Whenever choice is limited or threatened, the human need to maintain a share of the limited commodity makes us crave it even more. Scarcity increases the value of any product or service. Scarcity drives people to action, making us act quickly for fear of missing out on an opportunity. Potentially losing something before we've even had an opportunity to possess it drives people to action. We don't want to miss out on anything we could have had. We want to get around any restriction placed upon us. We feel uptight and want back our freedom. This causes tension and unrest. The Law of Scarcity not only pertains to physical products, but also to time, information, price, and knowledge. We want to be the ones to own the rare items or to get the last widget on the shelf. The more the scarcity of an item increases, the more the item increases in value, the greater the urge to own it. Consider how the Law of Scarcity made the Beanie Babies' popularity soar. The Beanie Baby phenomenon was created by Ty Warner, When Ty Warner would take certain Beanie Babies off the shelf and limit their availability, prices skyrocketed for the discontinued and suddenly rare and valuable Beanies. Spurred on by the threat of losing out, collectors began hoarding the stuffed animals and speculating as to which ones would be retired next. The Law of Scarcity was also used to create demand for diamonds. In spite of a dramatic leap in production from 15 million carats to a whopping 100 million carats, DeBeers, the company maintaining a monopoly over diamond supply, still managed to render the diamonds scarce. Running only ten diamond sales per year and inviting only a select number of dealers, DeBeers easily controlled the supply and pricing. Not only this, but each invited dealer got only a limited amount of diamonds. DeBeers selected for them, and if they complained, they were not invited back! Psychologist Anthony Pratkanis of the University of California, Santa Cruz, is recorded as saying, "As consumers we have a rule of thumb: If it is rare or scarce, it must be valuable and good." Department stores use the Law of Scarcity to bait consumers into an uncontrollable shopping frenzy. Fights break out at department stores when people are going after those scarce items, which are being offered at bargain prices for a limited time only. The lower prices are bait--a loss leader for the store, but certain to generate a buying frenzy that is contagious. Blinded by scarcity, consumers will buy anything and everything even if they don't need it. For example, you see patrons buying three DVD players. You ask them why "three," and they don't know. All they know is that the store said supplies were limited, the sale was only for today, and each shopper was limited to three. So they bought three DVD players. We also see the Law of Scarcity being frequently employed by home-shopping television networks. They know that rare things are highly valued in our society, so they always have a little clock running in the upper corner of the screen. You only have ten minutes to purchase this precious item, and the clock lets you know how little time you have left to make this buy of a lifetime. Home-shopping channels make time the scarce resource. They often have a counter on the screen too. Sometimes the counter runs down with every sale. So the host says, "We only have a limited number of these imported widgets, and when they're all gone, we will never sell them again." And the counter showing the number of items remaining continues to tick down. The counter creates the impression of scarcity. Some stores have this "limited number" thing down to perfection. Often when we go shopping, we are only casually interested, telling the salesperson, "Just looking, thanks." We glance over the packaging, examine the sale sign, etc. Then the salesperson plays the number's game. Approaching us, she says, "It's a great model, isn't it? Especially at this price! Unfortunately, I just sold our last model." We suddenly feel disappointed. Now that it's no longer available, we feel that we really want it, even though we were only mildly interested before. We ask whether there might be another one in the back or at another location. "Well, let me see what I can do. If I can get another one for you at this price, will you take it?" she baits. Trapped! Funny thing is, we don't even realize the trap is being set, so the technique works like a charm. We are asked to commit to a product when it seems like it will soon be totally unavailable, and therefore seems incredibly desirable. Threatened with potentially losing a great deal, we agree. Then, of course, the salesperson comes back with the great news. The product will be shipped to the store in three days. In the meantime, all you have to do is sign the sales contract. Have you ever wondered why some "in" restaurants continue to have waiting lines outside? Long lines seem to make the restaurants even more fashionable, increasing the length of the line by an even greater degree. Why don't restaurants eliminate the waiting line by increasing their prices? They don't because removing the lines would eliminate the scarcity factor, and demand would collapse. Additional Forms of Scarcity in Marketing Consider the following "scarcity" tactics we see day-to-day: * Clubs and restaurants that create exclusive membership requirements * Disney videos (should it be DVDs) that are offered for sale once every five years * Airlines that only hold your seat for twenty-four hours, informing you that "These seats might sell out" * Collectors of hard to find antiques and rare baseball cards * Special "by invitation only" sales * Going-out-of-business sales * Offers "not available" in stores * Exclusive, one-time offers * Membership in an exclusive club An owner of a successful beef-importing company decided to conduct a study among his staff. The staff members were assigned to call the company's customers and ask them to purchase beef in one of three ways. One group of customers just heard the usual sales pitch (presentation) before giving their orders. Another group was given the usual sales pitch, (presentation) but they were also presented with evidence that imported beef was expected to be in short supply in the coming months. A third group was given the usual sales pitch (presentation) as well as the information about the beef's upcoming scarcity, but they were also told that this news was not available to the general public, and that the information provided was exclusive to the company. Not surprisingly, the sudden demand for beef created by these phone calls exceeded the supply on hand, and the company had to scramble to fill the orders. Customers alerted to the coming scarcity of the beef bought double the amount of those receiving only the standard sales pitch, and those learning both of the coming scarcity and that this was "secret information" bought six times the amount as those hearing only the standard sales pitch! Application Questions Scarcity is overused and abused. Some of your prospects will not believe you. How can you create legitimate scarcity? How can you create scarcity using time, information, price, and knowledge? The Law of Scarcity works because it makes people feel they will lose their opportunity to act and choose if they dont do so immediately. How can you help them make a good decision right now? Conclusion Persuasion is the missing puzzle piece that will crack the code to dramatically increase your income, improve your relationships, and help you get what you want, when you want, and win friends for life. Ask yourself how much money and income you have lost because of your inability to persuade and influence. Think about it. Sure youve seen some success, but think of the times you couldnt get it done. Has there ever been a time when you did not get your point across? Were you unable to convince someone to do something? Have you reached your full potential? Are you able to motivate yourself and others to achieve more and accomplish their goals? What about your relationships? Imagine being able to overcome objections before they happen, know what your prospect is thinking and feeling, feel more confident in your ability to persuade. Professional success, personal happiness, leadership potential, and income depend on the ability to persuade, influence, and motivate others. |
