Every company out there needs to come up with an effective selling strategy to promote its product and increase its brand awareness in the market. One such strategy that many companies have turned to these days for the same purpose is scarcity. With this strategy, these businesses can drive sales by creating demand for their products.
What is Scarcity?
Scarcity as a strategy is not that hard to understand. Consider a product that is really popular in the market. If the product tends to fall short of supply, it creates a natural desire among buyers. With time and extended scarcity, this desire turns to demand which then creates a sort of rush for the product once it reenters the market. This rush, in turn, makes the product sell like crazy, even at any price the seller deems worthy. After all, it is normal human tendency to want what others cannot have.
How is Scarcity important?
Although an easy concept to understand, scarcity in reality is hard to implement. In order to do this effectively, one will need to understand how exactly it works in pushing the sales of a product. Differentiation is a must when it comes to selling products these days.
Companies will need to come out with effective marketing tactics like offering something new and improved, or maybe even bundling a product with another one to increase sales. However, at the end of the day, differentiation alone cannot drive the sales of a product. The process can be completed effectively only if demand for the product increases. And this can be achieved by scarcity alone.
Real life examples that reflect the strategy of scarcity
Let’s take a few examples into account about how different companies use the strategy of scarcity to sell their products.
- Christmas Sales
Nearly everything can be bought online these days. However, come Christmas, and every department store broadcast news of flash sales that have people lining the streets outside the mall in the hopes of grabbing the hottest items first. Although none of these items are in short supply, the stores market their sales in such a way to make shoppers believe that these products are scarce and cannot be found anywhere else.
- Movie Release
The same can be said for new movie releases. Movie theaters and multiplexes introduce pre-booking schemes to generate demand for tickets.
In all of these cases, employing the strategy of scarcity effectively allows these businesses to convince customers that they will be the first to own something special. As such, the companies may not necessarily be better than others in the market. However, they will need to create the impression that they are in fact special, and can offer their customers something that no one else can.
Scarcity has its flaws too
Scarcity has become the foundation for several companies planning to increase the sales of their products. It is the essential tool for driving the energy behind the riches enjoyed by energy and pharmaceutical industries, athletes and celebrities and even the entire Silicon Valley.
However, scarcity has its flaws too. If not implemented properly, it can bring to the forefront the dark side of people as well as unfettered capitalism. Without proper implementation, scarcity can create greedy villains and predators eager on feeding on the money of innocents. It can also lead to the rise of several fake schemes that can also cause a lot of disturbance in the market. Hence, the proper way to enjoy the benefits of scarcity is to implement it effectively.
Scarcity is an effective marketing strategy that allows companies to push the sales of their products by increasing desire and demand. However, it is a difficult concept to implement and needs to be done in an ethical, authentic and thoughtful manner. This alone, will help a company to reap the benefits of the strategy.