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©2013 The Corporate Executive Board Company. All rights reserved.
No Fuss, No FrillsConsumers search for low effort alongside low prices
Read This: To understand how consumers are redefining value — again.
by Gwyneth Holland, Aisling Balfe, Greg Hodge, Kathrin Schaarschmidt and Xue Bai
Business IssueBrands are still asking CEB Iconoculture Consumer Insights how they can premiumise basic
products, when they should be asking how they can make basic goods more appealing.
Price-savvy consumers are happy to equate “no frills” with “no excess”, but that doesn’t mean
they’re willing to make extra effort to secure great deals. Consumers are redefining what value
looks like yet again, meaning that brands must offer clear pricing, focused product ranges and
seamless purchasing processes. The new, true value is giving consumers what they want, and
then getting out of their way.
Where We’re HeadedThis research explores:
• How the “informed consumer” has turned into the “exhausted consumer”
• The new rules for value goods: less expense, less fuss, less time
TOP TRENDS 2014
oregemind ArchiMedia, Flickr.com
2 ©2013 The Corporate Executive Board Company. All rights reserved.
The informed consumer becomes the exhausted consumer Post-recession, value has never been more important for consumers across Europe,
leading them to cut costs where they can and turning many consumers into no-frills
types. And as their numbers have grown, so have their expectations. A smooth path
to purchase and edited product offer is no longer the preserve of boutiques and niche
brands — Europeans expect it as part of any no-frills offer. Now, “no frills” refers not just
to products stripped down to the basics, but to stripped-down purchasing processes too.
Europeans’ ability to spy great value has
only increased in the age of the “informed
consumer”, as they’ve armed themselves
with the feature- and price-comparison
details necessary to secure the best price.
But now consumers are shifting from feeling
informed to feeling exhausted. Yes, they
wanted to know all the necessary facts
to find the best value, but along the way
they’ve started to feel like they’re wading
through info — and like wading through
treacle, that’s a tiring process.
For no-frills consumers, it can be particularly exhausting, as finding a good deal takes so
much work. To find the cheapest energy package, consumers in the UK1 and France2, for
example, must unravel the mystery of around 100 electricity and gas tariffs. Customers
of budget airline Ryanair must traipse
through 17 steps to purchase a cheap
flight online. Meanwhile, supermarkets
fall over themselves to promise the
cheapest prices, yet layers of EDLP, special
promotions and loyalty discounts make it
nigh on impossible for consumers to be
sure if any retailer is telling the truth.
Keeping things simple helps consumers
make decisions, as pointed out by
Barry Schwartz in his TED talk “The
Paradox of Choice” in 2004 and again
Thrifty Europeans and the value of simplicity CEB Iconoculture’s values-data spotlights the importance of simplicity for thrift-
minded consumers in Europe. Simplicity ranks 24th of 91 values for consumers who
say “thrift” describes them, while simplicity ranks only 45th for all other consumers.
Simplicity — the hallmark of no-fuss, no-frills positioning — is the starting point for
winning over the time- and cash-crunched consumer.
Base: Total French, German, Italian, Spanish and UK consumers age 15+. Thrift-minded consumers gave a 6 or 7 for the value of thrift on a 7-point scale, where 1 means “not like me at all” and 7 means “describes me exactly.”Source: CEB Iconoculture Values and Lifestyle Survey, October 2013
Ranking, Thrift-Minded Consumers
Ranking, All Other Consumers
Difference in Relative Rank for Thrift-Minded
simplicity 24 45 +21
Marshall Segal, Flickr.com
by Sheena Iyengar in hers, “The Art of Choosing”, in 2011. Yet brands are still holding
on to the dream that was choice: making consumers earn affordable goods by working
through labyrinthine pricing policies, multilayered product offers and fussy purchasing
processes. Each click, each weighing-up of product options and prices takes time out of
consumers’ day, and with a growing sense of their own time poverty (whether they really
are super-busy or not), they expect every transaction to be faster and fuss-free.
