at all”, says resounding Rubén Sánchez, spokesperson for the consumer organisation Facua. “In principle there is no problem. No more than what another traditional society can give. There is if they force to hire accessory products outside the offered price, as some airlines do. But most companies sell cheaper because the average prices of the sector still give room to win.”, explains Sánchez.
However, some companies refuse to advertise themselves as low cost. Explained by lawyer Bettina Gölzenberger, founder of Lomaslegal. “We became known as low cost, but we have abandoned that label because it seems that in services such as the legal profession the quality is being lowered. It's not like that., and in fact I do not want to stop influencing that we are more economical”, Holds. “Are low cost But high quality [high quality]”, juan pardo redundant, of Legálitas.
As the crisis progresses, no one risks saying that the sector is safe. some airlines, For example, have been battered by the rises of the fuels and others have had to reduce the quality of their service. In any case, all those consulted agree that they will suffer less than the rest. Antonio López, by Uned, remember that fast food restaurants have increased their turnover. “The target audience is different. It is a capitalism of popular consumption, that has been able to expand its spending horizon with more affordable prices”, Ensures. And whims, needs and cravings made needs maybe happen, even more so in times of crisis, by low-cost companies.
Change of mentality
The rise of low cost has a lot to do with the popularization of consumption. But that doesn't mean the buyer is more passive and acquires everything.. No, this move is making it easier for one more consumer to emerge Smart,
that before buying uses all the information you have at your fingertips, including Internet, which has favoured transparency. And, therefore, know all the alternatives that are within your reach.
“There will be more search for the bargain, No doubt, but good service will also be required. You will go for the reasonable”, says Antonio López, professor at Uned. And he has a critical mood.. I mean, knows that in some cases (the clearest, that of airlines) what gets cheaper is the cost of access. But he is also aware that everything accessory will have to pay for it..
The extension of low cost has a lot to do with a change in the mentality of the middle class.. And especially of your preferences. “The middle class stops behaving like a nouveau riche by consuming, and instead of talking about how expensive it has cost you something, prefers to brag about how cheap things cost you”, adds Félix Cuesta, professor at the Instituto de Empresa and president of the Virtual Business Advisory Center.
Lopez agrees with him. “When I got married does 15 Years, the most important thing about a house for the family was the dining room, to which most of the money was dedicated. Today it is no longer that luxury space. It is a functional site. And Ikea saw it clearly. The representative of a family is no longer the dining room, is the plasma TV and the car! Social bookmarks have changed”, Explains.
But consumer behavior is not always predictable.. “There is another dimension of the superfluous”, says Lopez. “The consumer mixes both, the cheap with the expensive. From time to time small indulgences are allowed and this fidelity is skipped.”, says Cuesta. Esade professor Josep-Francesc Valls agrees with Cuesta. “A tourist can hire a cheap flight and then go to a much more expensive hotel or go shopping”, Says. I mean, allow you to rationalize your budget and spend more money on what you enjoy most.
Convinced that everything leaves a mark, I help companies better connect with their stakeholders through personal branding programs (personal brand management) and employee advocacy (programs of branded internal ambassadors).
Socio of Soymimarca's Integra Personal Branding, Brand Directory of Omnia Branding, I also collaborate with Ponte en Valor, Brandergizers, MoreThanLaw, Noema Consulting and Quifer Consultores.
I participate in various programs at IESE, ISDI and EAE, among others. Collegiate advertising, Master in Marketing. Humanities Degree Student.
My advertising DNA comes from 20 years in agencies: Time/BBDO, J.W.T., Bassat Ogilvy, Saatchi & Saatchi, Altraforma and TVLowCost among others.