My first experience with “scarcity marketing” happened back in 1982 when I wanted a Cabbage Patch Kid for Christmas. I was one of the lucky ones but it was a close call… Since then, the sophistication of scarcity marketing has increased. But the behavioral economics have remained constant. When consumers feel like a product or service is only available for a limited time or in a limited quantity, it has a higher perceived value. And it’s this value – or fear of missing out (FOMO) – that ultimately drives the sale. Entire business models and brands, like Groupon and Zulily, have been built based on this understanding.
You don’t have to be a behemoth brand to leverage the psychology of scarcity. However, there are a few important considerations.
1. The Product or Service Being Sold
There are certain products you need to buy like toilet paper. And there are certain items you want to buy like the Black Cement Air Jordan 3 sneakers. In general, “wants” tend to be more self-expressive purchases, making it easier to tap into the psychology of scarcity. Experiences like vacations or dining also fall into the “want” bucket. Which is why tables during Restaurant Week are completely full weeks ahead of time.
Creating scarcity around the right SKU/service will also ensure success. There’s always demand for Four Roses. But would you like a bottle of 2017 Limited Edition Four Roses Small Batch instead? It’s only ten times more expensive than the every-day product.
2. The Offer
Limited Time? Or Limited Quantity? The type of offer you run should be grounded in your brand strategy and your marketing calendar. Limited time offers are perfect for seasonally relevant programs like those holiday drinks you-know-who serves from Oct. to Dec. On the other hand, limited quantity makes sense if inventory or resources are actually or artificially capped. Even with a quantity of 20,000 never-ending pasta-passes, Olive Garden sold out of the passes in one second.
A slightly different twist on limited quantity and collectability is executed by L.O.L. Surprise Dolls. There are plenty of “mystery” dolls to purchase – but the buyer doesn’t know if they are purchasing a popular doll or an ultra-rare doll. My daughter’s friend has over 50 of these but only a few are rare.
3. The Execution
An awareness driver of some sort must be used to create scarcity. This can be done via multiple mediums including public relations, traditional advertising or even social media. Grass roots efforts are another way to create awareness. You probably remember when Spotify launched their free service was available only by invite.
Finding a way to incorporate real-time numbers into your execution will also help with closure. Typically this is easiest to do in the digital space. Whether it’s the number of people viewing an offer, the quantity of product left or the time remaining on a deal, featuring the right number drives scarcity. Which is why Southwest lets you know that there are only 2 Wanna Get Away seats left to Cabo San Lucas.
As with any marketing tool, scarcity needs to be used wisely. Otherwise you may end up changing your consumers’ purchase behavior in an unwanted way. Like never ordering pizza or visiting a Bed, Bath & Beyond without a coupon.
Looking for ways to incorporate scarcity into your marketing plan? We’d love to help.