Economic Recession and consumer behavior surround the "lipstick effect"
In the times of recession the consumer behavior also changes and especially for women the change can be observed as women cut their luxury spending from buying expensive bags and clothes and using the saved up money on lipsticks etc. It further establishes the point that women might spend more on beauty products in times of recession due to the reason that there are fewer financially strong men in the society. All these points gather up to a common hypothesis which can be stated as “Economic Recession and consumer behavior surround the lipstick effect”.
Lipstick effect can be termed as a theory wherein the customers when face any of the economic crisis, try to select the goods which are not very costly or may not be classified as luxury item. For example, the women instead of purchasing costly fur coats, will purchase expensive lipstick. This has been observed that the sales of the lipstick almost doubled after 9/11 attacks on USA, on the other hand, many of the other sources are of the view that this statement is only exaggeration. In an article published in New York Times on dated 01 May, 2008, Leonard Lauder, the owner of the company, stated that the sales of their lipstick products rose after the attacks by the terrorists. In his statement, it has not been claimed that the sale is doubled after the event of attacks. The fundamental or general assumption depicted from the people is that the consumers will purchase the luxury goods even though there are crisis situations in the country. When consumer reliance in the market is declining, they will purchase the commodities or goods which have very less effect on funds available with them .
In order to explain “Lipstick Effect”, following three steps are quite significant to understand the concept and can also be conveyed easily, these three steps are as under:
- When in an economy, there is a recession in the growth of the economy, or even if there are rumors for declining the market growth, the people change their strategies of spending the money. They shift their preferences from luxury goods to the goods or commodities which are included in the necessities of life.
- As the purchasing of GUCCI handbags or costly sunglasses by ladies have been stopped, in spite of the fact, that the women have now extra cash which they are willing to spend on procurement of other goods.
- This money or saving in the form of extra cash with the women should be treated as insurance during the likely recession which may come in the economy from time to time. But, the women, on the other hand rationalize that the expenditure of this excess amount be made instantly and this would give them satisfaction by purchasing extra lipstick than usually they buy, this is, hence known as the “Lipstick Effect”.
During the times of a recession in the market anomalous gains have been constantly produced for the products of beauty industry. Even at the time when the consumers stop expenditure on the recreational products and household goods. The Journalists have nicknamed this curiosity as “lipstick effect.” The lipstick effect has recently been sought out in a succession of studies; the results of the studies were printed in Personality Journal and journal of Social Psychology. The findings suggested that lipstick effect is factual. This is not only valid, but also deeply embedded in the psychology of women .
The term economic recession is not a phrase used in old times but it is a recent improvement in the human history. The human ancestors frequently went through the cycles of huge production and famine, each of these produced various reproductive strategies. While during the cycle of huge production, it is favored that the strategies which are associated with the postponing of the reproduction be adopted. While in the famine state or during the periods of the scarcity of a product, immediate reproduction is highly appreciated and favored. As far as the successfulness of these strategies is concerned, the second strategy is considered the successful one, due to the reasons that during the times of scarcity of the resources it reduces the probability of a good to be perished before reproduction of the other goods .
For women, the scarcity period also reduces the accessibility of the quality mates, because the preference of the women’s mate prioritizes the access of the resources. As a matter of fact the economic recessions in the market are associated greatly with the higher unemployment and negative or minimal returns after the investments, therefore, the news of recession may be considered as an indication to the women to secure the men financially i.e. those who are able to spend the resources in offspring rearing are soon becoming scarce .
The Wise women always understand that in order to progress in the professional life and to achieve certain goals in their career, only hard work is not good enough. For this purpose women also have to work smart. It is very crucial point for women to be perfect in all aspects of their personality. The women’s garments or dressing are quite significant in this context. The way how they package themselves is one of the first and foremost points of the communication whenever they meet someone. In fact, socially or professionally, for a women looking good unlocks many doors to get better opportunities for employment. When a woman looks pretty, she has always a keen sense of confidence that may allow her to intermingle confidently with others. Although both women and men economize consumer expenditure during the recession cues, but there is exclusion to the goods or commodities called the beauty products .
