👉 During early 2000 when the US economy went into recession & great depression following the dot-com bubble burst, a certain customer's buying pattern was noticed.
👉 Leonard Lauder, a former chairman of cosmetic company Estee Lauder, noticed that particularly "Lipstick💄" sales went very higher (than usual) even during huge economic crisis.
💄That's when be coined the term "Lipstick effect" which basically means consumers will be more willing to buy less costly luxury goods instead of buying expensive fur coats, designer shoes, purses etc.
🔺Lipsticks aren't inferior goods, economists say, but they could be small indulgences, an inexpensive treat meant to substitute for much costlier items like purses, fur coats etc.
🤷 The lipstick effect is when consumers still spend money on small indulgences during recessions, economic downturns, or when they personally have little cash.
The ‘lipstick’ in the above explanation of the psychology of consumers does not literally have to be a lipstick. They can be anything that could be a substitute for expensive items.
🇮🇳 This Lipstick effect played out in India during covid crisis. Companies such as Hindustan Unilever Ltd, the owner of the Lakme brand, and Nykaa have reported a surge in cosmetics & personal care sales amid weak economic activity.
💡This gives a company/brand a chance to launch products that could possibly play into Lipstick effect psychology.
Isn't this interesting?
🤔 In this reference to context above, what was your "Lipstick effect?"
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