Reproduce Article “I am not stupid” Lluís Pellicer Aparecido in The country yes, 11 November 2008

The bargain of a lifetime made business. Flights low cost, ropa low cost, abogados low cost… Even massages! an industry doomed the concept low cost is consolidated in Spain. The price of products differentiates these companies, which they continue to grow around a public that increasingly seeks more plum.

They do two out of three consumers, they buy brands white, go to supermarkets hard discount outlets and are regulars at the sales. Citizens called market research low cost and that, nevertheless, every day they spend the not inconsiderable amount of 36 millions of euros.

The slogan of an ad, I am not stupid, He came to define a new type of customer: who knows how to value the quality, but it is also able to compare and stay with cheaper. Airlines became fashionable in Europe the concept low cost with a cost structure that whenever fuel is expensive is in distress. Ryanair, Easyjet and Vueling They are just three of the best known. The success of these lines forced flag carriers such as Iberia to launch its own budget airline.

The same has happened in many other sectors, from everyday purchases to mobile phone, to fashion. Some companies have devoted years to this segment, but they have taken root after the middle class has taken over the. The crisis strengthens moment. In addition to allowing squaring some family budgets, still leave space for leisure.

Bettina Gölzenberger businesswoman came open a legal services company in Barcelona at an affordable price when it was in an establishment massage 1.000. “The image of lawyers is often difficult to access, until something rancid. I wanted to do the opposite: Local functional, where you can go without an appointment and with very transparent pricing”, assures. And launched Lomaslegal, a fee 30 euros for minimal consultation.

But not only this niche market is exempt from competition. legitimacy, for example, It offers its services 88 euros a year thanks to a cost structure based on economies of scale: has 250.000 Direct customers and other 8 million through agreements with companies. “We realized that only 20% citizens flocked to a lawyer, and in most cases, serious issues”, He explains its deputy general director, Juan Pardo.

The triumph of the low cost has to do, precisely, with the popularization of services and consumer goods that were not previously available to everyone. Antonio López, Professor of Sociology at the UNED, He explains that the emergence of these firms coincided with the existence of a “pocketed customer demand could not be satisfied by the traditional channel”. A report by consultancy TSN figure the volume of these consumers in the 22% of the total. A group concentrates 18% spending on consumer products, the first to have their labels low cost under the umbrella of store brands or white. A third of these citizens, Besides, they go to super reductions as Mercadona, Day or Lidl.

According to the report, These consumers usually buy white markings and use cheques discount. The crisis does nothing but enhance this behavior. Pocket fits, and during the first nine months of purchases of consumer products they fell 2,5% in every home over the same period 2007, according to TSN and the Spanish Association of Manufacturers and Distributors. White brands gained market share, and it raised the number of people who claim to be guided first by the price and looking for products on sale. Even El Corte Inglés has launched allied, its low-cost brand.

Airlines and consumer goods are the source of phenomenon low cost. “It all starts in the United States, in the sixties. With air liberalization arise companies that differ by price. The phenomenon is then mixed with the food distribution”, explains Professor Esade Josep Francesc Valls.

The boom It arrives in Europe in the nineties, and with other airlines come first service companies. But they burst with overwhelming force in the XXI century. “The middle class borrows, increases your standard of living and spend well above what it did before. Here comes a very important mass of consumers with real purchasing power”, says Felix Cuesta, professor Instituto de Empresa.

And some companies drag other. The biggest example is the Swedish multinational Ikea, It is offering more affordable furniture eliminating assembly costs and transfer. And immediately, yes, magnet effect: emerging companies in the industry with very competitive prices with a similar model.

Very noisy advertising, these companies are making their way. Dozens are activities that have their low-cost companies. This label has made his fortune in the sector hotelier, establishments that are located in metropolitan areas of large cities. The industry estimates that in 2010 there will be between 40.000 and 50.000 cheap rooms two and three stars, when in 2006 just had 8.000 in all Spain. In this market there are companies that are dedicated only to this segment, as Sidorme, but big also had to be positioned there. One of the first to do so was Accor, which continues to expand its brands Ibis, steps and Formula 1.

The low cost and takes time extending to all corners: computing (Media Markt), mobile phone (Yoigo, MÁSMovil), insurance (Direct Insurance)… Even the automotive industry, in which India and China are taking the initiative. Indian conglomerate Tata Tata Motors has launched the Nano, a car for four people 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 in the sector, Anfac, It indicates that the vehicle has not yet reached Europe. And when you do, It will probably be more expensive, Since it will be adapted to the rules of safety and environmental. “these markets are destined to supply cars, with needs motorization”, He holds employers.

