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You’re on a break and start scrolling through your IG feed when you notice an ad for something you don’t really need, but have the urge to buy it immediately. Sound like you?  If the answer is yes, it’s probably because you saw three magic words: “limited time only.” 

We immediately add the product to our online shopping cart and punch in our credit card numbers in haste whenever we feel like something we want (suddenly) is in short supply.

Businesses aren’t afraid to take full advantage of our buying impulses by telling us that there’s “only one left” or including a countdown timer for when a sale ends on their website or that the item is only available between 12am- 1am.

We’ve even seen this play out during 11.11 sales which has now become a monthly affair in online marketplaces like Shopee and Lazada — you would have read about the recent craze over Taylor Swift concert tickets when some people were willing to pay 10x more the value of the ticket just to get their hands on them.

These impulse purchases don’t just hurt your wallet for the next week or month. Over time, they can prevent you from reaching the big financial goals that really matter — buying a car, planning a family holiday, or starting a college fund for your kids.

That’s why it’s so vital for us to understand where our shopping habits come from and how we can gain control over them. 

Today we will walk through the concept of scarcity, and how our brains react at a primal level when we know that a resource is limited (even if the “resource” is a dress or a pair of shoes).

Exclusivity Scarcity
Some products have a price-tag that almost makes you gag when you see the number of digits.

A good example of this is whenever Apple launches a new iPhone. You would notice that they get more expensive with every model. They even sell chargers and ear phones separately.

A lot of people dislike this about Apple. But they actually do this on purpose to make their products seem more exclusive since fewer people are able to afford the newest luxury item.

This implicit form of scarcity is called is Exclusivity Scarcity. It’s implicit because the product itself isn’t exactly scarce, but acquiring it becomes harder with every price increase.

A lot of brands embody this type of scarcity and a lot of people identify with this feeling of exclusivity. Brands that capitalize on this behavioral princple make it harder for people to get the products they want, making their products more desirable.

Research shows that some people stop buying into products when others jump on board. As soon as a product becomes popular, people opt out.

Eliciting a feeling of scarcity due to exclusivity will be more efficient for those looking for status.

Once a brand has reached this desired exclusivity level, consumers want to equate themselves with others that already own their products. For them, it doesn’t matter that others may have that item. All that matters is that they achieve the same level of implied status by acquiring an exclusive product.

Exclusivity scarcity is also more effective on people that feel powerless. They want to reduce that feeling and, instead, be envied.

One way of doing so is buying high-status luxury goods, as these signal status and exclusivity. For example, wearing expensive brands could be a sign of someone compensating for their lack of power.

So how to recognize exclusivity scarcity?

The Producer (Apple) is putting restrictions on the Consumers’ ability to buy the products by increasing the price of these products, making it an exclusive product.

Restrictions can be price increases or needing to have a certain skill, for example, requiring they be a part of a group. These restrictions are not related to the product supply.

Rarity Scarcity

Rarity Scarcity usually goes hand in hand with Exclusivity Scarcity, which can make it hard to distinguish between two.

Those looking for rare items are often also looking to acquire a higher status or distinguish themselves to fulfill their need for uniqueness.

One way they do this is by buying a product from the brand Supreme. This skate brand prides itself on the creative collaborations it has with other brands when making products and their own “unusual” products, ranging from a crowbar to nunchucks and bolt cutters.

The collaborative creations they’ve made are rare, because collaborations with a brand only happen on a single occasion and are done with brands that are usually very different from their own.

It seems as if Supreme has built their business model around making unique items by either collaborating with another brand or slapping their logo on something that is not a fashion item. For example:

supreme rarity scarcity types of scarcity

This item you see here is a collaboration piece between Louis Vuitton and Supreme. It’s a product both brands are not known for and won’t make again anytime soon, making this occasion very rare and unique since there is only one peoduct.

scarcity supreme 2

One of their weirdest items is probably just a brick with their logo on it. It may seem like they’re trolling their audience, but people will acquire these rare items to show off their uniqueness and status.

We call this rare rather than exclusive because a production limit is set at the beginning of the products’ life cycle. Meaning, the producer has set restrictions on the product supply on purpose.

Urgency Scarcity

So far, we’ve covered rarity scarcity (limited supply established at the beginning production) and exclusivity scarcity (limited number of people are able to acquire item). Both of these help individuals to express status or fill the need to be unique.

But not all brands are looking to enhance the perceived status of their customers. And yet that doesn’t mean that they can’t use scarcity effectively.

On the other side of the scarcity spectrum, we find ways to express scarcity that have nothing to do with exclusivity and can even backfire if you use it on status and identity-related products.

This time, it’s scarcity in time a.k.a. Urgency Scarcity.

So when and where would you find this fine piece of persuasion that everyone loves to hate? 

black friday urgency scarcity

Black Friday.

These two words make people shiver with either excitement or disgust.

It’s that one day of the year where retailers let go of their products for a fraction of the initial retail price.

Along with the number of discounts that can be found during Black Friday, the temporary nature of these deals makes people act fast.

The motivating effect is more than the money you can save – it’s being able to take advantage of a deadline tied deal that creates a sense of being “smart shoppers” among buyers.

Buying a product with a discount feels like “winning” a bargain, meaning that it provides both utilitarian (functional) as well as hedonic (fun) fulfillment.

Excess Demand Scarcity

Often products are scarce simply because the demand exceeds the supply. No tricks, no limited editions, no exclusivity, or other barriers that make the product scarce. Sometimes it’s plain old supply and demand.

So how does one make use of this situation?

Especially when products are almost sold out due to high demand, scarcity can be skillfully used to drive purchase behavior. This form of scarcity that many of us will be familiar with instills fear in shoppers by telling them they may miss out on the hot item.

One of the reasons that could explain why people feel the need to buy something that is almost sold out is because of the scarce-is-good-heuristic.

Similar to social proof, where people look at other’s behavior to decide what to do, excess demand scarcity has the rationale that if many people buy an item, it’s probably the right thing to do. And, you better hurry in doing it before your chance is gone.

In this case, consumers tend to neglect their own product knowledge and follow the (buying) behavior of other consumers. Excess demand implies popularity and, at the same time, shows there isn’t much left of this popular item, so you better act.

As a result, people may be motivated to buy the popular item.

How we can train ourselves to stop impulse buying?

That’s what we’ll cover next week!

To reach our editorial team on your feedback, story ideas and pitches, contact us here.

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