Little Indulgences

Little indulgences:10 Insights on where to grow business

Growth Stories

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“Individuals invest more heavily in one domain to make up for what is missing in the other domain” (Staines,1980)

Compensation theory

Estee Lauder coined the recession-proof 'lipstick index'

'Small luxuries' are things to get you through the bad times as well as the good

Today, nail polish also qualifies: up 65% '08-'11 (source:NPD Group)

the dipstick is lipstick

Ice-cream sales are rising in Greece

In Britain, M&Ms sales were up 12% in 2010

(source: Euromonitor)

against all odds

out with small austerity

Rise of small luxuries means declines in small austerities

Example: Danone's Activia creamier yoghurts are booming but health-focused Actimel struggles

Nestlé Eclairs are a recent hit in India: “with an irresistible outer layer of caramel and a yummy milky

filling, you will not find a better temptation”

trend is global

Royal Salute costs upto $600 a bottleAs the brand says: “it's a bottle you need not mortgage

the family home for” (!)

for all pockets

products > services

Surge in sales of pricier Unilever shampoos as compensation for fewer visits to the salon

Expensive food ingredients get a boost as people cut down on eating out

London Tea Company's recent launch of a white tea in silk bags swiftly overtook staples like Earl Grey

focus on NPD

problem with profits

Adding value can come at a cost. It takes six times as long to make silk tea bags; toothpastes which whiten cost more

to makeAs Unilever's Polson reminds us: “good innovation over time

should be margin-accretive”

Padora's charm braclets took the market by storm: an ideal 'pick-me-up' product

Then it pushed up the average price of these 'treats' by 40% in 18 months to $40

Result: the 2011 revenue forecasts were cut from 30% to 0

getting it wrong

Acknowledgement These insights are drawn from The Financial

Times article of August 6, 2011 “In the age of austerity, indulgence is back”

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