We’ve all experienced the fear of missing out, or FOMO, over something. In marketing, FOMO is known as the scarcity principle or scarcity marketing, and it’s the principle of psychology we’re going to delve into this week to look at how marketers use it to get All In Your Head!

 

 

What is Scarcity Marketing?

 

Scarcity marketing “is a technique marketing teams use to encourage customers to make a purchase before a product or discount goes away. Often, this means putting timers on sales and promotions, limiting the number of items in stock or creating seasonal or promotional items to sell for a short time. This technique targets customers who want products or discounts that they might not get if those products or discounts run out.” (Just a Moment. . ., n.d.)

Scarcity marketing is derived from the scarcity principle, which states that people value something more if it’s scarce.

Why Does the Scarcity Principle Work?

In his book, Influence: The Psychology of Persuasion, Robert B. Cialdini explains two reasons why the scarcity principle is so effective at influencing behavior.

1. Our mind likes to create short-cuts to deal with a complex world.

The scarcity principle is one of these short-cuts. It’s easy to estimate an item’s worth based on its availability. If an item is rare, we assume it’s of higher quality and is worth more than a common item that’s easy to obtain. This is true…most of the time, which is why it’s built into our psychology. Under most circumstances, this short cut helps us. But not always.   (Waschenfelder, 2020)

2. The scarcity principle creates limited opportunities. As opportunities decrease, so does freedom of choice.

We are psychologically hardwired to react against losing freedom of choice. One of the reasons for this is that we suffer more from a loss than we celebrate from a proportionate gain. We are wired to watch the downside and keep as many options openly available as possible at any given time. This is grounded in evolutionary biology. The more options our ancestors had, be it in food or shelter variety, the more likely they were to survive. If they failed to catch an animal for dinner, at least they could climb a tree in the area and eat its fruit. They kept their options open. (Waschenfelder, 2020)

As a rule, you act against a restriction because it limits your freedom of choice, and you will come to want the restricted item or experience even more.

 

Scarcity Marketing Tactics Used

 

There are 4 types of scarcity marketing, exclusivity, rarity, urgency, and excess demand, but several tactics marketers use to implement it. For this blog, we’ll take a look at 5 of the most common tactics used to create FOMO.

 

1. Only ___ Left!

Announcing or advertising low stock is one approach used for scarcity marketing. This method encourages hesitant customers to make a purchase before the product sells out.

2. Special edition & seasonal products

Special edition or seasonal product is a particularly effective technique because consumers know right away that the product will only be available for a limited period of time. Many companies use this tactic during the holidays such as Starbucks with their seasonal/holiday drinks. Selling limited season products can help a company make more sales during certain times of the year and create excitement each season when they release new products or the same high-demand ones from the year before.

3. Early access discounts

Early access discounts are usually time-sensitive price reductions on pre-orders of products or special promotions for loyal customers to get an item before everyone else. These discounts motivate customers to buy a product before the discount expires and others can access the item, which may lead to it going out of stock more quickly. A good way to use early access discounts is by sending emails to existing customers with the promotion details and putting a banner on the store’s website or physical location with the date the discount ends.

4. Limited Time Offers

A limited-time offer is a promotion deal set within a specific time period. It provides a clear end date for when the promotion becomes unavailable. Limited time offers heavily rely on the scarcity principle: When a product is more difficult to get, it becomes more valuable to buyers.

Limited time offers can take shape as:

• Sales
• Discounted prices
• Free gifts
• Exclusive products
• Free shipping

5. Highlighting popular or high demand products

 Another way to use scarcity marketing is to add features to online product descriptions that show how many customers are interested in a product. This could be displaying the number of people who have viewed the item, put it in their cart or liked it on the website. While the actual number of products available may not be limited any more than usual, customers may want the product more because they see that it’s popular and could be more likely to sell out.

 

We’ve all been enticed by the FOMO message marketers use to get all in our heads! Now that you know more about scarcity marketing, can you tell which tactics are used for which type of scarcity marketing?

 

 

References:

Just a moment. . . (n.d.). https://www.indeed.com/career-advice/career-development/scarcity-marketing

Cialdini PhD, Robert B.. Influence (Collins Business Essentials). HarperCollins e-books. Kindle Edition.

Firestone, E. S. A. \. C. C. (2022, July 15). While Supplies Last: 8 Scarcity Marketing Tactics to Boost Conversions. Shopify. https://www.shopify.com/blog/using-scarcity-urgency-increase-sales

Waschenfelder, T. (2020, July 15). What is the Scarcity Principle? Wealest. https://www.wealest.com/articles/scarcity-principle