Why people buy expensive things during recession? : The Lipstick Effect

The lipstick effect states that people tend to buy certain premium quality products even when the economy is undergoing a crisis. This can be reframed as people remaining ‘loyal’ to the brands. It is all about priority. Some brands have been successful in getting connected directly with the customers’ hearts. The products, even though are expensive, will be bought because they are what the customers have become accustomed to. They are what makes the customers happy.

ust like any great invention is named after its discoverer or the era it was discovered in, this effect is named the way it is because: This behavior was observed for the first time in the American economy during the Great Depression when a reduction in industrial production by half and even more was witnessed but the cosmetics industry reported a 25% increase in sales. This rise in sales occurred during the recession of 2008, cosmetics behemoth L’Oréal experienced a sales growth of 5.3% during the first half of the year.