Humans have become masters of mental shortcuts, a skill that can be harnessed to great effect in marketing and advertising.
In a world where our attention is constantly divided and our brains are fatigued from processing an overwhelming amount of information, we instinctively seek ways to streamline our decision-making process. Deeply aware of the sheer volume of messages bombarding us each day, we rely on these rapid mental shortcuts to navigate through the noise. We gravitate towards clues and signals that act as beacons of efficiency, guiding us towards faster decisions.
By understanding these shortcuts, marketers and advertisers can strategically craft their messaging to align with these cognitive tendencies, providing consumers with the necessary cues that allow them to effortlessly make choices amidst the chaos. Scarcity, when used correctly, can be a game changer when it comes to increasing sales.
How Disneyland Masters the Art of Perceived Scarcity
One spring, my family embarked on a trip to Disney World, a highly anticipated vacation for all of us. As the designated travel coordinator, I took charge of making reservations, buying tickets, and planning our itinerary. With two boys who preferred thrilling rides over slower attractions, I found myself searching for a compromise that would cater to everyone's interests.
That's when I stumbled upon Star Wars: Rise of the Resistance, a ride that caught my attention on the Disney website. What intrigued me even more was the virtual queue system, the only way to experience the ride, with specific times available for joining.
Determined to secure our spot, I set an alarm for the opening of the virtual queue and eagerly awaited the moment. However, to my dismay, the queue filled up quickly, and I had to try again in the afternoon. Suddenly, my interest in the ride transformed into an obsession. Throughout the day, I anxiously monitored the time, waiting for the second chance to join the virtual queue. Reacting physiologically, my heart raced, and my palms grew sweaty, reflecting the concept of reactance theory.
Finally, the moment arrived, and I swiftly clicked the button, placing us in a backup boarding group. The emotional rollercoaster continued as we anxiously awaited our turn, realizing the allure of the ride stemmed from its scarcity. The entire experience made me reflect on the influence of scarcity and how it triggered a competitive drive within me, prompting a hyperfocus on securing the coveted opportunity to ride.
So… Does Increasing Product Value in Consumer’s Mind Increase Sales?
Two studies provide compelling evidence of how perceived scarcity can significantly increase the value and sales of products. In the first study conducted at a large grocery store in the United States, featured products without quantity limits experienced a 202 percent increase in sales when advertised. However, when a quantity limit was introduced, such as "only 3 per customer," sales skyrocketed by about 544 percent.
Similarly, a second study conducted at three grocery stores in Iowa focused on Campbell's soup. When the soup was discounted from $0.89 to $0.79 per can, different purchase limit conditions were tested. The results showed that compared to no limit, a 4-can limit led to a 9 percent increase in purchases, while a 12-can limit resulted in remarkable 112 percent higher purchases.
These findings demonstrate that setting perceived scarcity through quantity limits can significantly influence consumers' buying behavior and increase the perceived value of a product.
How You Can Utilize This Tactic in Your Business
Companies can employ various strategies to limit the availability of a product or service, enhancing its value in the eyes of consumers.
One approach is through limited edition releases, where companies create exclusive versions of their offerings, available for a limited time or in limited quantities. This tactic is often utilized in fashion, collectibles, and technology industries, driving up demand and perceived value.
Another method is through membership programs that offer exclusive benefits and privileges to a restricted group of individuals. By limiting membership availability, companies create a sense of exclusivity and scarcity, making the program more desirable to consumers.
Additionally, hosting invitation-only events can effectively restrict access to a product or service, instilling a feeling of exclusivity and importance. These events provide attendees with unique experiences and first access to new offerings, further increasing their value and desirability. By strategically limiting availability, companies can leverage scarcity to enhance the perceived value of their products or services, driving consumer interest and demand.
Scarcity breeds competition and amplifies the perceived value of an item. It ignites our desire for what we can't easily obtain, prompting us to focus on its unavailability.
Surprisingly, scarcity can also trigger mental shortcuts, which may initially seem contradictory to the intense fixation on scarce items. However, it's just another facet of the scarcity effect, and our response to a scarce product varies depending on the circumstances at hand.
To discover more ways you can use scarcity to drive up sales in your business, read my best-selling book The Power of Scarcity.