The lipstick effect is the theory that when facing an economic crisis consumers will be more willing to buy less costly luxury goods. Instead of buying expensive fur coats, women will buy expensive lipstick. I set out to see if I could find any data to back this theory and to see if it is an area worth investing in.
The history of the lipstick effect
The “lipstick effect” can be traced back to the Great Depression of the 1930s. In the four years from 1929 to 1933, industrial production in the US halved, but sales of cosmetics rose. Putting on a happy face during World War II, aided by the movie industry, gave lipstick and face powder respectability. It became the patriotic duty of female citizens to “put their face on.” Given its low cost compared to other luxuries, it has been considered the acceptable indulgence in hard financial times.
Search engine volume for “lipstick”
Regular readers know what I am going to do next. I tested the search volume in Google Trends.
At first glance, search volume for lipstick and search volume for recession seem to overlap pretty well. However further research and I do encourage you to research any trend thoroughly, shows that “lipstick jungle” can account for most of the increased volume with one exception. Lipstick Jungle is a popular American TV comedy-drama.
As you can see here, “lipstick jungle” and “lipstick” give almost exactly the same trend in search volume (compare red and green lines above). Further the one discrepancy in Sept 08 can be accounted for by the Palin – Obama lipstick remark during the American presidential election campaign.
Lipstick Effect still controversial
In summary, search volume doesn’t provide any support to the lipstick effect theory but this exercise does teach us to be very careful in interpreting trend data and to spend time researching deeply before investing.
Cosmetics is a relatively robust area and is well suited to the online sales environment. Good domain names in this area as well as developing related domains as e-commerce websites can pay off. Good planning, a good business model and thorough research are essential.
You can read more on the lipstick effect in the NY Times article from earlier this year
Hard Times, but Your Lips Look Great
{ 6 comments… read them below or add one }
Nice writing. You are on my RSS reader now so I can read more from you down the road.
Allen Taylor
Never knew about the lipstick effect — interesting stuff.. Good point about carefully analyzing search terms. Thanks for sharing Barry
Reece, I hadn’t heard of it either until recently. I have been searching around for recession-proof areas and this turned up.
Allen, Glad you liked it.
Not something I had heard of before, Interesing read
Big news story ran yesterday on how comfort food consumption is on the rise…. in particular Hamburgers. So it seems the phenomenon is real!
I own the domain name lipstickeffect.com Make me an offer think of the possibilites.