Lipstick sales in the Recession Thesis Example | Topics and Well Written Essays - 4250 words

Lipstick sales in the Recession - Thesis Example Women although consider lipstick an essential but purchase it as a luxury to give themselves satisfaction. The results of the research have been supported by economic theories of Keynes, the income effect, the lipstick index and the elasticity of income theories. The results defy the substitution effect and basic economic theory of demand and supply. An interesting point is that lipstick sales are being depended upon to assess recession however, the trend of buying lipstick is changing and women are substituting it for lip gloss. Thus the question arises as to how much can the lipstick index be relied upon or whether the theory should be revised to include a certain pool of cosmetics for the theory to be more dependable. Recession has the global market and the economic conditions are deteriorating both in the developed and developing countries. The unemployment rate is increasing and the purchasing power of consumers is shrinking (CBS News 2008). Consumers now have to make choices and switch to cheaper commodities. Most cannot afford to purchase the luxuries they could afford in pre-recession times. Thus the overall prices of all goods are increasing due to inflation and according to the law of economics the demand for all products should decrease (CBS News 2008). However, as per Keynes (2009) there are certain products whose demand and supply rises in recession which is against the economic law. Lipstick is one of these products as its demand rises with the recession and increase in prices. The research focuses on why the demand of lipstick rises even with the increase in prices. So much so, that the sales of lipstick are used to indicate the recession patterns and to know whether recession has set in or not. The greater the sales, the more the recession. In the makeup industry the lipstick index is ardently used to see the recession progress. At the same time, it is also