What we want to have is not only influenced by how much we like the product but also how much others like it. Economics and the market are often explained in terms of demand and supply, which in theory can determine the price of the product. But studying demand and supply is also imperative to psychologists, as there are many underlying cognitive factors in buying products. In this post, I will discuss one of those factors, the scarcity principle.
Running low on supply
Apparently, we use others’ preferences as signals to find out whether a product is good or not. When we walk through the supermarket aisle, we use quick mental heuristics (a rule of thumb). One of those heuristics is the scarcity principle. Seeing that there are only a few products left tells us that the demand is high, therefore the product must be good, right? This is what several experiment settings have found. Not only telling consumers that ‘there are a few left!’ but seeing the visual display of a few more wine bottles left can trigger people to opt for that particular wine type/brand.¹
Unfortunately, I don’t know whether retailers actively put this into practice by intentionally filling aisles with small amounts of products. As supermarkets, for instance, can use this to up the sales by continuously stocking a few items at a time.
But what about limited edition?
Every now and then manufacturers decide to only produce a few product and market it as ‘limited edition’. Big brands will create unique shoes, perfumes, phone designs, or watches which often sell for high prices. However, this is different from the aforementioned wine bottle situation in a supermarket. Consumers that want these types of products probably don’t want it because ‘there’s only a few left, everyone wants them’. But there are more underlying factors at play. Limited editions are often used for conspicuous products. These are products to show off one’s status. Thus buying limited editions is to display uniqueness, because you’re one of the few who owns a specific product.² But as for the other side of the scarcity principle, people want a product because everyone else wants it, so it must be good.
1. Van Herpen, E., Pieters, R., & Zeelenberg, M. (2014). When less sells more or less: The scarcity principle in wine choice. Food Quality and Preference, 36, 153-160.
2. Gierl, H., & Huettl, V. (2010). Are scarce products always more attractive? The interaction of different types of scarcity signals with products’ suitability for conspicuous consumption. International Journal of Research in Marketing, 27(3), 225-235.