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What is the "lipstick effect", and why is it important? [Archive] - SOWPub Small Business Forums


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Dien Rice
January 2, 2009, 05:12 PM
In summary...

In hard times, people don't want to spend the big bucks for luxuries.
However, they still want luxuries to help "cheer them up".
Hence, they buy more inexpensive "small luxuries" - like "lipstick". That's why it's called the "lipstick effect".
For example, sales at L'Oreal (a cosmetics company) in the first half of 2008 were UP by 5.3%.
This effect can be traced back to the Great Depression - so it's been happening in every downturn for a long, long time.

This suggests that a good business at the moment could be inexpensive "luxuries"!

Anyway, here are some articles to check out...


It's an example of the type of business that can prosper in a "downturn"...

Any other ideas or examples?


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