This paper explores the role of the "Lipstick effect" on consumers’ decisions, from a managerial perspective. The chosen research context is New Luxury (Silverstein and Fiske, 2003). During hard economic times, people tend to buy less expensive prestige goods. This "Lipstick effect", first observed in cosmetics, has been noticed in major downturns such as the Great Depression, and the 2008 crisis (Hill, 2012). This paper considers masstige goods as a visible market response to the Lipstick effect. To explore the impact of Lipstick effect, this paper uses income as a moderating variable on the linkage between the major components of service quality and behavioural intentions, in a New Luxury context. 488 questionnaires have been collected within stores of an Italian jewellery retail chain. Results show that perception of store atmosphere still appears to be stronger for higher income consumers; lower-income consumers put a greater emphasis on more material attributes of the offering (i.e., staff interaction).
Keywords: Masstige, lipstick effect, democratic luxury, moderating variable, fast fashion jewellery, behavioural intentions