Limited time offers are the basis of scarcity marketing

Scarcity Marketing: the fear of shortage to sell more

Purposely creating purchase barriers might seem counterproductive, but with scarcity marketing it is possible to take advantage of psychological levers to increase sales. Let’s see how.

Have you ever wanted to buy a product you liked so much but discovered that, unfortunately, it was already out of stock? This situation could actually be a shrewd move: brands, at times, purposely create barriers to the purchase of a product or service, creating few copies or deliberately making it difficult for customers to buy.

These strategies are called scarcity marketing and create in the consumer the desire to get hold of a product precisely because it is difficult to obtain. In this article, we will explain what scarcity marketing is based on and how it is used by brands.

What is scarcity marketing?

Scarcity marketing is a marketing strategy that exploits the scarcity principle to leverage consumers’ fear of missing out on something or not owning a specific product/service in order to increase sales . This creates a sense of urgency that encourages customers to buy before it’s too late.

By specifically creating time-limited offers, restricting access to products or producing a quantity of goods that is lower than the market’s demand, brands can increase awareness around a certain product and start a real purchase rush.

This type of marketing is based on a principle of cognitive psychology postulated for the first time by Jack Brehm in the essay Theory of Psychological Reactance. According to this theory, the human being yearns for what is in great demand but at the same time extremely difficult to obtain. The harder it becomes to achieve a goal, the more you want to achieve it.

Consequently, consumers tend to want to buy what is very difficult to obtain.

Brehm illustrated an experiment during which he placed two identical toys in front of some children. One toy was easily accessible, while the second one was protected by a plexiglass barrier that forced children to lengthen the path to reach it. Most of the participants in the experiment chose the second toy anyway.

Over the years, the studies around this interesting theory have expanded. Robert Cialdini, in Influence: The Psychology of Persuasion, argues that the idea of ​​a potential loss plays a fundamental role in the way in which the human being makes decisions.

FOMO

In marketing, the fear of losing or not having access to something is called FOMO (acronym of Fear of Missing Out). FOMO is also behind many internet dynamics, such as the incessant scrolling activity that takes place on Twitter or the immediate opening of new stories published by a friend on Instagram. But it’s also about TV shows, which are binge-watched as they come out – so you can then talk about them everywhere.

It is no coincidence that 68% of millennials say they have purchased at least one product because of the fear of feeling excluded. This fear is in fact also exploited by brands, through various strategies that involve the creation of an artificial scarcity that could cause the permanent loss of a product.

The elements that make up scarcity marketing

Once it is established that the value of a product increases as its accessibility decreases, it is necessary to understand how to exploit this concept within marketing strategies. How can you create an artificial scarcity and encourage consumers to buy? Let’s see the most common elements:

  1. Time-limit
  2. Exclusivity
  3. Rarity

In addition to making products/services available only for a certain amount of time, one of the most common practices to encourage consumers to purchase is to instil the doubt that the products will still be available, but at a much higher price. It is the strategy that hides behind the sales in stores or the discounts offered by brands on the occasion of particular events, such as Amazon’s Prime Days.

However, consumers are now used to this type of incentive and may no longer pay attention to discounts or sales. So, in addition to the reduced price, there are other elements that help create a sense of urgency.

There are many brands that have created limited editions of their products. In this case, the goods always keep the same price and there is no maximum date by which to buy. The urgency is given by the quantity of goods available, which is lower than the market demands. Consumers are prompted to purchase immediately, to prevent stocks from running out forever.

This strategy is implemented not only with physical items, but also to stimulate another kind of shopping. Take for example the messages on the various online portals that indicate the limited availability of what we are thinking of buying: the fact that there are few tickets available for our favourite band’s concert, or that another user is viewing the room we planned to book for our long-awaited summer vacation, makes us much more likely to proceed with checkout right away.

Finally, scarcity is also generated by creating barriers to purchase. In this case, the limited availability can be given by the place where a product is sold, the payment method or the price. This strategy is, for example, used a lot by the fashion and luxury sectors.

All these elements make up scarcity marketing strategies and are often complementary. Additionally, scarcity is used alongside other promotional strategies and advertising channels. To better understand how to exploit the scarcity principle, let’s now look at three successful case studies.

Scarcity marketing: three successful case studies

1) Nutella Biscuits

Nutella Biscuits had great success in Europe between the end of 2019 and the beginning of 2020, thanks to their flavour but also to their reputation as unobtainable sweets.

Ferrero, the brand that owns the Nutella company, has carried out an intense marketing campaign on social media to promote the new cookies around the Christmas holidays. However, very few packages (or at least few compared to consumer demand) were distributed on the shelves of supermarkets and grocery stores. As a result, consumers went to multiple stores in search of these new Nutella-cream flavoured cookies and commented on the internet how difficult it was to find them, further amplifying the Nutella Biscuits visibility. The Nutella Biscuit craze was so out of control that some supermarkets have set a limit on the number of packages that can be purchased per person.

Although the company did not announce that they would only be available as a limited edition and/or in small quantities, consumers rushed to buy every pack they could find and some even resold them for a premium price on Amazon.

