The Scarcity Effect

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The idea that scarce products are more appealing isn’t new. The latest iPhone MUST be good if hundreds of people are standing in line to snag one of the small number available at launch, right? Game console makers seem to have turned scarcity into an art, ensuring that when a new model is introduced the demand always exceeds the supply, fueling even more demand.

But the power of scarcity goes far beyond the obvious social validation of watching other people clamor for a product they can’t have. An amazingly simple experiment conducted a few decades ago shows how we are subconsciously influenced by apparent scarcity, even when we are by ourselves:

WORCHEL, LEE, AND ADEWOLE (1975) asked people to rate chocolate chip cookies. They put 10 cookies in one jar and two of the same cookies in another jar. The cookies from the two-cookie jar received higher ratings—even though the cookies were exactly the same! Not only that, but if there were a lot of cookies in the jar, and then a short time later most of the cookies were gone, the cookies that were left received an even higher rating than cookies that were in a jar where the number of cookies didn’t change. [From Neuro Web Design by Susan Weinschenck.]

Marketers employ scarcity strategies all the time with phrases like “Limited supply!” and “Offer applies only to current inventory!”

Web merchants are getting smart about scarcity, too. Lately, on travel sites when I’ve looked up flights I’ve seen little red notes next to a flight that say, “Only 2 seats left at this price!” That’s great psychology – not only does it invoke scarcity, but also suggests that the current price is a bargain compared to the “regular” price. I know that little flag has caused me to book a flight right away instead of continuing to explore other options or postpone booking to see if prices might drop.

Online merchants who have good real-time inventory control also employ scarcity when they indicated that an item is available for immediate shipment but that there is only one left in stock. (I have mixed feelings about that one. Coming from the mail order business, the last item on the shelf is sometimes the banged up one that the pickers have avoided grabbing as long as they could.) This implied scarcity is both a motivator because of time (I might have to wait for a backorder if I don’t order now) but also because of the scarcity effect.

While the invocation of limited supply does imply social validation, one more powerful approach would be to show how rapidly a product is selling. If you knew that a product was in limited supply AND selling at a strong pace, the cookie experiment suggests that the product would be even MORE attractive. (Television shopping channels actually use this technique by showing rapidly declining inventory for the featured product – they clearly get neuromarketing.) Flagging a product as one of the “most popular” is a good idea, but strikes me a being weaker than something more concrete.

Both service providers and product sellers have found ways to build scarcity into their offerings in a productive and (one hopes) honest way – are YOU exploiting the “scarcity effect?”

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This post was written by:

— who has written 985 posts on Neuromarketing.

Roger Dooley writes and speaks about marketing, and in particular the use of neuroscience and behavioral research to make advertising, marketing, and products better. He is the primary author at Neuromarketing, and founder of Dooley Direct LLC, a marketing consultancy. Follow him on Twitter.

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6 responses to "The Scarcity Effect" — Your Turn

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Lydia, Clueless Crafter 26. August 2009 at 12:07 pm

Coming from an arts background, I know how powerful the visual can be. Whenever I see a clock ticking down, I feel compelled to act.

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Promotional Products 26. August 2009 at 3:16 pm

This is a great tactic. I fall for it all the time and I tend to use it in my marketing campaigns quite often.

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Salesgrok 26. August 2009 at 8:49 pm

Great article, Roger. The scarcity effect is incredibly powerful. Once you gain a complete understanding, you can take steps to counterbalance the impact. I experienced the power the other day at the GM dealer as I looked at the 2010 Camaro, which is currently selling for $5k over list before it hits to show floor. Leveraging scarcity in the business of selling software is a bit more difficult. Would be interested to hear your take on that. For more on scarcity (and other sources of influence), check out “Influence” by Robert Cialdini…

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Keith Monaghan 28. August 2009 at 3:25 pm

Nice post, Roger. Thanks again for the valuable insight.

Another example that comes to mind is Knob Creek’s current “Thanks for Nothing” campaign that highlights the fact that they’ve run out of their famous bourbon.

It’s brilliant old-school marketing. They’ve highlighted their Scarcity problem without any hype and subtly used Social Proof to show that many people think their bourbon is great. And damn if I don’t want to try it because of that.

Here’s the copy. Very clever:

“For the next few months Knob Creek Bourbon is in a unique situation — our product is so popular that we cannot keep up with customer demand. As a result, our supply will be running low over the next few months, and, in some cases, we may experience temporary stock depletion. But, instead of compromising quality to meet demand, we have chosen to let the supply run low. In deference to Booker Noe and his vision for Knob Creek, we will age all our bourbon the full 9 years. The next batch will be ready in November of this year… Again, with all the success we’ve had, we’ve still come up empty. Thanks for helping make it happen.“

Apologies for the ramble, but I thought it was a good example.

Thanks again for sharing your wisdom!

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Scott Lovingood
Twitter: scottlovingood
31. August 2009 at 9:26 am

Great overall article. I disagree that a line of people waiting to buy something involves scarcity. It is more a form of social proof that the product is great. The fact that Apple said they had a limited supply is the scarcity tactic.

Not every product in scarce supply receives the social proof that the iPhone did.

I do think many online merchants misuse the scarcity technique. I have seen too many sites that when I visit from different computers (to eliminate cookie information) that show the same script playing.

I don’t buy from those who use it dishonestly even if I want the product. Make the scarcity issue real. Even software can be scarce.

Salesgrok – Scarcity in software is built upon other limiting factors.

For example – to make sure we can fully support our customers installation we limit our sales to 30 industrial copies a month. This lets our entire technical team focus on getting the customer up and running.

Or – the firs 250 customers get access to our live webinar training series to get you up and running with our software in 6 hours or less.

Or – the first 500 customers also get a bonus copy of Complimentary Software Y.

Scarcity is a technique that can work in any area.

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