Welcome to the first installation of our brand new weekly blog series – Psychological Hacks for Marketers. Each week we will introduce a new shortcut that the consumer’s brand takes and how the crafty marketer can take advantage.
This week we are discussing:
In psychology, the Scarcity Principle describes the urge to purchase, gather, or obtain something that a person feels that they may not be able to get in the future. When something is rare, or difficult to get, or its availability is limited in some way, our desire for it grows.
Marketers can use this to increase the value of their products – either pushing consumers to make a decision in a shorter time or pushing them to spend more money than they otherwise might.
A classic example of this principle is found in the diamond industry. The reason diamonds are so valuable is because they are so rare. But the dirty little secret is that diamonds are not rare at all. But suppliers figured out a long time ago that they could create an artificially inflated demand for them by simply limiting the supply. So they store them away, literally preventing them from becoming available, keeping the supply low and the prices high.
Now obviously not every business can operate this way. But there are a number of different ways that marketers can use the principle of scarcity to their advantage.
- Apple uses scarcity in their initial product launches to perfection. Avid customers know that for a popular product, there will be a waiting list. Apple intentionally under delivers in their initial order, meaning that some customers will get the product right away while others will have to wait. This creates a mad rush through the door to avoid missing out on the next big thing.
- Online travel sites use scarcity when displaying available flights and hotels. Consumers will see a note next to certain listings that tell them there is only “1 room left at this rate” or “2 seats left on this flight”. They know that if they hesitate, they will likely miss out.
- Ecommerce stores like Amazon use the same idea to display how many items are left in stock. The lower the number, the more likely a customer will be to complete the purchase right away.
- Online clothing stores take this a step further, actually displaying products that are “out of stock”. When people find something they want, they have to take the additional step of requesting something that is not currently available. That signals to the store that there is more demand for this specific product and they should make/order more.
By limiting the supply of something, and making that known to consumers, you are sending them a signal that this product is desirable. Those same consumers will be more likely to buy simply for fear of missing out.
Stay tuned next week for another installment of the Psychology Hacks series. Have a suggestion? Let us know.