Scarcity Marketing

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Sarah Daghman
Lecturer, Russian Federation

Scarcity Marketing

🔥NEW 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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