According to several sources, the 'Lipstick Effect' occurs when consumers facing an economic crisis will increase their spending on more affordable luxury items such as lipsticks and cosmetics.
Interestingly, the lipstick sales in the US doubled after the terrorist attacks on 9/11, and in recessions the sales of lipsticks was not only unaffected, but actually went up by double digit figures. In Australia, similar trends have been observed during times of recession.
So why is it that women turn to lipsticks and cosmetics when times are tough? I guess it's mostly psychological. When holidays, cars and other luxury items become unaffordable, women turn to less expensive items to cheer themselves up. Most women would sooner give up silk scarves or designer shoes than mascara or eye shadow, which they consider to be more essential.
It is no coincidence, that at the same time the recruitment of new consultants wanting to run their own home based business selling cosmetics is also increasing. As 'normal' jobs start to disappear, people are looking for other ways to make money. As a result, multi level marketing and direct sales companies experience record growth in times of recession.
The attraction of starting a business of your own in times of recession can be put down to several factors:
- unlike franchises only a low start up investment is required, mostly under $1,000
- the convenience of working from home saving travel time and petrol costs
- the ability to work flexible hours which can be worked around other commitments
- great company incentives to help new consultants get started
- excellent commission rates and bonuses for reaching sales targets
- extra benefits such as overseas travel and company vehicles
- personal recognition for high achievement.
In times of gloom and doom, the mere fact of being recognised and rewarded for effort has a great impact on confidence levels and ultimately success. So it's no wonder that home based businesses are growing at 20% when other industries are closing their doors.
There are many direct sales and multi-level marketing opportunities out there. Do your research and make sure you feel comfortable with the company culture and reward systems before you join up.
Ultimately, every business works if you do - so best of luck in your new venture!