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Why Scarcity Should Be Part of Your Strategy


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It’s a fact of life that people are most attracted to things that are exclusive and hard to come by. The perception is that things that are hard to obtain are somehow better in quality than those that are readily available.

It’s the kiasu phenomenon. Kiasu is a colloquial Hokkien word that means a fear of losing. And the less readily available something is, the more people fear losing out, and the more covetable that item becomes. So when brands manage to make people fear that they are losing out, they have stumbled upon a winning strategy.

The scarcity strategy, where marketers use the fear of shortage to sell more.

The exclusivity inherent in luxury branding is a scarcity strategy. Although luxury goods may not be scarce per se, but a large number of luxury brands maintain their exclusive status simply by ensuring their items are only available to very few, due to prohibitively high pricing.

But when products of luxury brands make their way into the hands of more and more people, their desirability drops.

Like Pierre Cardin, which you might know as a brand of underwear sold in Parkson. Cardin was actually a designer on par with Christian Dior back in the day, but because he made such a business of licensing out his name for use on any and every product (including toilet paper!), his brand became generic and lost all credibility.

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Or events like the Formula One Grand Prix. There was a time when it was considered an enviable privilege to be able to afford to have a weekend out at the races in Sepang, but it has recently been announced that Malaysia will stop hosting the event after the current agreement expires in 2018.

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The reason is that ticket sales and F1 attendance are dropping due to a proliferation of similar events in close proximity. Malaysia used to be the only host-country in the region. Today we compete with events in Singapore, China and the Middle East. What was once exclusive has become, dare we say, commonplace.

Even a behemoth brand like Apple no longer enjoys the anticipation, constant chatter and long lines that used to accompany the launch of a new iPhone. If you know a new phone will be launched next year and the year after that, there’s no reason anymore to get fired up.

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But price and limited product releases are not the only scarcity strategies. Brands can also employ strategies like placing limits on the availability of products either in terms of the number of products available or the time they will be available for. There is nothing more covetable than the “Out of Stock” item or the one with “Only LIMITED quantities available.”

Take Groupon for example. Their business model is to offer deals at a huge discount, for short periods of time and a sense of exclusivity for those quick enough to pounce on the offer. Because each deal needs a set amount of people to “unlock” it, customers basically help market Groupon for them.

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Many online retailers have out of stock size indication, with some helpfully letting you know “Only 1 piece left!” in your size. Wouldn’t you whip out that credit card if you really wanted that one piece?

eBay ups the ante by forcing customers to “fight” for one item by way of auction. An auction has both a time and quantity based limitation. The countdown timer for the auction to end spurs bids that increase price. If you have ever been caught in a bid war on eBay, you’ll know how the price can sky rocket in a mere matter of minutes!

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One of the easiest things for a customer to do is to put off buying something until later. After all, if the item is always available, why hurry to cough up the cash? Scarcity pushes them to take action and make a decision fast.

How is your brand using scarcity to provoke action?
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