Artificial Scarcity: Creating Demand with Smart Positioning
What makes a Unicorn Frappuccino so irresistible?
Recently, Starbucks introduced a special limited drink, Unicorn Frappuccino, in its menu for just five days. The customers started racing in to get hold of that beautiful, color-changing rare beverage before it ran out. The response was exceptional. One outlet sold over 500 of these in one day.
Do you think there would be the same response or flooding in of customers for that one drink if it were available all year round?
The “available for five days only” proposition did the trick. This is known as artificial scarcity.
What is artificial scarcity?
Artificial scarcity refers to a perceived scarcity of items, where the items’ availability is portrayed to be less than what it actually is. This creates an illusion that the item stock is on the brink of running out, even though in reality, that need not be the case.
We tend to be attracted to things that are out of reach/limited, or rather, “we all want things we can’t have.”
Marketers smartly use this tactic to rope in more customers, expand their user base and trigger sales. They thrive on people’s FOMO, a basic human nature. Adding in “Limited offer” or “Only 1 left in stock” tags to the mix, and people rush in to buy.
A study called “Effects of supply and demand on ratings of object value” conducted in 1975 by Stephen Worchel, Jerry Lee and Akanbi Adewole demonstrates the Artificial Scarcity principle.
The participants were asked to rate the value and attractiveness of cookies that were either in abundant supply or scarce supply.
Results indicated that cookies in scarce supply were rated as more desirable than cookies in abundant supply.
The participants were then told there was a scarcity of cookies due to either an accident or a high demand for cookies.
Cookies scarce because of high demand were rated higher than the cookies scarce due to an accident.
This study indicates that the object is perceived as more valuable when it is scarce, high in demand or out of reach.
Let’s look at some examples where companies use this strategy to manufacture demand.
1. Amazons stock availability markers
How many times have you accelerated your purchase when you saw that “Only one left in stock” flashing on the screen? Artificial scarcity is a pretty common in e-commerce websites. It depicts that the product is in demand, which makes it more desirable to us. It helps triggers the sale, which would otherwise be put off because of the procrastinating buyers.
No one would buy this tinfoil hat, but now the “Only 1 left in stock” message has got them to rethink their choices because of this perceived limited opportunity.
2. Starbucks holiday special
Starbucks (in all their wiseness) uses its “limited edition” tactic to drive up its sales during the holiday season. Starbucks lovers just can’t seem to get enough of the holiday-themed limited edition drinks, including the iconic “Pumpkin Spiced Latte” in its aesthetic Halloween cups during the Halloween season.
There’s another rush during Christmas when Starbucks fans rush to buy the Christmas drinks, in its limited-edition cups. Starbucks takes it up a notch with its incredibly Instagrammable cups, driving in more customers.
These flavours could be made available all year round, but the idea of it being limited does the magic of creating huge demands.
3. Snap Inc. Spectacles
Snap Inc. started a marketing campaign for Spectacles, glasses that could record 10 seconds video from the wearer’s perspective. They chose not to go by the traditional mode of selling through online stores. Snap Inc. churned up the innovative idea of selling the product by randomly dropping Snapbots in random cities just for a day.
The news of Snapbots dropping in the city spread like wildfire through social media, and people lined up to get hold of those limited edition glasses before it ran out of stock.
4. OnePlus One invite
Initially, when OnePlus One was released, only the customers with the invite could buy it. This marketing strategy was one of the driving factors behind the massive hype behind this phone. OnePlus brought in the idea of exclusivity with the invite-only approach, channeling the ‘always want things we can’t have’ emotion.
5. Free Netflix for 2 days
Recently, there’s been a lot of buzz around Netflix being free for 2 days. A lot of people binged Netflix in those 2 days. But if you think about it, why was it such a big deal? You can anyway get Netflix free trial period for 30 days, 15x more.
Netflix used this principle of scarcity to broaden its user base. They drove the crazy hype behind it, making people think it's a rare opportunity to let go.
6. Supreme shirts
The original cost of a Supreme t-shirt is $35-$40, which does not seem like much right now. What’s interesting is that these prices rise exponentially once these products are sold out. Supreme sells these products again but at increased costs, creating an exclusive market for those who can shell out the money.
Some people have flipped Supreme products for 20 times the original cost. Supreme even rolled out a ridiculously expensive brick, and it sold out because of this same phenomenon.
Artificial Scarcity helped them create a cult of fanboys who bought their strangely themed products, season after season, no matter how ridiculous it was, and Supreme kept rolling out stuff they didn’t need, only to see how absurdly far this canvas can be stretched.
All in all, Supreme is a brand that redefined artificial scarcity for millennials.
Artificial scarcity is an excellent persuasion strategy and acts as a significant catalyst for increasing conversions. Its magic only works if appropriately employed. What brands need to keep in mind is that sometimes it can backfire and cause more harm than good.
Key takeaways
Artificial scarcity boosts up sales by representing an item as limited or rare. It acts as a great marketing tool for companies to drive in more customers. It thrives on FOMO.
And remember, scarcity means more to a customer.
The Canvs Editorial team comprises of: Editorial Writer and Researcher- Paridhi Agrawal, the Editor’s Desk- Aalhad Joshi and Debprotim Roy, and Content Operations- Abin Rajan
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