Posted in General, Marketing, Selling & Persuasion

When things become scarce – Part 2

The rule of scarcity is one of the powerful heuristics (decison-making shortcuts) that consumers use: because it is scarce, it must be popular or rare – both of which are indicators of inherent value and both of which reduces any of the perceived risk associated with buying the product.
Most retailers intuitively use the rule of scarcity to stimulate sales:

  • Only 7 3 units left
  • Runout sale
  • Last few days
  • Offer must end tomorrow

Most of these taglines are copied form other retailers or past campaigns, and because they have never really studied the underlying psychology, they don’t know that there are quite a few qualifications that apply.

Invoking scarcity is a powerful motivator because it plays on the notion of ‘anticipated regret’. But consumers will only anticipate regret if your tagline communicates that possibility in some way. Regret is only feared if:

  • There is an element of recency. That is, the product/offer must have become recently scarce. The store that has been ‘going out of business’ for the last 3 years does not generate sales because of any perceive ‘scarcity’. Products that have always or will always be scarce will reflect that scarcity in its price – and consumers know it. It is the prospect of a price/value equation might change radically which is the motivator.
  • There must be perceived competition for the product/offer. That is, there must be an apparent demand by other people, because the potential regret is amplified when it is obvious that other people are fighting for the resource.

A current classic example of how an advertiser is effectively using the principle of scarcity in a novel way is the Burger King Whopper Freak-out. (See previous post.)

It is a viral campaign – launched a few months ago – that demonstrates the emotions induced by scarcity /unavailability without actually making the product scarce in anyway. (In this instance it is technically called ‘deprivation research’, but I am sure you’ll see clearly the emotion that scarcity invokes in consumers.)

When designing campaigns around the notion of scarcity, retailers should:

  • Be very clear about what is scarce. (Simply saying time is running out is not a powerful motivator – there is always more time, but the actual product might not always be around…)
  • The consequences of that scarcity should also be clear. (Last chance to make her happy…etc)
  • There must a definite time-limit that forces the desired behaviour. (And stick to it! It can be repeated later, but don’t extend the sale.)

The 3-Hr sale in shopping centres is a good example. A bad example is when retailers keep extending the sale, hoping to continue the early response. All that happens then is that customers are educated about your strategies, undermining the future efficacy of such tactics.



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