CEB’s latest research, The Effortless Experience3, which explores
drivers of loyalty in customer service, points out that four out of
five triggers for disloyalty are about perceived effort on the part
of the consumer, while those brands which have
low-effort service interactions outperform the market by 31%
when it comes to repurchase and positive word of mouth.
Phil Dragash, Flickr.com
3 ©2013 The Corporate Executive Board Company. All rights reserved.
More for lessDisaffected by cheap and low-quality goods and exhausting deal-hunting, strapped
consumers needed to regain confidence in cheapness again. With high quality and low
prices as their foundation, the brands detailed below have raised standards in their
categories by homing in on what consumers really want — simplicity and low effort —
and discarding the rest. Overcoming snobbery or wariness about cheapness with charm
and honesty, these new or rejuvenated no-frills brands have discovered that “less is
more” really can pay.
No frills vs. new frills: A tale of two airlines UK-based budget airlines Ryanair and easyJet
were pioneers of the cheap flights that opened
up European travel over the last decade. Both
aim to undercut flag-carriers with no-frills
services that consumers can augment according
to need. Except their ideas of what “no frills”
means have diverged, with Ryanair charging
passengers extra for basic amenities, such as
hold baggage, boarding-card printing, allocated seating and paying by card online.
CEO Michael O’Leary always believed that consumers would be willing to put up
with anything for a cheap flight, but he’s been proven wrong with rising complaints
and falling bookings. Meanwhile, easyJet boasts of a simple booking process and
cheap fares which include the things consumers consider essential to airline travel
— baggage allowance, free e-tickets, reserved seats — garnering a more positive
reputation and growing market share.
Skoda-Auto.com
Transportation: Low-cost Czech car marque
Skoda was a laughingstock for many years because
of its poor safety record and build quality, but its
models now regularly win European industry and
consumer awards for design, economy and safety.
Aldi.Sued, Facebook.com
Food: German discounter Aldi has won UK
Supermarket of the Year twice in a row. The retailer’s
ads put its products on a par with leading brands
in terms of quality (but at significantly lower
prices), and it seems that consumers agree. French
supermarket chain Super U has increased price
transparency with on-shelf breakdowns of what
makes up their prices. Out of the €2.49 cost of a
pack of apples, for example, producers receive €1.05,
while Super U receives €0.56. The rest covers taxes
and the costs of packaging.
Generator Hostels, Facebook.com
Travel: The Pan-European hospitality group
Generator Hostels offers the things that all travelers
(especially Millennials) now consider important in
accommodation: great design, comfort, free WiFi and
the option of private, twin, quad or dorm rooms — for
rates that beat even Airbnb (around €10 per night for
a private room).
OvoEnergy.com
Home: UK energy provider Ovo was set up to
offer simpler, cheaper tariffs that incorporate more
renewable energy sources than the big providers.
Amid consumer uproar over price hikes from giants
like EDF and British Gas, Ovo has positioned itself as
“cheaper, greener, simpler” and gained more interest
from consumers and the media.
HonestBy.com
Fashion: Belgian designer Bruno Pieters has
launched Honest By, a high-end online fashion brand
which breaks down the costs and materials involved in
every garment, creating rare transparency for the luxury
goods buyer. Japanese brand Uniqlo has successfully
expanded in the UK, Russia and France with a tightly
edited product range that eschews frills to offer high-
quality clothes at affordable prices. The brand offers
little variety beyond colour options, but consumers are
reassured that the model brings great value.
Michael Renner, Flickr.com
4 ©2013 The Corporate Executive Board Company. All rights reserved.
References 1. “Energy tariffs confuse customers”, Express.co.uk, 15 September 2013
2. “The complex effects of reward-penalty on energy prices” (French), LeMonde.fr, 12 March 2013
3. The Effortless Experience, Matthew Dixon, Nick Toman and Rick Delisi, CEB, 2013
More from IconoIQ Webcast: The Price Is Wrong: Why “Value” Is Not a Numbers Game
Observation: London restaurant gets real about the price of wine
Observation: French supermarket gets transparent with pricing
Observation: Enough java jive: Consumers start brewing coffee on the stove
Observation: Belgian fashion brand promises transparency about production costs
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