Scarcity Marketing

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Scarcity Marketing

🔥 Scarcity marketing is a marketing technique based on the principle that people want what is difficult to obtain. It includes product, promotion, pricing, and distribution tactics. It can also be defined as a marketing strategy aimed at limiting supply in order to stimulate market enthusiasm and increase market demand. The central principle behind scarcity marketing and/or offering "limited edition products" is to create a sense of exclusivity among the target consumers since scarce items feel exclusive, appear more valuable, and make people feel powerful. Packhard would probably call this a hidden need for Ego Gratification or for a Sense of Power.
Product scarcity can significantly influence price, sales promotions, product popularity, and purchasing behaviours. Such conditions can be deployed by firms to maximize a product's revenues and/or profits.


TYPES AND EXAMPLES OF SCARCITY MARKETING
Actually there are two types of scarcity marketing:

1. Quantitative limitation: this type specifies the restricted number of products available for purchase. In a limited-quantity scarcity message, the promotional offer is made available for a predefined quantity of the product. Note that scarcity in quantity could be due to either limited supply or excessive demand. Messages such as "limited edition" and "only X items per customer" cause a sense of scarcity due to supply, whereas using messages like "nearly sold out" or "only X items left in stock" cause a sense of scarcity due to excess demand.
   Example: Automobile manufacturers McLaren and Ferrari only make a number of certain models, not exceeding a certain number of them, in order to give the car a character of scarcity and a feeling of distinction to those who own it.
2. Time limitation: indicates the amount of time remaining to place an order for a product. In a limited-time scarcity message, the offer is made available for a predefined period, after which the offer becomes unavailable. Scarcity in time can be caused only by the supply side, because of the fact that in time limit messages, retailers usually define a precise margin of availability – for example "The product is only available until...", "only temporary available".
   Example: Alibaba successfully created a national 'shopping carnival' in China. The event is characterized by a wide range of products that are heavily discounted for a limited time (some of which are also offered in limited quantities). On that one day, Alibaba's sales recorded astonishing levels.

References:
Shi X., Li F and Chumnumpan P. (2020), "The use of product scarcity in marketing", European Journal of Marketing, vol.54 No.2, pp. 380-418.
Khoa T. A. (2014), "Scarcity Effects on Consumer Purchase Intention in the context of E-commerce", Aalto University, P.83.

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		0 Anonymous
	Scarcity Marketing Thanks for the nice summary of marketing based on limited quantity and limited time. For me it was a useful reminder that to increase sales volume, we can do 2 major things: 1. We can work with special (lower) prices (discount pricing, the easy way). 2. We can create a a feeling of scarcity, value in the mind of the consumer (perceived value pricing, the more difficult, intelligent way). The second one obviously has better margins.

		0 Anonymous
	Poor Grasp of Marketing The phrase, "Scarcity Marketing", summarized by Sarah Daghman, is a betrayal of the true meaning of the word "Marketing", and only serves to propagate the growing lack of genuine professionalism of the discipline.

		0 Anonymous
	Scarcity Marketing is a Tactical Sales Approach I would say that "scarcity marketing" is not marketing at all as it does not serve to satisfy the needs and wants for the good of the society. Rather, it puts pressure on the target segment to decide immediately and purchase. IMHO, this "scarcity marketing" is more of a tactical sales approach - as opposed to strategic marketing - that is aimed to generate revenue fast.

		0 rustenburg Business Consultant, Netherlands
	Scarcity Marketing is a Choice of Marketing Strategy Generally you can divide needs in 3 types of needs: economic, functional and psychological needs (e.g., the 8 hidden needs). Limited editions (QUANTITATIVE LIMITATION) are common in the industry of luxury products (see for example the case 'Kering: Luxury in the digital world'). All the 'hidden needs' from Packhard have psychological characteristics. In my opinion the hidden needs are not (really) needs, but personal values. You need a set of relevant customer's needs to meet personal values. Products with TIME LIMITATION can be luxury as well as non-luxury products for meeting economic and functional needs, mainly. The marketing strategy is important: What are the segments and the positioning?