Scarcity Marketing

Have you ever heard – Less is More?

That Marketing Lady dives into the concept of Scarcity Marketing

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Scarcity Sells? Doesn’t it! 

The fear of missing out is real. As humans, we want what we don’t have or rare rather than something far more readily available and abundant. In psychological research circles, the scarcity heuristic stems from the concept that the more difficult it is to acquire an item or a service, the more value it has. 

The principle behind scarcity is loosely based on the fact that – If a product is low in stock, a limited edition, or sold out, it is perceived as a great product as everyone seems to be purchasing it. Leveraging this concept of scarcity heuristic to influence the audiences has been widely used in the marketing industry, also known as scarcity marketing. 

(Stephen Warren, Jerry Lee, and Akanbi Adewole’s 1975 Cookie Jar Experiment)

Observations & Conclusions: 

In the first experiment, even though the jars and cookies were identical. Scarcity influenced the participants to perceive that the jar with the fewer cookies had more value since it was consumed more than the other jar. 

In the second experiment, the jar with only two cookies received a surplus of 8 more, was considered less valuable than the jar whose cookies were taken away. In this case, the study showed that the product’s perceived value decreased when it started as scared and then became abundant. 

The Scarcity Heuristic tendency here places a higher value on products such as the jar with two cookies perceived to be scarce and a lower value on products abundantly available like the jar with ten cookies.

Creating an atmosphere of scarcity marketing entails limitations placed on products and services to increase sales.

Now you would argue that the goal is to sell more and not less. But herein comes the fact that less can sometimes be more. We live in an age of competitive markets where the consumers have unlimited options to choose from, and everything is designed for the ease and convenience of the king – the consumer. If the consumer is not satisfied with your product or service, another option is just a click away. By limiting your product/service availability, you are essentially tapping into creating a sense of scarcity in the market. This implies that the consumer perceives and believes the offer over the product or services will be gone if they don’t purchase it immediately; also, the concept of owning or experiencing something exclusive is a powerful sales strategy to stand out in saturated markets.

How businesses put scarcity to work for their brand?

Scarcity marketing essentially works on two principles:

• Time-related 

• Quantity related 

How to travel and rentals agencies use urgency tactics like “a high number of people are looking at the property to stay on the same dates – Book Now,” “Deal of the Day” or e-commerce websites reminding the visitor “only x left in stock. “ The consumers are not used to waiting for too long or having limited supplies of something they are eyeing. – The FOMO kicks in, and scarcity does its job. 

While time and quantity are the most fundamental part of any scarce marketing strategy, Other types of scarcity created into the market play into genres like: 

Exclusivity: Luxury goods are a great example of this. Whether it’s an Apple phone or a high-end Rolex watch, in these cases, the quantity is not necessarily an issue, nor is the offer time-bound. The brand is just essentially positioning themselves and their product/service as exclusive (above average), and the consumers are not concerned about how many people have the product. Still, they want to be a part of that exclusive status achieved by owning that product. 

Rarity: A similar concept like exclusivity. Rare marketing can entail products like vintage jewelry or fashion which is not always available or manufactured. Collaborations between two brands create a one-time product like how Nike would collaborate with a sports star to create a line of limited edition sports shoes available for a particular season only. Such strategies tend to create a demand and a feeling of “I want it”; otherwise, I won’t have it again! “

Does scarcity marketing always work? 

No. Increasing demand through persuasive techniques like urgency, exclusivity, low supply, etc., isn’t always a foolproof method. A lot of factors go into planning and executing a successful scarcity marketing strategy. Especially if you try to create scarcity around a service or product which is readily available, not exclusive, or does not have any unique quality to it, then scarcity marketing techniques might drive your potential customer elsewhere. Many times short selling your product through an apparent great discount sale can also backfire, questioning the value you place on your product!

• Limited edition and exclusive products do not mean every product you sell is to be marketed as complete. They are limited because they are different from the other offerings!
• Your products or services have to be desirable enough for them to be desired by your customers if it’s low in stock or a sale. Don’t forget your product has to work before you put scarcity to use!
• Forcing customers and pressurizing extra urgency into taking action constantly will not help. Everything in moderation!

Tell us how your brand has experimented with the element of scarcity in your marketing plans and your experience with it! Your ideas may help others in our community come up with some creative ideas they can work with ☺