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Chapter 1: Why do limited time offers work so well?
Why do limited time offers work so well? Why does a product suddenly seem more valuable when there are only a few left? And why can the mere possibility of missing out change our decisions, our spending, and even our relationships? Scarcity is one of the most powerful forces influencing human behavior and it's everywhere from online shopping to social media and everyday life.
That's why today's SYSK trending topic is the power and influence of scarcity. In my conversation with marketing expert Mindy Weinstein, we examine what scarcity is really doing to our brains and how we can recognize when it's being used to influence us.
Chapter 2: What makes a product seem more valuable when it's scarce?
We also explore the psychology behind scarcity, why it can be so persuasive, and how understanding it can help you make better decisions. And we'll begin right after this. One interesting way consumers, you, me, everyone, gets manipulated is through something called scarcity. It's ingrained in us. When we think something is in short supply, it triggers and influences our decision-making.
Chapter 3: How does scarcity influence our decision-making and relationships?
In fact, when it comes to being influenced, scarcity is arguably one of the most powerful forces, invoking a kind of primal instinct, an instinct that was essential to our ancestor's survival, but not so much today.
It is the explanation for why when there's an approaching storm, people stock up on milk and toilet paper, because something tells them that these things could become scarce, even though they rarely do. One of the leading authorities on scarcity is Mindy Weinstein.
Mindy's a marketing instructor at Grand Canyon University and the University of Denver, as well as a program leader for the Wharton School and Columbia Business School. Hi, Mindy. Welcome to Something You Should Know.
Thank you for having me.
So briefly explain, what is scarcity as it applies to the way we think and make decisions?
To put it simply, scarcity is some type of unavailability. And when you think about it, it's just a restriction of some type. And there can be a lot of different causes of that restriction, but it is something that is unavailable, or it could even just be something that's hard to get.
And I think everybody has a sense of what that's like when you go on Amazon and it says, hurry, only two left in stock or, you know, sale ends Monday, that that's kind of scarcity. And I think people have a sense that it may be baloney, too, that if you really wanted to find, they could find another one to sell you. And if you really came in on Tuesday, they'd probably match the price.
And yet people pay attention to that.
They absolutely do. And I'm just going to tell you a little bit more and expand on scarcity. So, I mean, I gave you the simple definition because that's truly what it is. But there are really four different types of scarcity. And what's so interesting about it is that each one tends to have a different effect on us.
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Chapter 4: What are the different types of scarcity that affect consumer behavior?
That's demand-related scarcity. But then there's supply-related scarcity. And that could be intentional. So a lot of big brands will do drops where it's very limited and they're restricting the supply. Or it could be because of some type of supply shortage. I know that the PlayStation 5 is something that's a supply-related scarce item. And that's just because of the distribution and...
chip shortage is what I think I read last. But then there's also time-related. And time-related is some type of limitation on the amount of time that you have.
And that could be something like a flash sale, or if you've ever been on a website and you see the countdown timer, that feeling that you have that you start to get anxious, that is time-related scarcity because now you're competing against the clock. And then finally, there's limited edition, which is really part of supply-related scarcity. But with limited edition,
it's different in that it could be the same product, just a different packaging or just a slightly different twist, but it's also still scarcity. And all of those areas and all those things I talked about, they have different effects on us. And that's part of why I wanted to study scarcity. My dissertation, believe it or not, was on the power of scarcity.
And that's just really what catapulted this whole thing because I realized how complex it really was.
And so what is the effect that people have? Why is it that we pay attention to that? Why does something become more desirable when it's harder to get?
That is what is so surprising. So during my studies and even through some testing that I've done, there is a reaction to when something is unavailable to us. And that actually dates back to early mankind when people were trying to survive and there were scarce resources. Our brains are hardwired and they're still hardwired to overcome any type of scarcity.
So something is all of a sudden we can't get it or it's a little bit harder for us to. Then our brain kicks into high gear.
And so you can see that when you observe people and their behavior. But is there a way to tell like what's going on inside of a person that causes them to act the way they do when they suspect scarcity is upon them?
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Chapter 5: How can fear of missing out (FOMO) drive purchasing decisions?
So it's just amazing at just how powerful it really is. And to me, I mean, when I started studying scarcity, originally I was looking more at just what influences us and the factors. And then when I started digging into that, I realized that out of all of them, scarcity is the one that is so innate in us and so strong.
