What is scarcity?
Well the dictionary definition of scarcity is pretty simple, “The state of being scarce or in short supply; shortage.” So now what happens if something is in short supply and there is substantial demand? People will be encouraged to buy as quickly as possible which is profitable for the company that makes it.
Why is scarcity so effective?
Losing is a pretty horrible feeling, isn’t it? No one wants to suffer loss, which is why we avoid it. In fact, just the thought of a risk of losing anything or the possibility of it scares us.
There was a survey conducted where the surveyors asked adults if they would like to own their own company. Around 80% – 90% of adults want to own their own company, but why do we see so few startups and entrepreneurs? That is because of fear of loss.
Well, scarcity makes not buying the product feel like losing. So now, how do we employ scarcity for our own benefit?
4 ways to use scarcity.
- Limited quantities.
- Price increases are near
- Discounts that will end soon
- Deadlines
To explain all of these ways better I shall take the example of a supermarket and how they could employ these tricks.
Limited Quantities
This is pretty self-explanatory. Add a product with only a limited amount of stock available and create demand for it. In the supermarket, for instance, a sneaker with only a small amount of stock can be added.
Price increase in the near future
This too is self-explanatory and I don’t have to go into great detail. You can add a product and claim the price will increase later.
For example, the supermarket can add some coffee beans and say “Buy our premium coffee beans today and lock in the current price before a market price hike!”. Weather conditions are affecting crop yields, which means coffee bean prices are going up. Buy now at a stable price so you don’t have to worry about price increases in the future.”
Discounts end soon
In any market, we have seen this at least once. For example, a supermarket can add a “Black Friday Sale! (Discounted Products)”.
Deadlines
There are many ways to use deadlines in your business but for my example I’ll use season offers. A supermarket can create a Halloween Offer and discount products until Halloween is over.
Adding the element of scarcity can really boost sales but one thing to look out for is making it look artificial. You don’t want to seem manipulative so it’s good to implement it in a natural way.