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Upper Intermediate course

21/10/15

NO-FRILLS CHIC COMPANIES IN MEXICO

How low cost goods and services companies are investing in style to add value without
increasing cost.

INTRODUCTION

The term frills refers to a style decoration. It means a service or a product without any
unnecessary features.
No Frills concept started in the beginning of the 1970s in the USA with Southwest
Airlines (Brueninghaus, 2004). But it was so well accepted that other companies took the idea in
order to offer low cost goods and services with high quality elements, exceptional customer
service at bottom prices.
The tendency now before buying a product is to analyze the alternatives and compare
prices. By this way people buy at the most convenient price and save money (Fedele, S. 2011).
Thats why no-frills chic companies are being so successful in Mexico.

MAIN TOPIC

With increasingly demanding mexican customers looking for high quality products at
an affordable price, Companies realize that offering low cost services could give them the
opportunity to increase their profits as well as reach different market sectors. Now we can find
no-frills services in Hotels, Supermarkets, Education and Airlines (Trendwatching, 2004). To be
more specific there are three kinds of no-frills chic companies in Mexico:

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A) Corporations that offer either low- cost or luxury products & services:
Fabricas de Francia and Liverpool
Tec Milenio and Tec de Monterrey
VW and Audi
These companies try to cover all the population segments with both luxury and no-frills chic
products or services in order to increase their profits
B) Companies competing against big Corporations:
Interjet vs Aeromxico
Cityexpress vs Fiesta Inn
Smartfit vs Sport City
These companies reduce cost by removing all that does not add value but maintaining high
quality and a good customer service.
C) Important brands offering products from previous seasons:
Premium Outlets Punta Norte
Important brands offer discounts from 40% to 70% on their own outlets stores.
Even though this business trend has been only 15 years in Mexico its successful is
overwhelming. Just mention two examples:
A) Fabricas de Francia and Liverpool
Department stores designed to meet the needs of the entire family. Fabricas de Francia
focuses on people whose monthly income ranges from 6,800 to 35,000 pesos. The variety of its
products is lower and the size of store is smaller than Liverpool, but offset this with a very
friendly customer service. Their main competitors are Coppel, Famsa and Elektra. There are
nowadays 23 stores in Mexico and they have been well accepted by customers.

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On the other hand Liverpool focuses on people with the highest incomes. Their seventy
stores are big and you can find always fashion products. Their main competitors are Sears and
Palacio de Hierro. (Santa, I. 2015)
Both stores cover 73.80% of the population.
B) Aeromexico vs Interjet
Aeromexico began to reward their frequent passengers with Gold, Platinum and even
Titanium Cards. Boarding is by category, so it is slow and impractical.
Looking for increasing revenues, Aeromexico compacted their seats generating many
drawbacks to passengers.
Interjet instead abolished business class. Boarding is made strictly by seat number, this
decision becomes fast and effective their service. Besides all their airplane seats are made of
leather what makes the journey very pleasant. (Garza, R. 2013)

CONCLUSION
Nowadays that Mexican economy limits the purchasing power of the population, nofrills chic companies are being successful not only for reducing costs, but also for changing the
way of providing the service giving added value to the customer.
This business trend is the option for the most cost-conscious consumers which caring
less about traditional status symbols and expect discount store prices but with boutique service.
In my view, Mexico outlets are not yet at the level of the United States ones. Despite the
fact that many brands are sold in both countries, the discounts are not so good here. There is still
much to do to make people perceive the added value in these kind of businesses.

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BIBLIOGRAPHY

Trendwatching.com.

(2004).

No-frills

chic.

Retrieved

October

11,2015,

from

http://trendwatching.com/trends/NO-FRILLS_CHIC.htm

Brueninghaus, S. (2004). Applying the 'No Frills' concept to other specific Airline Businesses.
Retrieved October 19, 2015, from http://www.grin.com/en/e-book/23446/applying-theno-frills-concept-to-other-specific-airline-businesses

Fedele, S. (2011). Development & Construction 'No Frills Chic' vs. 'Extra Chic', Design vs.
Affordability: New Trends in the Hospitality Industry. Retrieved October 14, 2015, from
http://hotelexecutive.com/business_review/2658/no-frills-chic-vs-extra-chic-design-vsaffordability-new-trends-in-the-hospitality-industry
Fonseca, M. (2011, October 10). Empresas low-cost, una estrategia para incrementar ganancias.
Retrieved

October

8,

2015,

from

http://www.informador.com.mx/economia/2011/334249/6/empresas-low-cost-unaestrategia-para-incrementar-ganancias.htm
Santa, I. (2015, January 26). Por qu Liverpool puede ser el nuevo dueo de Suburbia?
Retrieved

October

15,

2015,

from

http://www.cnnexpansion.com/negocios/2015/01/23/por-que-liverpool-podria-ser-elnuevo-dueno-de-suburbia
Garza, R. (2013, August 1). Que est perdiendo Aeromxico y que est ganando Interjet?
Retrieved

October

15,

2015,

http://www.reporteindigo.com/reporte/mexico/aeromexicointerjet

from

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