Using the Lipstick Effect

The shopper index company Catalina recently published an update to their Shopping Basket Index to compare the aggregate price of 10 popular consumer packaged goods between 3rd Quarter 2021 and 3rd Quarter 2022. Not surprisingly, all the categories showed substantial inflation.

Hand and bath soaps came in at #3, with Q3 2022 prices 19% higher than Q3 2021 prices.

Soaps and detergents came in at #10 with a 6% increase.

Calculations from the consumer price index 2021-2022 indicate that cosmetic prices only increased 1.84%.

Prices vs Sales

Prices are up, but what about sales?

Economic information available leans toward the fact that sales are down in most categories. People are conserving and budgeting wherever possible. However, the beauty industry was the only category with increased sales volume (about 14%).

According to research company NPD, a large portion of that was from prestige beauty product sales by consumers in households earing over $100K per year increased 15% from Q3 2021 to Q3 2022.

The Lipstick Effect

While prestige beauty product sales rose 15%, lipstick sales rose a whopping 32%. Why? It’s called the Lipstick Effect.

The concept of the Lipstick Effect was coined by Estee Lauder in 2001. It is the idea that when the economy is tough, people tend to spend more on small luxury goods (like lipstick). In other words, when people have limited discretionary money to spend and can’t afford bigger ticket items, they buy smaller luxury goods to feel a little better. Like lipstick.

Increasing Your Sales

Handcrafted soap is very similar to lipstick when it comes to being a not-too-expensive luxury item. It can be that little luxury pick-me-up that someone CAN afford.

Consider positioning and marketing your spectacular and beautiful soaps as a way to “do something special for yourself.” When times are hard, a shower or bath with a yummy soap may be just the thing!


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