Four separate experimentation of the word with real data depicts that during the recession period of the economies, it has been observed from the experimentation that women’s desire for buying cosmetic goods and beauty industry products increases significantly. The findings of the experimentations constantly supported the lipstick effect. While women are primed with the news of the economic instability, it is observed that an enhanced desire for purchasing enhancing or attractiveness goods increases, on the other hand the desire to buy goods which do not improve their physical appearance reduces. Several experiments also revealed that this enhanced desire for the beauty products, accessories and clothing was fully arbitrated by a keen preference for the mates with these resources.
Recession cues enhanced the women’s desire for buying the designer clothing and expensive cosmetics, but not for the purchase of ordinary beauty products. The ordinary beauty products are not preferred by most of the women as these are quite less effective for improving their appearance. Furthermore, it has been discovered that the lipstick effect and a desire of woman to magnetize a mate are unrelated to the independent resource. Women of lower and higher socioeconomic status articulated an enhanced desire to purchase beauty products of luxury quality after primed with the recession cues. This recommends that a tentative economic climate guide women to intensify mate attraction irrespective of the need of their own resources.
As per the research of City economist, during the recession cues, in order to avoid the loss of customers spending habit, they simply start trading down the cheaper items from the market instead of luxurious to brighten them up. In addition, the lipstick effect has apprehended well in the recessions of past and in the countries having different traditions and culture. Beiersdorf Joshi, an analyst in RAB Capital, thought that recent sales from the huge cosmetic companies of the world- Shiseido and L'Oréal, Beiersdorf - proved that the lipstick effect as international economy has returned into its synchronized downturn since early 1980s, with high spending of the consumers on cosmetics products.
"Lipstick effect" can also be referenced from the huge Depression during the year 1930s. It has been evaluated from the studies that during four years’ period from year 1929 to year 1933, the industrial production halved in US, but the sales of the cosmetics did not stop even rose. During this period, in Germany the total unemployment rose more than 6 million, but the employees working for Beiersdorf industry did not experience unemployment. The Beiersdorf Company was nearly able to rise and did not discharge its single worker. More recently, the employment in US cosmetics industry increased during the recession period of the year 1990 and year 2001, on the other hand the employment in the other industries were being dropped. According to Dhaval Joshi, "lipstick effect" illustrates the performance in the stock market, with the products sector of European personal out performance by 100% in the three last recessions of early 1980s, 1990s and 2000s. The products sector of European personal is an outstanding proxy for international cosmetics sector as it is fully dominated by Beiersdorf and L'Oréal. This index has performed by 45% in the broader market .
The global and national economies have not yet been performing well for a long period during the recession cues, and the prediction for recovery seems to be bleak. During the last half decade, very small number of industries have performed well. However, if there is an industry that is just considered an industry of recession-proof environment is maybe the one that produces lipstick. Few say that heels and hemlines fall and rise with the condition of stock market. But the fact is that how things are on their place, is only true for the item that is lipstick. When the times are hard, the consumers stop investing in big items, the mortgages demand drops down, spending on furniture and carpets reduces, and the demand for purchase of the lipsticks increase. The women’s desire to buy more lipstick can be closely related with their need of financial security through getting financially strong mate which can be described by Maslow’s hierarchy of needs. Although the luxury goods come after the basic necessities in Maslow’s hierarchy of needs, in case of the lipstick effect; in the time of recession; lipstick is not a luxury good and rather it is a necessity for searching a financial secure mate. The conclusion from the study carried out in this paper can be drawn as that women are more affected by recession in respect of lipstick effect. After explaining all the above several facts and points, it becomes evident from this paper that the economic recession and consumer behavior surround the "lipstick effect".
References
Kelly, K. L. (2012). EcĚOĚNomĚIcs: A Simple Twist on Normalcy. Munster: Kersten L Kelly.
Khan, M. (2007). Consumer Behaviour. Seborga: New Age International.
Liselotte, R. (2010). The Lipstick Effect, Faded Or Long Lasting? Rotterdam: Erasmus University.
Richardson, D. R. (2009). The Impact of the Recession on Women. Canberra: Australia Institute.
Rubery, J. (2010). Women and Recession. New York: Taylor & Francis.
Sarah, S. K., & Donald, P. C. (1997). Lessons from the Recession: A Management and Communication Perspective. New York: SUNY Press.