Their scarce availability meant that over 4.2 million packs were sold in the first month, for a profit of around 12 million euros. Thanks to this success, Ferrero was then able to double its production and hire a hundred new employees.

2) The capsule collections of H&M

Usually, luxury brands operating in the fashion sector exploit exclusivity to differentiate themselves from competitors, with prices that can reach tens of thousands of euros. For example, to get the famous (and very expensive) Hermès Birkin, it is first necessary to spend large amounts of money in the brand’s stores in order to be placed on a waiting list lasting over a year, and sooner or later be called to create and customise your dream bag. Scarcity marketing is also employed by less exclusive brands.

In addition to increasing direct sales, the scarcity principle is also used by fast fashion brands to increase perceived value. A famous example is the H&M chain, which through its capsule collections creates limited editions of clothing often made in collaboration with luxury brands and available only in selected physical and online stores.

This strategy was implemented for the first time in 2004 thanks to the collaboration with the German designer Karl Lagerfeld and has then continued over the years, involving other names in high fashion such as Moschino, Jimmy Choo and Simone Rocha.

By associating its name with these renowned brands, H&M has increased brand awareness. Furthermore, the limited collections have exploited the scarcity principle explained in the previous paragraphs to entice consumers to make a quick purchase so as not to miss these exclusive items at lower prices than market standards.

The capsule collections are not only created in collaboration with famous fashion brands, but also with companies operating in completely different sectors. An example of this is the collaboration with Netflix, which has created and marketed some of the iconic garments from its most successful shows.

So, for (few) consumers it is possible to wear the swimsuits shown during the third season of Stranger Things or t-shirts and sweaters inspired by the fourth season of the Netflix’s series, but also more particular garments such as the Sex Education school uniforms.

By exploiting the interest of Netflix shows and the limited availability of clothes, H&M has managed to create a real purchase hunt.

3) Lidl streetwear

The third successful example falls again within the clothing sector, but is characterized by a totally different style. In 2020, the supermarket chain Lidl decided to launch its own streetwear brand. The production of “Lidl Fan Collection” clothing began after the success of an initiative developed by the German company, which offered the chance to win socks to customers who went to the store to take a selfie.

Towards the end of the year, the company began selling shoes, T-shirts, slippers and caps at a very low price (the sneakers were in fact sold for $ 13).

Lidl's socks and shoes, a typical example of scarcity marketing

In a few hours, the clothing items were sold out, only to be put on sale on Ebay for € 2,700. In this case too, Lidl has exploited a strategy that has always characterised the company: the low prices. The extremely low cost of a product is in fact used to attract the customers to the store, where they will then be offered additional goods that will increase Lidl’s earnings.

In addition, the limited number of shoes and clothes available – in conjunction with the spread of the news and the virality of the phenomenon on the internet – attracted an unprecedented number of customers.

Summing up

Human beings are characterised by the need to be part of a community and are afraid to remain, for example, without something owned by the majority of people or to miss important events. For this reason, people are willing to wake up in the middle of the night to watch the screening of the latest Game of Thrones episode, or to queue in the rain to grab tickets for the Champions League final or the latest iPhone model.

This feeling, called FOMO, is the basis of scarcity marketing: a persuasive technique that is based on the consumers’ fear of losing the possibility of choice, creating a sense of urgency and exclusion in the customers to entice them to proceed with the purchases.

Amazon, Booking, EasyJet, Eminflex, etc., are just some of the many brands that exploit the scarcity principle within their marketing strategies. By offering time-limited discounts, signalling the limited availability of desired goods, or intentionally producing reduced stocks, companies exploit some unconscious levers of human psychology to encourage the purchase of products and services.

As we have seen, this type of marketing has created a real product hunt, with Lidl clothing or Nutella cookies that have become a cult object among collectors and are sold in secondary circuits at three times their value.

However, basing your sales solely on scarcity marketing could prove harmful, as consumers are now used to these strategies. The companies mentioned in this article do not base their strategies exclusively on the scarcity principle: these dynamics are part of a broader communication strategy, which also embraces more traditional techniques.

Brands need to develop a marketing and communication plan that also includes other strategies and channels, in order to create content that constantly attracts the attention of their (potential) customers.

Have you ever experienced this feeling of FOMO? Have you ever bought compulsively because of the fear of running out of a product or losing the chance to get a discount, only to regret it after a few days? Or are you the proud owner of a pair of Lidl branded shoes and have breakfast every morning with Nutella Biscuits? Let us know your opinion in the comments!

EOS Mktg & Communication can help you develop an effective communication strategy and better manage your brand’s online presence. Visit the page dedicated to our services or write to info@eosmarketing.it to receive more information.

Published by

Gabriele

Marketing enthusiast, bachelor’s in linguistic sciences for media and communication at Catholic University in Milan and then MSc Media Management at University of Stirling. Thanks to my academic background, I am now working my dream job: I manage communication and marketing strategies for EOS and the ipcm® magazines. In my free time I play basketball and watch lots of films. Favourite team: Milwaukee Bucks. Favourite director: David Lynch.

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