Scarcity Sells

by George Lovell | | 0 comments

Ever notice how the Apple store will display as few demo models as possible in their mostly-empty stores.

How their commercials will typically show just one of the advertised product.

How they refuse to provide any information on upcoming products, and go to great lengths to cover up any leaks.

That you can pre-order their devices weeks before launch.

You'll never see footage of iPads rolling off a production line, or photos of thousands of MacBooks stored in a warehouse.

You'd never guess that Apple manufactures around 240 million iPhones per year, or that they've made more than 2.2 billion to date.

Yet people queue up outside of stores for days, just to be one of the first to get their hands on the new product.

It's almost as if there isn't enough to go around...

Apple's Zhengzhou plant is spread over 1.4 million square metres and contains dormitories, restaurants, basketball courts, swimming pools, a football pitch, a grocery store, and a bank. It employs 200,000 workers (8 Portishead's or 43% of Bristol) who produce as many as 500,000 iPhones a day.

With 1.5 billion active iPhone users worldwide, we need not fret just yet.

Whether it's Covid lockdowns or supply chain issues, retailers always publicise threats of shortages. Photos of empty shelves ensure us that Christmas is cancelled this year.

How else can you convince people to upgrade their phones every year, despite the fact that it looks exactly the same?

Scarcity sells.

We want what we can't have.

Companies leverage scarcity - the fear that there may not be enough - to increase perceived value and quality. We can't help but assume that a cheap, readily-available, mass-produced product is less valuable and of lower quality than a more expensive, difficult-to-source alternative. 

Louis Vuitton CEO, Bernard Arnault, is the richest man in the world - worth twice as much as Bill Gates, or more than Warren Buffett and Mark Zuckerberg combined. He’s achieved this not by selling things people need, but things they want. Because these things are so hard to get, people are willing to pay extortionate amounts to get them, which means only rich, high-status people can afford them, which makes them even more valuable.

Scarcity and prestige go hand-in-hand. Brands that exploit our built-in desire for status can generate a fortune.

Take Birkin handbags - the pinnacle in over-priced designer handbags. Often donned by Victoria Beckham, Kim Kardashian and other celebs; these goods are so impossibly difficult for the average person to get - even those willing and able to spend £7000 - £10,000 for their "basic" bags, or £200,000 for their "premium" bags. But you can always join their 6-year waiting list for a new bag.

Hermes could surely manufacture and sell a lot more than they currently do, but as with most luxury goods, an increase in supply results in a decrease in demand, which drives the price equilibrium down.

Well, it works. One study showed that
Birkin bags outpaced both the S&P 500 and the price of gold in the last 35 years, since they were first produced in 1981. The annual return on a Birkin was 14.2%, compared to the S&P average of 8.7% a year and gold’s -1.5%. That's a 500% return on investment in 35 years!

Scarcity - real or perceived - drives the price that people are willing to pay up, significantly.

Did you know that you can buy man-made diamonds? Synthetic diamonds (also rubies and sapphires) are indistinguishable from mined diamonds. They are created in the same way - with heat and pressure - and have identical physical properties.  Diamond mining is dangerous, often involves child and slave labour, and has a devastating impact on the environment. You will have heard the term "blood diamonds", which refers to the illegal trading of diamonds to fund war and terrorism in African countries.

Despite being 100% identical, mined diamonds cost 4-5x more than synthetic diamonds, and have significantly greater resale value. Mined diamonds take billions of years to form, and there's a finite amount of them in the earth. They are hard to find and require a complex infrastructure and workforce. In contrast, a laboratory can mass-produce perfect diamonds quickly, efficiently, ethically and perpetually. 

It's not the end product that we value so much is it?

We don't want to miss out.

We all experience FOMO: Fear Of Missing Out.

From an evolutionary perspective, FOMO served as a necessary survival function. It was a useful adaptation, at a time when we didn't know where our next meal was coming from.

Being a part of a group or community gave us a better chance of securing food, water, shelter and protection.
To be cast out was quite literally a death sentence.

It's a feature, not a bug.

Not having critical information, access to resources, or simply feeling left out of the in-group produces a stress response in the amygdala. At worse, we find ourselves in a perpetual state of hypervigilance - constantly on the lookout for perceived threats.

Scarcity marketing is used to exploit our built-in fear of missing out.


"5 people looking at this right now"

"Limited Edition"

"While stocks last"

"As seen on..."

"And right now, you can save 20%"

You know the triggers that prompt you to act fast, think later.

Companies may even target the consumer directly: Ads featuring people of similar age and background using a product, or celebrities that you admire (determined by your content consumption).

Once you recognise this, you will see it everywhere.

We are, by our nature, more attracted to that which we cannot have, what our friends and colleagues have, and what the people we admire have.

For a company, cultivating a scarcity mindset amongst its customers is often more lucrative than cultivating an abundance mindset.

Creating a sense of FOMO through scarcity can induce more emotion and be an overall more powerful marketing tactic than promoting a product for its utility and strengths.

This is also why social media and online shopping can leave us feeling anxious or stressed out.

The internet addict is in a constant low-level state of fight-or-flight; the fear of being left behind like an itch in the back of the brain.

In such times, it is helpful to remind ourselves that there's plenty to go around; that we're not missing out on anything.

The only thing we might miss out on is the moment itself.

Thanks for reading!

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