©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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