Economic downturns can be tough. People tighten their belts and cut back on spending. But did you know some products still thrive in economic downturns? This phenomenon is called the “Lipstick Effect.”
The Lipstick Effect is when people still buy small, affordable luxuries during tough economic times. The name comes from the idea that people still buy lipstick even when money is tight. Why? Because it is an inexpensive way to feel good and treat oneself.
Example 1:
During the Great Depression in the 1930s, sales of cosmetics increased. People bought small luxury items to lift their spirits.
Example 2:
During the 2008 recession, many businesses struggled. But Starbucks saw a rise in sales. People cut back on big expenses but still treated themselves to a good cup of coffee. It was an affordable luxury that made them feel good.
Example 3:
L’Oréal often thrives during economic downturns. Their tagline, “Because You’re Worth It,” resonates even more during tough times, reminding people they deserve a little luxury.
Why Does the Lipstick Effect Happen?
– Affordable Luxury: Small luxuries like lipstick, coffee, or a nice meal can make people feel better without spending too much money.
– Emotional Boost: Buying something nice, even if it is small, can give a quick mood boost.
– Sense of Control: When times are uncertain, people like to have control over something, even if it is just choosing a small treat.
There are ways for businesses to use the lipstick effect to their advantage. But that’s for a different post in the future.
How can you make your customers feel good during tough times? Ideas?
The Lipstick Effect: Thriving in Economic Downturns
