The law of supply and demand asserts that when there is low supply and high demand for a commodity, the price will rise.
To what end am I clarifying the elementary principles of economics? Because the scarcity principle might become operational when there are fluctuations in supply and demand. Understanding the scarcity principle and its application to driving up demand is the focus of this piece.
Scarcity marketing is all about making people feel like they’re missing out on something amazing and acting quickly to get what they want before it’s gone. It’s just like when a limited run of sneakers or concert tickets completely sell out in a matter of minutes.
Scarcity marketing uses the natural human reaction of wanting what we can’t have to its fullest effect by making a product scarce through limited supply or time-limited offers. It’s a shrewd tactic that plays on our desires for things we believe to be rare and expensive.
Dr. Robert Cialdini‘s “scarcity principle” of persuasion states that something’s perceived worth increases as its availability decreases. Customers are more inclined to make a purchase when they believe supplies will run out in the near future.
Customers may feel compelled to act quickly on purchase decisions when they believe supplies are limited. When people weigh the alternative of going without a product or service against the price tag, they tend to be more ready to shell out the extra cash.
Using scarcity marketing, businesses pressure potential buyers into making a purchase quickly before a sale ends or a product is discontinued. This usually involves setting expiration dates on sales and promotions, limiting supply, or making limited-edition products for limited-time offers. This strategy is aimed at consumers who are interested in a product or discount but may miss out if supplies run out.
The purpose of using scarcity in advertising
Many businesses use scarcity marketing to encourage customers to buy quickly before an item sells out or a sale expires. When consumers see that a product they want is running out of supply, they are more likely to make a purchase. As a marketer, you can increase revenue by encouraging clients to buy now while supplies last by emphasizing the limited availability of products or promotions.
How does scarcity affect demand?
When supplies of a good or service are limited, demand increases as individuals rush to get their hands on them before they sell out. This is where the scarcity principle comes into play, as some businesses will choose to charge higher prices to take advantage of the situation.
The scarcity principle in Marketing
The fear of missing out on something desirable is a key psychological response that marketers play on.
Because of its high demand, a buyer may believe that a certain good, service, or piece of material is difficult to obtain. They may feel pressured to move quickly and buy before the deal is over, so they may enjoy the same value as their friends.
The scarcity principle is a powerful tool for brands looking to get consumers to submit a lead form, buy a product, or take some other action.
When searching for flights on a booking site, for instance, you can get a message indicating that there are just a few tickets available at a given price.
Knowing that there is only one seat left at that price makes me think that I should buy it now rather than risk paying more later because we all know that airfare pricing is incredibly volatile, which is why some of us wait until certain times or days of the week to make purchases.
Now that you know what scarcity is, we’ll talk about several companies that have effectively leveraged it to promote their products. Let’s look at some practical applications of the scarcity principle.
10 strategies for promoting scarcity
If you want to enhance sales for your firm, you might think about using some of the following scarcity marketing strategies:
1. Nearly sold-out products
Showing customers that a product is almost out of supply or that there are only a few left in stock is one technique for using scarcity marketing in an online store. Customers will always be able to see when there isn’t much of a product available to buy thanks to the fact that you may utilize software to display real-time alerts of low stock on the website of your firm. Customers who generally wait to make a purchase and forget about the goods as they go about their day can benefit from this strategy since it has the potential to persuade customers who are on the fence about making a purchase to do so before the product runs out of stock.
2. Timers for carts
You have the ability to employ cart timers to prevent another client from purchasing the items that are already in a customer’s cart for a predetermined period of time. This is especially helpful for limited or low-stock products because customers are forced to decide whether or not they want to purchase the item immediately rather than keeping it in their cart while they wait for it to become available for purchase. To encourage customers to finish their purchases, you may use this strategy, which entails adding a real-time cart timer to the website of your firm and corresponding with clients via email when the timer for their cart is about to run out.
3. Discounts for early birds
Early access discounts are typically time-sensitive price reductions on pre-orders of products or special incentives for loyal customers to get an item before everyone else does. Alternatively, early access discounts could refer to customers who receive an item before everyone else does. These offers encourage buyers to purchase an item before the discount expires and others can access the item. This can result in the item selling out of supply faster than usual. Sending emails to existing customers with the promotion details and putting up a banner on your store’s website or physical location with the date the deal finishes is a fantastic way to make use of early access discounts.
4. Only available for a short time
When you have a lot of smaller things to sell or when it is the Christmas season, you might use this strategy to persuade customers to spend a particular amount of money on purchases from your store. Customers who spend that amount in your store are eligible to receive bonus items for a limited period of time if you choose to offer them. Utilizing low-cost or overstocked things that do not result in a loss for your firm is the key to the success of this strategy, which enables you to sell more of your products. This is especially helpful during gift-giving holidays, when customers may appreciate purchasing additional things for their own use or to give as presents to others.
5. Countdowns for next-day or same-day delivery
This scarcity strategy often encourages customers to make a purchase sooner so that they may acquire their items more quickly, and some online merchants offer next-day or same-day deliveries for products that are ordered before a specific time. Because many businesses that offer delivery also have minimum purchase requirements for free delivery, this may also encourage customers to make larger purchases all at once. You can make use of this strategy by displaying a timer on the checkout page of your website. This timer will inform customers how much longer they have to make a purchase in order to receive their goods in a timely manner.
6. Limited edition items
The sale of limited edition or unique products, which generate instant value due to their low availability and strong demand, is yet another strategy for taking advantage of the scarcity effect that could work for your organization. You may also think about working together with other businesses or well-known members of the public to produce one-of-a-kind things that appeal to a variety of different audiences and expand the pool of potential customers you have. If you want to get the most out of limited-edition products, you should strive to generate anticipation about their release well in advance. This will guarantee that as many people as possible are aware of the products when they become available.
