Lipstick effect
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The lipstick effect is the theory that when facing an economic crisis consumers will be more willing to buy less costly luxury goods[1]. Instead of buying expensive fur coats, for example, people will buy expensive lipstick[2].
It has been rumored that lipstick sales doubled after the 9/11 attacks on the USA,[citation needed] however, other sources say this is an overstatement. In a New York Times in article published May 1, 2008, Leonard Lauder is quoted as saying that he noted his company's sales of lipstick rose after the terrorist attacks. He did not claim they doubled.
The underlying assumption is that consumers will buy luxury goods even if there is a crisis. When consumer trust in the economy is dwindling, consumers will buy goods that have less impact on their available funds. Outside the cosmetics market, consumers could be tempted by expensive beer or smaller, less costly gadgets.
Juliet Shor in her book, The Over Spent American, talks to consumer's purchase of higher-priced, more prestigious lipsticks, specifically Chanel, that are used in public, vs. lower-priced, less prestigious brands that are used in privacy of the bathroom.