Even so, A study by consultancy Roland Berger notes that demand for these cars will grow much more than the rest. In 2012 they require at least 18 million units, and not only in emerging countries. Proof of this is that Renault He used his Romanian subsidiary Dacia to launch a cheaper model would first be sold only in developing countries and then marketed in Europe under the slogan The car 5.000 euros. Prices of cars Announces web, However, Today exceed 7.000 euros.

Internet has been, definitely, the key factor for takeoff of these businesses, since it has allowed them to reduce costs and address a target audience directly. “It has been instrumental. Tremendous. Not only for business. It allows us to dive, get all kinds of information… find alternatives”, says Felix Cuesta. Network has allowed the concept low cost It has also reached the financial sector. Banesto, for example, He opted for the direct banking model Low Cost iBanesto, now it ranks second among Internet banks, after ING.

Fashion has also pointed to the phenomenon. Even some streets of big cities are characterized by concentrating H&M and brands Inditex, Primark or Esprit. They have names, yes, mass tiger (Combination mass and prestige). “Some consumers seek cheap, so that then the product is actually a commodity. But sometimes it seeks to design and prestige, but also affordable, as clothes Zara, for example”, says Cuesta. The measured term It is a low cost with an emotional approach, so it is not uncommon for H&M has resorted to Madonna or Kylie Minogue divas to achieve more notoriety.

Is synonymous low cost of poor quality? “Not at all”, resounding says Ruben Sanchez, spokesman for the consumer organization Facua. “In principle there is no problem. No more than can give another traditional society. If there is necessary to hire outside accessory products offer price, as some airlines. But most companies sell cheaper because the sector average prices still give margin to win”, explains Sánchez.

However, some companies refuse to advertise as low cost. Explains the lawyer Bettina Gölzenberger, founder of LOMASLEGAL. “We shook known as low cost, but we have abandoned that label because it seems that services like law is lowering the quality. It is not like this, and in fact I can not fail to influence that we are cheaper”, holds. “We are low cost but high quality [high quality]”, Juan Pardo redounds, but legality.

As the crisis unfolds, no one dares to say that the sector is safe. some airlines, for example, They have left the battered rises fuels and others have had to reduce the quality of their service. In any case, all respondents agree that suffer less than the rest. Antonio López, south Unit, recalls that fast food restaurants have increased their turnover. “The target audience is different. It is a popular consumer capitalism, It has been able to expand their horizons spending more affordable”, assures. And caprices, needs and cravings facts may pass needs, even in times of crisis, by low-cost companies.

Mentality change

The rise of low cost has much to do with popularizing the consumption. But that does not mean that the buyer is more passive and acquire all. Isn't it?, this movement is facilitating the emergence of a consumer more intelligent,

before buying used all the information you have at your fingertips, including Internet, which it has favored transparency. Y, thus, knows all the alternatives that are its scope.

“There will be more cushy search, definitely, but good service is also required. It will go so reasonable”, says Antonio López, professor of UNED. And it has a critical mood. That is to say, know that in some cases (the clearest, the airline) It cheapens what is the cost of access. But he is aware that all accessory must pay also.

Low cost expansion has much to do with a change of mentality of the middle class. And especially their preferences. “The middle class stops behaving like a nouveau riche consuming, and instead of talking about how expensive it cost him something, rather boast about how cheap things cost”, Felix added Cuesta, Business School professor and president of Virtual Business Advisory Center.

Lopez agrees with him. “When I got married ago 15 years old , most importantly a home for the family was the dining room, that most of the money is spent. Today is no longer the luxury space. It is a functional site. E Ikea saw him clearly. As representative of a family is no longer the dining room, It is the plasma TV and the car! They have changed the social bookmarking”, Explain.

But consumer behavior is not always predictable. “There is another dimension of the superfluous”, Lopez says. “The consumer mixes both, cheapness with expensive. Occasionally small indulgences are allowed and this faithfulness skip”, Cuesta holds. Cuesta matches Esade Professor Josep-Francesc Valls. “A tourist can hire a cheap flight and then go to a much more expensive hotel or go shopping”, stated. That is to say, They allow you to streamline your budget and spend more money on something you enjoy more.