How Does Scarcity Affect Consumers – Have you ever bought something you didn’t need just because it was on sale? Have you ever fought with your siblings because your parents bought them something you didn’t have? Have you ever done something other people told you not to do? We’ve all been there. You may not know that the concept of scarcity was at work in all of the above cases. Let me show you how it works and how you can apply the same principles to your business.
Simply put, scarcity is a state of insufficient resources to meet demand. Faced with limited resources, we strive to use them efficiently in the process of making important decisions.
- 1 How Does Scarcity Affect Consumers
- 2 The Power Of Scarcity In Growth Marketing
- 3 What Is The Scarcity Principle? Scarcity Principle In A Nutshell
- 3.1 Navigating Purchase Behavior & Decision Making
- 3.2 Rising Inflation Rates Can Be Fought With An Economics Of Surplus
- 3.3 Price Controls And Their Effects
How Does Scarcity Affect Consumers
Scarcity increases our focus on the problem at hand, increasing cognitive processing of relevant information for efficient use of resources and stabilization of perceived value. But it can lead to short-sighted and impulsive behavior, focusing on short-term and long-term gains. Impaired cognitive function that can lead to poor decision making.
The Power Of Scarcity In Growth Marketing
“A reaction is an unpleasant motivational arousal that occurs when people feel threatened or deprived of their free behavior.” (Steindl et al., 2015)
So when a product or service that is normally available becomes scarce, this perceived “threat” to our freedom to have it makes us want it much more than before.
When we see what we want less available, we experience physical anxiety. It is worse when there is direct competition. Focus narrows and emotions run high, making it difficult to feel at peace. Opportunities seem more valuable to us when their availability is limited.
The idea of potential loss plays an important role in human decision-making. People seem to be more motivated by the idea of losing something than by the idea of gaining something of equal value. We prefer to avoid losses than to chase profits. Directly related to this is FOMO (Fear of Missing Out).
Types Of Scarcity: How To Use It To Influence Anyone?
GoPetplan.com tries to convince the user to buy a single cat insurance policy instead of paying several expensive bills shown.
In a study on how to apply loss aversion to health campaigns, leaflets urging young women to be screened for breast cancer through self-examination were significantly more successful when they made their case in terms of
(eg “You could potentially ‘miss’ a lot by not devoting just five minutes each month to self-examination”), not
(For example, “There is potentially a lot to be gained if you spend just five minutes each month doing self-examination”).
Do Consumers Expect Discounts When Inflation Is Running Hot?
Another unpleasant emotional state that can influence our purchase choices is the anticipation of regret. That is, the feeling we get when we imagine what would happen if the decision we are making now were wrong.
In time-limited offers, the user must make a decision before a set deadline, which adds a sense of urgency to the decision-making process.
The most common scenario in real life is waiting until the last minute to complete exam projects/research. In these cases, the level of concentration and attention increases, as well as the setting of priorities.
Flipkart features a countdown timer that is displayed when the discounted price ends, prompting the user to get the product offer before it expires.
Scarcity Principle: 18 Scarcity Examples In Products And Marketing
This is considered more powerful than temporary scarcity, as availability depends on popularity or supply and is therefore unpredictable.
Oil prices are rising in countries like India because of limited supply, while the opposite is happening in countries like Kuwait and Saudi Arabia because of availability.
Amazon shows “only 2 left in stock” which means the product is decreasing in availability, forcing the user to make a quick decision.
The popularity of an article is a social proof that it must be good and valuable and makes us get an offer.
What Is The Scarcity Principle? Scarcity Principle In A Nutshell
Worchel, Lee, and Adewole (1975) asked people to rate chocolate chip cookies. They put 10 cookies in one jar, and two identical cookies in the other. The cookie in the two-cookie jar was rated higher, even though the cookies were the same! Not only that, when there were many cookies in the jar, soon most of the cookies were gone, the cookies that remained scored even higher than the cookies in the jar where the number of cookies did not change
Myntra is used to displaying “18 people have added this item to their cart” on the product page, which informs the user that the product they are viewing is popular and may be discontinued soon.
It is more effective than the previous two. Not only do we want a commodity when it is scarce, but we also want it, even more, when we have to fight for it.
Old stamps and parts are very valuable because they are unique and not easy to come by. People then bid higher to own the item, causing the item’s value to increase significantly.
Martech Podcast // Marketing + Technology = Business Growth
Similarly, several companies will auction digital broadcast and satellite movie rights, outbidding each other and paying huge sums to acquire the rights.
When access to certain information is restricted, it is considered more valuable due to exclusivity, especially when it is related to social status.
Priority Pass membership gives access to special airport lounges that offer free food, alcohol, Wi-Fi and discounts on shopping.
One Plus implemented an invitation-only sales strategy that helped them create a lot of buzz in the market. People who were “lucky” to be invited felt more privileged. This resulted in more than 25 million site visits and nearly a million sales less than a year after launch.
While Supplies Last: 8 Scarcity Marketing Tactics (2022)
When something interferes with our previous access to an item, we want it more and want to have even more than before.
The Romeo and Juliet effect emphasizes that the greater the parental disapproval of the relationship, the more intense the relationship becomes.
The UK High Court has ordered its ISPs to block the Pirate Bay website, but paradoxically this has led to a record number of unique visitors.
Now or never scenarios. We strive to experience “once-in-a-lifetime opportunities” because they are not available later.
At the time of its launch, Reliance Jio offered great introductory offers in India, which attracted many customers.
In Kanchipuram, the Athi Varadar idol is available for darshan once in 40 years for just a few days. Thousands of devotees visit the temple to experience this once-in-a-lifetime opportunity.
Amazon celebrated its 5th anniversary in India by offering customers a good amount of cashback for a minimal amount.
Rebecca Ratner and Meng Zhu investigated how scarcity affects choice when multiple consumer goods are displayed simultaneously. They found a clear pattern that scarcity polarizes advantage. “When people feel that many goods are in short supply, they choose relatively more preferred goods,” says Ratner. “They become less scouts. They focus on their lead option.” If so, customers rate their favorite items higher.
Rising Inflation Rates Can Be Fought With An Economics Of Surplus
A false deficit refers to a deficit in production when there is no deficit. For example, companies periodically run sales campaigns stating that they are only available for a limited time. When people notice this pattern, companies lose credibility and risk losing business.
Many companies use psychological manipulation to attract users and influence their decisions to maximize profits. Understanding how scarcity works allows us to be aware of these tactics and be prepared as consumers.
What other human behaviors have you observed around you? I’d love to hear all about it in the replies. Thanks for reading! If you found this article useful, please share it 👏👏👏 to help others find it! It will tell me to write more!
To see more of the UI/UX design I’ve worked on, visit my portfolio or Dribbble. If you want to connect with me, feel free to visit my LinkedIn or just say hello to [email protected] or message my FB Messenger Chatbot.
Price Controls And Their Effects
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Solved Yor Marginal Benefits From A Choice Do Not Reflect
4 Economics Economists insist that scarcity exists and forces people to make decisions about the use of resources. But people in the United States and elsewhere see many signs of wealth around them in their daily lives. They also see that some important resources, such as water and food, are routinely wasted. How important can the concept of scarcity be given the widespread evidence of wealth and extravagance? Economists do not see the paradox. Abundance and scarcity can coexist. People may view scarce goods as abundant if they receive misleading signals about a scarcity problem. Scarcity exists when resources are limited
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