We Care if its Rare

We are sitting relaxing on our coach on a lazy Saturday morning flipping through the T.V. channels.  Suddenly, we hear a man announcing, “ Only the next twenty callers will receive this special one-time offer! Time is running out”. We have an immediate tendency to feel we may be missing out on some valuable opportunity.   This is an example of scarcity.  Stemming from the principle of supply and demand, the more rare something is, they more value it’s seen to have.  In 1975, a study was conducted to see how scarcity altered people’s perception of things. The study asked participants to rate the cookies 1-10.  Half were asked to rate a jar with 10 cookies and half rated a jar with 2 cookies.  The cookies from the 2-cookie jar were rated twice as high as the cookies from the 10-cookie jar.  This study shows how strong the psychological premise of scarcity is. 

How Marketers can benefit from scarcity:

•  Increases perceived value: Demand of something can depend on how the scarcity is positioned.  If a product used to be plentiful, but due to popularity it became scarce, the principle will be more effective than if there was a scarce supply from the beginning. 
• More impulsive buys: If consumers feel they will miss their chance unless they act at a very moment, they will most likely make rash decisions. They might choose to purchase something immediately that if they had the time to consider all the pros and cons they would not have.

Whether it’s a hotel booking website informing you that only 2 rooms remain available, or a seasonally offered pumpkin spice latté at Starbucks, we as consumers are effected by scarcity in marketing.