Getting people interested in your product or service can present quite a challenge. One of the most effective ways to boost sales and improve your marketing tactics is implementing scarcity marketing.
Product scarcity describes a state of short supply.
In other words, the demand for a product or service is more significant than its availability.
The two common types of scarcity include absolute and relative.
Scarcity of the absolute type occurs when there are not enough resources to meet demand. This results in limited available products and goods.
Scarcity of the relative type is when there are physical goods but a not sufficient supply and distribution.
Table of Contents
- What are the Three Types of Product Scarcity?
- Scarcity Marketing Strategies
- Understanding the Principle of Marketing with Scarcity
- Six Innovative Scarcity-Type Marketing Approaches
- Don’t Take it Too Far
- In Conclusion
What are the Three Types of Product Scarcity?
- Demand-driven is when the demand for a product outpaces supply production or stock.
- Supply-driven is when the demand is stable, but the supply reduces. A cause for this can be limited materials for the production of the product.
- Structural is when only a part of the population experiences scarcity. This means that location or political issues cause unequal allocation of resources.
Scarcity Marketing Strategies
Scarcity marketing refers to types of marketing strategies that utilize a consumer’s fearfulness of missing a deal.
It’s based on the scarcity principle that states: we desire anything that’s difficult to come by.
Although it’s true that scarcity marketing should be combined with discounts and special offers, one must remember that it’s the urgency, not the discount, that motivates the customers to buy.
If you think that offering discounts and amazing deals are enough to captivate your site visitors, you’ll have to reassess.
Consider the following question:
If your product or service is that amazing, what is the point of offering a discount?
The truth is that there are several different ways to use scarcity in marketing without cutting your prices.
Limited product supply is an excellent example of why you don’t need to provide discounts any longer.
People prefer limited-edition items because they give them a sense of exclusivity and privilege.
The decisions we make can be affected by the idea of the potential loss.
We automatically become motivated to buy something if we know it won’t be there the next time around.
There’s something very magnetic about things that are rare.
Consider the popular ‘Black Friday’: a 24-hour shopping spree during which everything is discounted.
This is one crazy day when shoppers go absolutely bonkers!
Pre-pandemic malls will get flooded with discount-hungry buyers ready to pounce.
This shows to what degree consumers can be sold on the idea of scarcity and missing out.
Shoppers are spurred on by phrases like “Hurry! Limited stock!” and become more willing to wait in line for hours so they don’t miss out.
Scarcity is one of the more efficient marketing tactics for a company.
Scarcity advertising examples include approaches like time limits on discounted prices, phrases such as “five users are looking right now,” and “free shipping” encourage consumers to act even more quickly.
These phrases have been crafted for the sole objective of ramping up urgent feelings.
Understanding the Principle of Marketing with Scarcity
In economics, market equilibrium occurs when supply and demand are equal. Disequilibrium is the term used when levels of supply and demand are unequal.
When the supply of a product exceeds the demand for that product, it lowers the cost. Whereas when demand exceeds supply, the price of the product increases.
When product scarcity occurs, customers will perform their own cost-benefit analysis.
A product in great demand but short supply will almost certainly be more costly.
Many weigh it up and go for it anyways. Some don’t even think twice and grab the deal with both hands.
Six Innovative Scarcity-Type Marketing Approaches
1️⃣ Focus on Excess Demand when Supply is Low
Scarcity promotions are there to entice consumers. It is done to drive them to buy a specific item because it has a limited supply.
Examples include limited time approaches to buy a product or limited quantities of a good. The main benefit is that it motivates the buyer to purchase quickly.
People are not just afraid they won’t get the item, but they are also afraid of missing the chance to buy it.
We lose our freedom of choice when opportunities become scarce. When our options are limited or threatened, the desire to maintain our freedom increases the perceived need to own something.
There are two methods of limited supply tactics. One of them involves notifying customers of an item being back in stock but only for a small period of time. An alternative method is to promote your stock through social media and encourage customers to pre-order before the pre-order period ends.
