Scarcity Marketing: Your New Small Business Secret

The majority of us have. And it’s not always because we needed or wanted the item. So, why?

People always want what they can’t have. It’s human nature. People fear missing out aka, FOMO, and that is precisely what motivates them to act. So, how can you employ this into a business strategy to help your company grow?

Easily actually. However, this strategy isn’t for every business but can be pretty successful when done correctly.

Follow me, and I’m going to take you through what scarcity marketing is, why it works, and how to apply it to your business.

What is Scarcity Marketing?

Scarcity marketing is a marketing technique based on the principle that people want what is difficult to obtain. It includes the product, promotion, pricing, and distribution tactics.

It also is defined as a marketing strategy aimed at limiting supply to stimulate market enthusiasm and increase market demand. It’s a marketing tactic whose foundation lies with the law of supply and demand. It capitalizes on a customer’s fear of missing out on something. It’s based on the psychological principle that people want what’s hard to get. Stores always have sales that are ‘ending soon.’ Or they offer discounts that expire on a specific date.

Some only create a limited range of products. Have you ever seen a sign saying ‘hurry while stocks last’?

Say hello to scarcity marketing.

Why Does it Work So Well?

Remember FOMO?

We are all guilty of it, some more than others, but we have all experienced it. This is precisely why scarcity marketing tactics are so effective due to our fear of missing out. Scarcity marketing focuses on consumers’ panic of losing their freedom of choice. It’s simple.

Consumers place a higher value on limited items. Or even just perceived to be limited. The scarcity principle refers to the usage of scarcity—meaning that something is scarce or in short supply to make it appear more valuable to consumers.

Simply put, if a product isn’t available, it suddenly becomes more attractive.

Brands can make the most of this in their sales and marketing strategy by the scarcity principle. What’s that? Well, I’m glad you asked.

Researchers asked cooperators to rate two jars of cookies. Initially, both jars contained ten of the same cookie. Before selecting, eight cookies were extracted from one jar. Now participants had to choose between the jar with ten cookies or the jar with only two left.

Which one do you think people chose from more often? Bingo (the one with less cookies).

Brands can make the most of this in their sales and marketing strategy by the scarcity principle. What’s that? Well, I’m glad you asked.

Popular Ways to Use Scarcity Marketing

I have now brought you through what scarcity marketing is and why it’s so successful. Now let’s see how some big brands famously used the scarcity principle to market and sell different products. Then I will go through four different types of scarcity marketing and the best way to apply them to your business plan.

Starbucks

Four years ago, when unicorns became popular, Starbucks added the “unicorn frappuccino” to their menu. After stating that this specialty and highly Instagrammable drink would only be available for a few days, Starbucks quickly sold out within the first day.

Groupon

Partnering with different businesses to offer discounted services in exchange for new customers and a revenue split. The site often uses a limited-time remaining warning to encourage visitors to buy quickly at the risk of missing out on a good deal.

Girlfriend Collective

Their offer was simple and smart. For a limited time, if you paid for the cost of shipping, the brand would send you a pair of $100 leggings for free. All you had to do was share a link to its website on Facebook. This was an intelligent approach. Think about it, which are you more willing to trust: a Facebook ad offering free leggings or half of your friends in your News Feed promoting for the offer?

Urgent Scarcity

Urgency is a time-based strategy, making customers fear missing out, which forces them to buy within the limited time constraints.

There’s no doubt about it, if you want to improve conversions on your site and in your marketing, urgency’s one of the essential tactics to master.

If you’re looking for a quick and easy trick to optimize your conversion rates, urgency is a great place to start. The reason why we all feel the urge to grab those deals is psychological. There are two factors at play.

First of all, urgent situations push us to act to prolong positive emotions and reduce negative ones. That’s just the way we’re wired. Secondly, urgency also evokes loss aversion. We don’t want to miss a great opportunity, especially if others are grabbing it.

So when and where would you find this fine piece of persuasion that everyone loves to hate? I’m glad you asked.

Black Friday

These two words make people quiver with either enthusiasm or hatred. It’s that one day of the year where retailers let go of their products for a portion of the price.

Here are some common urgency words and phrases include:

• Speed (act now, don’t delay, hurry, rush)

• FOMO (price going up, now or never, final sale)

• Time (limited time, last time, today only, deadline)

• Scarcity (once in a lifetime, one day only, never again, last chance)

• Sale words (offer, clearance, going out of business, final close-out)

Exclusivity Scarcity

Being included in an exclusive list or group is always gratifying. And, you can use this to boost your conversions if you know how to implement it properly.

If something is exclusive, it means that only a select group of people are allowed access to it. Whether it’s a club, a sports match, or a product, everyone loves a bit of exclusivity in their lives, and your target audience is no exception.

Research shows that some people stop buying products when others jump on board—as soon as a product becomes popular, people opt-out.

Eliciting a feeling of scarcity due to exclusivity will be more efficient for those looking for status.

Exclusivity scarcity is also more effective on people that feel powerless. They want to reduce that feeling and, instead, be envied.

Restrictions can be price increases or needing to have a specific skill, for example, requiring a part of a group. These restrictions are not related to the product supply.

Which urges the question, how do you use this kind of scarcity marketing?

Well, this one is a little tricky as using words like ‘exclusive’ could make your product seem less exclusive. Be sure to try and use this tactic on products or services people can tie to their identity, something people would use to increase their exclusivity and status.

Excess Demand Scarcity

“If everyone is trying it, it must be good.”

That’s is the best way to sum up excess demand scarcity. More than often, products are scarce simply because the demand exceeds the supply. No tricks, no limited editions, no exclusivity. Sometimes it’s plain old supply and demand.

One of the reasons that could explain why people feel the need to buy something that is almost gone is the scarce-is-good-heuristic.

A heuristic is a mental shortcut that allows people to solve problems and make judgments quickly and efficiently. These rule-of-thumb strategies shorten decision-making time and allow people to function without constantly stopping to think about their next course of action.

People look at other’s behaviour to decide what to do. In this case, consumers tend to neglect their product knowledge and follow other consumers’ buying behaviour. Excess demand implies popularity and, at the same time, shows they’re almost sold out of this popular item, so you better act now.

Rare Scarcity

The word rare itself speak volumes. Those looking for rare items are often also looking to acquire a higher status or distinguish themselves to fulfill their need for uniqueness.

Nowadays, you see two brands that you would never relate to one and other. Still, they produce creative collaborations making unique products.

The collaborative pieces they’ve made are rare because collaborations with a brand only happen on a single occasion and are done with brands that are usually very different from their own.

The Wu-Tang Clan, a New York based rap collective, portrayed a prime example of this rare scarcity. After a long hiatus, they produced only ONE copy of their highly anticipated album. They put a restriction on the product supply from the start, making that edition extremely rare. This obviously went crazy viral, and proved that buying a rare product has similar effects on individuals as exclusive products.

People with a need for uniqueness value material possessions as an extension of their identity and use products as vehicles for expressing their identity.

Key Takeaways

Everyone is using scarcity marketing nowadays. So, if you want to stand out from the competition, you need to take your scarcity marketing to a new level. Use some of the above strategies and focus on the exclusivity of your product. Get people to buy now instead of later and watch your sales soar.

And don’t forget, you aren’t alone. Bookmark has everything you need to start.