Have you ever experienced the thrill of the chase!? The excitement you feel when you are trying hard to get something or someone?
How long did that excitement last? Are you still excited about those Nike Air Jordan Basketball Shoes that you bought last year?
That might sound like a lot of questions, but I am just trying to set the mood.
This whole thrill of the chase situation is very closely related to the Scarcity Principle. The Scarcity Principle states that an item in limited supply increases its attractiveness. In other words, humans tend to want stuff that is harder to get.
This principle has a massive fanbase in both the psychology world and the world of economics. Even if you haven’t studied Economics, you might know about the law of supply and demand. It states that a low supply and high demand for a product will typically increase its price. It’s that simple! Small changes in either supply or demand can quickly bring the Scarcity Principle to the playground.
There are a lot of reasons why the scarcity principle works. First, scarcity is a psychological trigger and is rooted in our intuition. Second, this instinct to hog scarce items is evolutionary. The third and the most relevant one in today's time is FOMO.
Fear of missing out or FOMO is defined as a "pervasive apprehension that others might be having rewarding experiences from which one is absent." It is driven by the desire to stay continually connected with what others are doing. Scarcity can sometimes be a function of FOMO. It is heavily predicated on the idea that others desire the product/service and that you have to act now to get in on the goods.
I hope by now you know why I am telling you about the Scarcity Principle. It is one of the most beloved marketing tricks. All you have to do to increase the demand for your product is to make it more challenging to get. It sounds like a dream! Look at how some of the brands made this dream come true -
(a) Nintendo - In 2006, Nintendo released the Wii gaming console. To say that they were selling like hotcakes will be an understatement. They were flying off the shelves even after three years. Nintendo ensured that customers would be clamoring to buy more right off the bat by starting with a low monthly production number.
Very strategically, Starbucks, on their website, announced that the Unicorn Frappe would only be available for a few days. Can you imagine such an instagrammable drink, only available for a few days! How cruel.
As expected, Starbucks was flooded with Unicorn frappe orders. Unfortunately, there are no sales numbers available for this drink, but judging from the social media engagement, it has to be a huge number!
(c) Bumble - It is a dating app that has uniquely used the scarcity principle. After matching with a potential partner, women have 24 hours to text them first; otherwise, the opportunity to talk with the match disappears. In addition, they recently added another element of scarcity to even the playing field. Now guys have 24 hours to respond, too.
Some other brands worth mentioning on this list are Snapchat, Amazon, Nike, One Plus, and some luxury brands like Louis Vuitton, Supreme, and Rolex.
Are you excited to use this principle in your market? Unfortunately, as easy as it sounds, using scarcity mindlessly can backfire. Here are a couple of things I want you to remember -
Scarcity only works when the customers are not able to see through your gimmick. And as I always say, customers are savvy and, they don’t like being manipulated. Therefore be very careful while designing your strategy and while communicating to your customers.
Two separate studies show that consumers who do not get the product associated with scarcity appeals (vs. not) have higher intentions to switch to competitor brands. This effect is mediated by consumer anger.
Using this principle will do more harm than good if your customers end up feeling angry or stupid. If not appropriately executed, this principle might cause a scarcity of customers for your product. It’s a scary world, be careful, my friend!
Some quick takeaways -
The Scarcity Principle states that an item in limited supply increases its attractiveness.
The law of supply and demand states that a low supply and high demand for a product will typically increase its price.
Scarcity can sometimes be a function of FOMO.
The scarcity principle is one of the most beloved marketing tricks; however, it should be planned for and executed very carefully.