Have you ever heard of the term Lipstick Effect before?
To put it simply, the Lipstick Effect suggests that when the economy starts to slow down, consumers will spend money on small indulgences such as lipsticks; to make them feel better about themselves and to maintain a sense of normality in life. As a result, the sales of lipsticks tend to rise during a recession.
In other words, consumers may be reluctant to spend money on big-ticket items such as expensive skincare products or cosmetics, but one lipstick is not going to break the bank. This makes consumers feel good about themselves, and sometimes, forget about current hardships and troubles of life, even just for a short period.
Similar terms and phrases such as “Minor Happiness” or “Small Happiness” have been used in Asian countries to describe equivalent experiences.
One example of this phenomenon is when a customer is unwilling to eat out at fancy restaurants regularly, but instead, visits a supermarket to purchase raw produce, alcohol, and/or drinks so that they can cook and recreate the same experience and feeling they would have had at the restaurant in the comfort of their own home.
These customers may also take photos or videos of their creations, to share with their friends and community on social media.
So how does the Lipstick Effect affect you as a business and what strategies could you implement to take advantage of this phenomenon?
- Understand change, both in your target customers and in the current economic environment, and how this could affect your marketing strategy.
- Diversify product offerings to include affordable luxury items, to provide the emotional benefit of a small but meaningful indulgence.
- Focus on value for money, and ensure other benefits such as quality, durability and versatility are highlighted. This will help frame your customers’ purchasing decisions in their minds as smart investments.
- Engage with customers to build user experiences that uplift your customers’ spirits and build a sense of community.