2️⃣ Create “Limited-Edition” Products
Having something that stands out is a great marketing strategy. Limited edition tags help consumers see scarcity to increase sales. Studies have shown that limited edition tags are seen as spontaneous and indulgent buys.
Limited-edition products can capitalize on the perceived rarity to increase purchases.
Be sure to indicate the exact number of items you’ll produce to stress their limited quantity.
This way, customers will feel compelled to buy something.
Limited supply isn’t always because of high demand. It can be because of an international sales method.
Products with rarity are often seen as symbols of class. They portray exclusivity. They make the buyers of these items feel unique and special.
3️⃣ Implement Countdowns for Quick Deliveries
Customers, particularly internet shoppers, are becoming increasingly impatient.
With the impatience of consumers, businesses may find it challenging to keep up with deliveries and shipping periods. A following-day shipping suite can save you a headache.
Next-day shipping countdowns do boost sales.
They work wonders for encouraging frenzy buying. If the customers desire a specific product and need it by tomorrow, they’re likely to purchase it right away.
4️⃣ Warn Customers of Low Stock
Sometimes the pain of losing something is equal to the pleasure of obtaining it.
Customers are concerned not only about missing out on something they want but also about someone else snatching it from under their nose.
This is why the “low stock” or “only a few items left” strategy can help boost your sales.
Scarcity forces things to appear more popular than they are. eCommerce companies are utilizing low-stock warnings because of this.
Check out our top marketing automation extensions to better understand ways to approach advertising and vending strategies.
5️⃣ Offer Limited-Time Discounts
It’s essential to strike a correct balance in relation to discounts that boost sales. You do not want to offer discounts too often as it lowers your products’ perceived quality.
Launching a new product is one approach to profitably using scarcity and discounting.
You need to provide prospects a reason to try something out, whether it’s a beta program or a new sweat-repellent sportswear product.
New products may not have any product reviews. It’s a great idea to offer an early-bird price to entice customers.
Don’t forget to inform customers of one-time offers. If they wish to buy the product at the introductory price, they must move quickly.
Here is our marketing and sales suite for guidance.
6️⃣ Take Advantage of the Season
Seasonal marketing is the process of marketing items or services for a specific period of time during the year.
The main benefit of a seasonal marketing strategy is that it attracts attention to your product or service during a quiet period.
This is often critical to generating revenue at a reasonable period during the year.
For example, during the holidays, customers look forward to gift buying. This approach can result in greater profits.
Another great marketing strategy to take into consideration during the holiday season is generating gift cards. Gift cards are a robust customer attraction tool and always encourage customers to spend more.
Season-specific products mean that they’re only there for a limited amount of time, particularly during special holidays. Making them available year-round will ultimately defeat its purpose.
Don’t Take it Too Far
Using scarcity in marketing for things with the low value might severely damage a company’s reputation.
Correctly using scarcity strategies will usually increase your advertising success and sale numbers.
Marketing scarcity is not a speedy fix for dormant sales. Rather, it intensifies the desire for a product that has a high demand.
Putting a time limit on your scarce product when there isn’t a significant demand will not increase its desirability.
Before you incorporate scarcity, try to establish a loyal consumer base that is eager to see what you have on offer.
Moderation is key to this method.
Limited edition goods should be the highlight of your product line.
You cannot make every good limited, seasonal, or available for a limited time.
Your consumer base will grow bored if you aren’t able to control your stock.
Scarcity should only be used in moderation.
These days, many marketers make use of limited-time offer sales.
If you’re planning to stand out from the competition, you’ll need to take your scarcity marketing to a whole new level.
If you have faith in your product, there’s no reason to implement time-limited sales every week.
Instead, make use of the above strategies and focus on the exclusivity of your product to boost sales.
Emily Andrews is the Marketing Communications Specialist at Records Finder, an online public records search company. Communications specialist by day and community volunteer at night, she believes in compassion and defending the defenseless