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The Connection Between Scarcity and Marketing

Updated: Apr 1



What is scarcity marketing? Almost every interview I've had in the media started with that question. Before you get into what scarcity in marketing is, you have to understand what scarcity means.


What is Scarcity?


Scarcity is unavailability — a restriction of some type. When it comes to scarcity marketing, there are several types.


One type is supply-related scarcity, caused by a distribution shortage or intentional restriction. We see this with product drops that encourage us to use emotional decision-making.


Demand-related scarcity is caused by popularity. Items sell out when they're popular.


Time-related scarcity is a restriction of time that can appear in many short-term forms. A flash sale, a coupon, or a limited-time offer like pumpkin spice lattes are great examples.


Limited editions and service bundles are supply-related scarcities. These are twists on the original product.


We need to bring the concept of unavailability to our marketing messages. Scarcity could be a product you offer in a bundle or one coming soon with a waitlist. The message is what matters in scarcity advertising.


What I love about the concept of scarcity in business is that it doesn't cost anything. It's free to add that a product was restocked to an email subject line, yet you present a scarcity mindset. It doesn't cost you anything when you talk to a prospect and tell them that you're only working with a limited number of clients. It's the words that you use.


What Are Examples of Scarcity?


What are some examples of scarcity in marketing? When the McRib was first introduced, it was offered every day and wasn't a popular item. When McDonald's decided to make it a seasonal offering, it became something people scrambled to get, partially due to commodity theory.


Another great example is a waitlist, which Tesla takes advantage of. A waitlist shows consumers that a product is popular.


What is The Psychology of Scarcity?


What is actually happening in the brain when we experience scarcity?


Scarcity psychology is massive. Scarcity is one factor that's difficult for us to ignore in a cognitive capacity. When faced with something scarce, our brains light up in the area where value processing occurs. We value the item very quickly.


The other thing that happens is that the part of the brain where decision-making occurs quickly lights up. We skip the normal steps we take when trying to decide whether to make a purchase or not.


We can't help but value a scarce product or even someone we want to work with who seems to be a little hard to get to.


For many people in service-oriented businesses, it can seem like scarcity principles only apply to products. However, I was talking to an employer who told me he might have created the perception of scarcity without meaning to. When potential clients call him, his schedule is jam-packed. Rather than turning clients away, this scarcity does the opposite — it makes people more persistent in securing that meeting.


Because his calendar was filled up, these clients think he must be doing something right. That many clients booking appointments couldn't be wrong!


Is Scarcity Genuine When Used in Marketing?


If you use scarcity, it needs to be genuine.


If you hold a flash sale for 50% off everything today only and then run those sales over and over, that's a time-related scarcity approach. It's not necessarily unethical, but it's creating intentional scarcity and is very repetitive. Customers begin to wait because they know that you're going to hold that sale again.


The other thing that happens with intentional scarcity is that people start talking — and not in a good way.


A woman told me the story of how she was on a cosmetic site and saw that there was only one product left. This created a sense of urgency. She bought the product. But she started to wonder if she should refresh the page to see if she really bought the last item. When she refreshed the page, it actually showed there were three products left.


She did more research and realized that people were complaining on Twitter. They were saying the same thing — the website made it seem that the product was almost out of stock. She then turned to Reddit to complain about her experience.


I can't tell you how this situation impacted the company's sales. What I can tell you is the resulting reputation from all of those people talking is not good. The fact that we have access to all the reviews and chatter about a company can truly impact sales. To get the most out of scarcity, it must be something that is true to you or your brand.

I talked before about the McRib; now I want to talk about McDonald's in general. When I was interviewing the former VP of Global Marketing at McDonald's, he talked about the campaigns they've completed over the years, such as offering Happy Meal toys tied to a movie.


These items all related to concepts that created excitement and fun. The recent Adult Happy Meal sold out right away. It brought back nostalgia for many customers because the toys were old school, with characters we remember from childhood. McDonald's was genuine in how it approached scarcity.


Does Rebelliousness Apply to Scarcity in Marketing?


The Reactance Theory says that when we are told we can't have something, we want it even more. One study involved teenagers and looked into anti-smoking campaigns. The teenagers were asked: “When your parents told you not to smoke, did that really help you avoid it?”


Their response was classic: “It was actually that that made me want to smoke more.”


Even as adults, we don't want anyone to tell us no; instead, we're going to push harder. Scarcity in business invokes that reactance. If we see that the product we wanted to buy is now out of stock, we might get a little bit upset. In a tense situation like Black Friday, we want to ensure we get that television before everyone else.


Is There a Relationship Between Inflation and Scarcity?


Does inflation affect scarcity? At this point in time, scarcity is still driving purchases. People aren't hesitating to buy vehicles or join waitlists, and products drop and sell out continuously. Scarcity is that powerful.


How Do Social Media Influencers Play Into Scarcity Marketing?


I have been contacted by Instagram influencers who want to promote my book. Some want to promote it for free; others want to be paid. It’s important to remember that the source claiming scarcity must be credible. We must believe the person or business that is telling us scarcity exists.


We have to make sure that influencer partners are to be trusted. Would they know that your product has sold out before?


Can I Overcome Scarcity?


When you hear how powerful scarcity in marketing is, you start to wonder if you are powerless. Are you always going to make the same purchase decisions?


I want you to understand that scarcity may drive your decisions — but you don't have to take immediate action.


Fear of Missing Out (FOMO) often causes us to buy something because we're worried it won’t be available tomorrow.


FOMO is not something that you'll experience for a long period of time. It's part of a greater theory called Loss Aversion, which is a part of Prospect Theory.


You only feel the effects of FOMO for a short period of time. As time passes, you won’t look back and regret the missed purchase.


FOMO and loss aversion can feel very strong in the moment. Knowing that you're not going to continue to feel that way helps these factors lose their power.


If you see a countdown timer and can only get a product today, close your browser, walk away, and decide if you really want to make the purchase.


In less urgent situations, take your time. Don't fall into the trap of “I need to get this just because it's hard to get.” You need to make sure that your decisions are based on wanting or needing the item.


If you're considering hiring someone to help you with a task, ask yourself: “That person's hard to get. Do I really want to work with this person, or is this the only reason that I'm going this route?”


Does Age Affect Scarcity Principles?


How does age affect how we react to scarcity?


One study shows that we are impacted by scarcity as young as six years old. We make decisions when something is running out or hard to get because we've seen it from a very young age.


As we get older, we become less susceptible to certain types of scarcity. As you reach your retirement years, you are more loyal to certain brands and products you use regularly. If you see an announcement that a product different from your normal brand is selling out, you don't really care.


If something is selling out, it's in very high demand. If a brand is trying to appeal to an older group, this concept can have a negative effect.


Let's say that you're a cruise line running an advertisement. If you promote a cruise as high demand or nearly sold out, you might turn off older customers. You're better off showing the experiences that they would have on the cruise.


As we get older, we learn that we don't have to take action right away just because everyone else is. From a business perspective, you need to consider your customers and where they fall within age ranges.


I hope I have given you some insight into how scarcity marketing works — both from a business perspective and a consumer perspective.


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