Don't you think that when people hear, when most of us hear these claims, these scarcity claims, only four days left, limit five, hurry, time is running out kind of claims, that it's a tactic. Some retailer is trying to manipulate you to buy and prey upon this scarcity response that happens in all of us when we hear these claims.
So my question is, does knowing, does being very conscious of the fact that this is a tactic, does that help mitigate the power of these scarcity claims? Because you know, they're just saying that.
It does help. You'll still find yourself in situations where you're going to have to stop and say, okay, what's really going on here? And I'll be completely candid with you. I am a researcher. I have my PhD in general psychology. I'm a marketer. I'm a marketing instructor. So I come from this background where I understand all of this. But as a consumer... I still get caught up in it.
If I find that there's a product that interests me and I see that it keeps selling out, oh, you better believe that that pull and that desire to purchase it is there. It's strong. And so it doesn't mean though that all of this is something you can't overcome. And I think that's really important to think about. So knowing that this happens... You can just stop.
And that's usually what I like to think about is like, stop. You're about to make an impulse purchase. Ask yourself, why are you purchasing this? Is it because you think that it's something that's not going to be available that day, the next day, you're fearful that you're going to miss out. But if you just pause and think about why am I truly purchasing this and wait, I mean, wait a day.
It sounds really simple. But the next day, if you feel like you still want to buy that and it's still available, purchase it. There's also been studies done that show that that feeling that we have of the fear of loss or the thought that we might regret our actions or inaction in this case, it goes away. It doesn't last that long. So you just have to remember that.
And I think it's just a reminder. So as a consumer, going back to being candid, I have to remind myself of that, of being Am I really filling my shopping cart online on this website because I wanted all these things? Or is it because I just got a text messages saying that I had exclusive access to a sale? So you just again, pausing is the best thing.
Pausing is the best thing. I think that's the big takeaway here when it comes to scarcity. Mindy Weinstein is my guest. She is author of a book called The Power of Scarcity.
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Chapter 6: What are practical ways to recognize scarcity-based manipulation?
So anything that's supply-related or even limited edition, that speaks to people who have a desire for uniqueness. They want self-expression. So going to that movie theater, they're going to take pictures before they go in, post them on social because they feel special because they got to be there before everyone else.
The same thing when you think about the latest iPhone that's coming out and people will wait in line for that. It's the same idea. It's that being one of those...
first movers you know the first to see it the first to buy it it sets you apart yeah and well and maybe the flip side of that is you know when like a broadway show announces that it's closing and then the tickets ticket sales go up way up for because now it's going to be now it's closing it's going to be gone well those people could have gone to see it six months ago and probably got better seats but now that they know it's closing all of a sudden it becomes more desirable
Exactly. It's that fear of missing out. And you saying that is making me think about the McDonald's McRib. I actually interviewed the former VP of global marketing for McDonald's. He was with the company for 40 years. And so they're a great example of using scarcity, but they take the approach of making it fun and adding excitement.
And so the McRib, that's been something that has been in and out in terms of being offered and available. And you never know what location it's going to be at. They've done farewell tours in the past. And currently, they've released it, but it's the farewell tour again. And so you kind of see things like that. And there's mass chaos to buy it.
I actually even saw someone was selling a McRib sandwich on eBay for $5,000. I'm a little confused. Yeah, I'm a little confused because I don't know... Like, do you just display it like it's a museum item or do you eat it? No, I can't tell you they got $5,000, but I actually kind of laughed and I looked at the listing for it too, because it's like your last chance ever to get your McRib sandwich.
This is going to be gone for good. I thought, look at you putting some scarcity into it. So, but it does create some excitement at the same time, but it's FOMO. It's FOMO with the example you gave with Broadway and then even with the McRib.
You see that? I don't get that because, come on, we know the McRib will be back. It has to come back. It's not like it's hard to bring it back. They do it all the time. So why would people actually believe that the McRib Farewell Tour is really the McRib Farewell Tour? You know, the same thing happens at Taco Bell with their nacho fries. And I just finally got tired.
You know, I'm tired of going to Taco Bell and seeing they don't have them. So I just don't go to Taco Bell anymore because you kind of like want them and they're not there. So it doesn't work on me or that one doesn't work on me because I've kind of resigned myself that I can live my life without nacho fries.
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Chapter 7: How do marketers use scarcity in advertising strategies?
I'm Mike Carruthers. Thanks for listening today to Something You Should Know.