Have you ever been shocked to find hundreds of people queuing up overnight for a sneaker release (colloquially known as a drop) priced at $400 a pair? Or a limited drink run at a franchised cafe? These are clear examples of scarcity marketing in practice/the wild. It is a marketing tactic or strategy that takes advantage of human psychology with intentional unavailability. ‘You want what you can’t have’ outlines the commodity theory; the more unavailable or scarce a product is, higher the desirability. A product’s quality or features may not necessarily be superior to the competition, but it’s exclusiveness makes it so.
FOMO is a killer. The ‘fear of missing out’ can drive demand to unprecedented highs. Fear is a primary human emotion – it can be rather motivating. We do not ever want to lose out on an experience, especially when it’s been deemed socially desirable. Marketing losses is more powerful than gains.
InsightzClub, a tech driven consumer insights firm in this article reviews the role of scarcity marketing and how marketeers may use it.
So long as there’s perceived unavailability, there’s potential for sales to be maximized. Brands vary in their approaches to this marketing tactic. Limited supply, time, and membership exclusivity are primary orientations of scarcity marketing.
Limited supply offers products the characteristic of unparalleled exclusivity. The example we led with in the beginning of the article represents this. Many luxury brands maintain a similar marketing strategy; using exquisite materials and a limited run, or regular materials that are easy to obtain and produce coupled with an artificial production limitation.
Pumpkin spice lattes registered 424 million sales in 2019. Any barista in a third-wave cafe could whip up a drink with a better flavour profile and reasonable pricing. Its seasonal availability, restricted to autumn months, accounts for most of the fanfare surrounding the drink.
The recent surge in popularity of IOS app Clubhouse reflects membership exclusivity. To join the app, a referral was needed. Perceived scarcity was then two-fold: availability limited to Apple products, and registration only upon referral. The media frenzy that followed, in retrospect, clear from the Clubhouse marketing strategy.
Scarcity marketing taps into fear, and a deep-seated need to comply with societal values. Brands have developed capabilities to drive up prices, and sales, with relatively simple tactics to increase perceived scarcity; even artificially. Along with market research to identify pressure points for target consumers, scarcity marketing may only grow in strength.
To understand more on consumer behaviour and insights reach out to InsightzClub to know more about our solutions.