“My friend, this one got HD video recorder, voice-guided GPS, 12MP camera, 3G, HDMI connection, on-demand web TV, and capacitive touch screen,” barked out the boyish looking salesman behind the counter.
Before I could reply on what I was looking for, he was already mechanically spewing out terms like HSDPA, super Amoled, Android 2.1, Wi-Fi 802, Twitter and Facebook enabled applications. When I finally told him that I was in the market for a basic mobile phone that only needed to make and receive phone calls and short messages, or in simpler term, a no-frills phone, he looked at me bewildered.
Quietly thinking that I was either an undercover officer from the Domestic Trade, Cooperative and Consumerism Ministry or simply plain crazy, he unenthusiastically shoved me one that fits my requirements.
“RM149. No discount!” The salesman quickly turned to another potential buyer standing next to me.
The no-frills business model is spreading rapidly across diverse industries around the world. These days, there are already no-frills hotels, airlines, personal insurance, colleges and universities, holidays, automobiles and even no-frills cinemas. In layman’s terms, no-frills refer to any service or product for which the non-essential features have been removed to keep the price low.
Of course when the conversation involves no-frills, the most obvious example of our very own AirAsia brand immediately comes to mind. A local daily recently reported that low-cost carrier AirAsia Bhd’s market capitalisation of RM7.6 billion had surpassed Malaysia Airlines’ RM7.5 billion. At the time of writing, the no-frills airline’s share price of RM2.58 topped MAS’ RM2.27 with its share price having surged 46.9% over the last three months compared to MAS’ 7.49%.
When you consider that one is a 9-year-old organisation while the other started way back in 1947, the above statistics are pretty commendable. While initially sceptical, a growing segment of passengers have become accustomed to not having in-flight entertainment, complimentary drinks and free titbits served during their flights.
From this inspiring example, it is perhaps time for more Malaysian SMEs and talented entrepreneurs to consider this form of business model to delve into to create a name for themselves.
A retail SME entrepreneur I met up with recently at an innovation-themed business conference had expressed his desire to go into starting up a no-frills supermarket. While this may not be apparent over here, it is a model that is being successfully adopted in other developed nations across Europe.
He believed that by reducing the use of shelves, optimising service staff, not giving shopping bags and leveraging on natural lighting during the day, he is able to offer consumers cheaper products.
Similarly, last week during a session on the treadmill, a fellow gym member commented that it would be ideal for users like him if fitness centres or gym membership came without television sets, towels, music, complimentary coffee and tea, newspapers and DVD movies rental. He does not need all of these services but he has to pay for them each month.
As we were discussing this while sweating profusely, news of Manchester United’s manager Sir Alex Ferguson reconciling with Wayne Rooney came over the sports channel showing on the LCD television panel in front of us. I’m pondering over if a no-frills football club would be possible.
After all, maybe if we don’t need to pay one single player £1mil (RM4.87 million) per month salary, we may not need to pay exorbitant prices to watch live telecast games over Astro or pay RM300 for the club’s Made-in-China jersey.
If a Malaysian entrepreneur can manufacture low-cost quality and trendy watches that does not come with Mickey Mouse on the face or Rolleks printed at the back, I would think that there will be a lot of people around the country that would love to have a watch that only tells time and date.
After all, how many of you understand the chronograph, vertical clutch and column wheel inside the watch or that it was made with 416 parts, 50 jewels, 140 oil points and five different lubricants?
As being frugal is now considered trendy by a fast growing segment of consumers, it would be timely to see more Malaysian entrepreneurs offering products and services that will meet this market demand. With consumers becoming more cost-conscious and less imprudent to unnecessary luxuries in their daily lifestyle in view of the uncertain global economic conditions, brands like AirAsia has evidently profited from it.
The message is clear: You don’t have to be the longest, largest or most luxurious brand to become the best. All you need is to be the best value provider. As for me, I’m still shopping around for the no-frills phone!