Mastering Scarcity: Unveiling the Psychology and Impact of Scarcity Marketing Cues on Consumer Behavior

The use of scarcity marketing, employing phrases like "Before it's too late!" or "Limited Edition!" to trigger the Fear of Missing Out (FOMO), has become a widespread practice in marketing. You’ve probably spent a pretty penny on websites with a countdown clock or rushed to your nearby Starbucks for a limited-time flavor. Pumpkin-spice latte, anyone? 

Different types of scarcity messaging exist, but do they all have the same effect on consumers? For example, would you want to purchase a product more if you knew there was a waitlist, if it was tagged as a limited-edition model, or if you could only purchase it during a specific time window? 

According to a 2022 study, there is a differentiation between various scarcity cues in marketing, but is one more effective? And can it be replicated across different products or experiences? 

The research results indicate scarcity marketing affects consumer behavior differently depending on certain factors like type of product, environment, and more.

Before we dive into the details, let’s unpack scarcity marketing.

The Psychological Power of Scarcity

Drawing on principles highlighted by Cialdini (2009) and Zeithaml (1988), scarcity marketing taps into the psychological impact of potential unavailability or scarcity surrounding a product. In other words, the more we perceive a product is running out of stock or difficult to obtain, the more we want it. Limited availability enhances a product's perceived value and desirability, making scarcity marketing a persistent force in shaping consumer decisions.

A comprehensive meta-analysis conducted in 2022 by Barton et al. explored the impact of scarcity cues on consumer purchase intentions. Examining 416 effect sizes from 131 studies, the analysis revealed that the effectiveness of scarcity marketing varies across conditions and product types.

Differentiating Scarcity Cues

To understand the nuances of scarcity marketing, it is essential to differentiate between supply-based, demand-based, and time-based scarcity cues (figure 1).

1. Supply-Based Scarcity

This type of scarcity signals restricted supply due to limited production or distribution. Examples include limited-edition products like food flavors (i.e., Birthday Cake flavored Kit Kat), footwear (i.e., limited-edition Air Jordans), vehicles (i.e., Volkswagen R32), and gaming consoles (i.e., Animal Crossing Nintendo Switch Console). Luxury brands demonstrate that supply-based scarcity enhances a product's desirability by associating it with exclusivity and status. For example, Ferrari is known for intentionally limiting production quantities to uphold its brand status. In the case of Ferrari, “…the company was founded on one simple principle, you only produce one car less than the demand for the vehicle. To meet demand would destroy the exclusivity of the brand”

(Alexander, 2020). 

 2. Demand-Based Scarcity

Demand-based scarcity results in depleted stock levels and empty shelves due to excess demand during selling. The perceived popularity and quality of a product can also increase. However, extreme situations can lead to aggressive consumer behavior, as witnessed during the coronavirus pandemic when shoppers went to great lengths to acquire rice, toilet paper, and pasta.

 3. Time-Based Scarcity

Constrained within a specific time frame, time-based scarcity is evident in seasonal restrictions, limited-time offers, and promotional events like "Happy Hour." This scarcity type leads to achievement and satisfaction among consumers who adhere to deadlines or expiration dates, often classifying themselves as “smart shoppers.”

Figure 1. Scarcity in marketing, based on Barton et al. (2009)

Scarcity Marketing’s Influence on Consumer Behavior

After analyzing the influence of scarcity cues on purchasing decisions encompassing experiential (i.e., experiences or events) and material goods, supply-based scarcity exhibited the most considerable impact on experiences, while no significant difference in purchase intentions for material goods was observed across different scarcity sources.

The researchers also categorized products into two distinct types: hedonic, characterized by affective and sensory experiences like fantasy, fun, and sensual pleasure (i.e., luxury cars, perfume, luxury handbags), and utilitarian, which are purpose-driven and serve basic needs or functional tasks (i.e., bread, detergent, toilet paper). Supply-based and time-based scarcity cues showed the most substantial effects for hedonic products, whereas demand-based scarcity had the most significant effects for utilitarian products.

Since supply-based scarcity typically associates products with exclusivity and status, it is no surprise that the research upheld the hypothesis that supply and time-based scarcity work best in highly visible environments, where the likelihood of being seen with the product is more significant.

Similarly, supply-based and time-based scarcity cues demonstrated heightened purchase intentions for high-involvement products (i.e., purchasing a house), requiring consumers to invest time and effort in decision-making.

In instances where consumers are familiar with the brand, scarcity-type effects did not vary. However, it's worth noting that the overall impact of scarcity was more pronounced for less familiar brands than well-known ones.

Key Takeaways

Supply-based scarcity exerted the most significant influence on purchase intentions, followed by time-based scarcity, while demand-based scarcity exhibited the smallest overall effect. Understanding these nuances is crucial for marketers seeking to harness the psychological impact of scarcity and create compelling campaigns that drive consumer action.

One thing remains clear. Scarcity marketing remains a potent tool in influencing consumer behavior, with its effectiveness varying based on the type of scarcity employed and the nature of the product.