7. Platform-specific deals
Customers can only receive specific discounts or bargains if they make their purchases through a particular platform, such as a mobile app or a website. These types of promotions are referred to as “platform-exclusive deals.” These types of deals place more of an emphasis on the duration of a discount and the many methods by which customers can take advantage of that discount, as opposed to placing restrictions on the number of things that customers can purchase. A strategy such as this one might be able to assist your firm in acquiring additional consumers on various platforms. This is something that is especially important for mobile apps, as they provide customers with convenient access to your store no matter where they are.
8. Buy timers or countdowns
Some businesses can increase their profits by employing purchase timers or countdowns on things, particularly if those items are going to be auctioned off. Customers will feel a greater sense of urgency to purchase an item from your online store if you have a clock on your website that displays the amount of time remaining until the item will no longer be available for purchase. This can also result in an increase in the amount of competition for the auction items, which will drive up the price as more customers place bids. As a result, you will make more money, and similar products in the same market will have a higher value.
9. Seasonal goods
When you release new products or the same high-demand ones from the previous year, selling limited season products can help your firm earn more sales during certain times of the year. Additionally, it can create excitement whenever you release new products. Depending on the kind of business you work for, you can be responsible for the seasonal marketing of products such as food and drink, apparel and accessories, or other useful items in order to attract clients who have a need or want for particular products at specific seasons of the year. Customers who are enthusiastic about seasonal goods are more likely to recommend such goods to their friends, which can result in an expansion of your consumer base.
10. Top-selling items
Adding a feature to online product descriptions that shows the number of consumers that are interested in a product is yet another method for using scarcity marketing to increase sales. This method can be used online. This may involve displaying the amount of people who have liked the product, seen it on the website, or added it to their shopping basket. Customers may want a product more if they see that it is popular and may sell out at some point, even though it is possible that you are not restricting the actual amount of things that are accessible any more than you normally would.
Simple but Effective Phrases
This approach can be applied to any marketing effort to boost conversions. If you want to boost your eCommerce sales, email subscriptions, or any other call to action on your website, this is a must-use marketing strategy.
That’s because it’s human nature to attribute greater value to items that are scarce. Therefore, its value must be higher.
1. “Lock in this great price while you still can”
2. “Booked 36 times today”
3. “15 people are looking right now”
4. “You missed it!”
5. “In high demand – only 2 rooms left on our site!”
6. “Only 3 left in stock”
7. “Up to 70% off until 6/30”
8. “Today’s Lightning Deals”
9. “Be among the first to own a pair of Nike”
10. “Team USA Closing Ceremony Uniform”
11. “Gold Class Clearance”
12. “9 left!”
13. “Time left: 0 Days 18 Hours 18 Minutes 00 Seconds”
14. “This just in: we now only have 72 tickets left…”
15. “Connect now and you’ll automatically save 30% on your first purchase.”
The ups and downs of using scarcity in marketing
Examining the pros and cons of scarcity marketing can help you better understand how it can affect your business.
- It makes more people want to buy certain products. Scarcity marketing often makes more people want to buy your products because it makes them harder to get and more exclusive. This demand could help spread the word about your goods when customers share your limited items or discounts with their friends. It could also make shoppers more excited about your products or prices because they are unique.
- Encourages customers to make purchases rather than wait. Some customers like to deliberate over a purchase for a considerable amount of time before making a decision to buy; nevertheless, this strategy frequently results in the buyer forgetting about the product. Through the use of scarcity marketing, you are able to generate a greater sense of urgency among these clients, which in turn motivates them to make a purchase before the availability of the product or the discounted price is terminated.
- Increases the exposure of your company as a result of referrals. Customers will often advise their friends and family about special discounts and products that they have found, thus utilizing scarcity marketing strategies and advertisements can help enhance the awareness of your brand and develop your customer base. This shareability can be improved by employing digital marketing strategies that make use of online signs of scarcity, such as countdown timers and displays that indicate low stock levels.
- Urgent marketing has the potential to divert attention away from the product. particularly if the countdowns and limited quantity are made too obvious, or if the emphasis is placed on the exclusive nature of the offering rather than its practicality. You should make an effort to strike a healthy balance between the scarcity marketing strategies you use and information regarding the product’s quality, the ways in which it might improve the customer’s life, and the value it delivers.
- Consumers may feel pressured to make purchases. This may deter some consumers from shopping altogether due of the difficulties they may encounter as a result of the scarcity marketing. Scarcity marketing may motivate certain shoppers to shop, but it may also push other customers to shop. To remedy this situation, you may decide to employ scarcity methods every so often in order to give them a sense of exclusivity and to provide customers the opportunity to take their time while making purchases.
- Doesn’t always bring in more customers. Using scarcity and marketing materials that people share on social media or with their friends can bring in more customers, but some shoppers may only buy from you once and not become regular customers. To stop this, only send offers to customers who are already buying from you, like those on your email list.
It’s true that “less is more”
Invoking the idea of scarcity in order to market and sell a product has the potential to be a successful method of persuasion; nevertheless, it is imperative that this tactic be applied appropriately. Customers will be more sensitive to your message regarding the scarcity of the product if you frame it as though there was a great supply in the past but owing to increased demand, there are only a few things left. However, if you explain the scarcity of the goods in such a way that it sounds as if there were only a few units of the product ever accessible, the principle of scarcity won’t be as successful in driving sales.