By sbernazzani@hubspot.com (Sophia Bernazzani)

If you took the same Introduction to Economics class that I struggled through in college, you might remember this key lesson:

The law of supply and demand states that a low supply and high demand for a product will typically increase its price.

Why am I telling you about basic economic rules? Because changes in the supply and demand of products can result in the scarcity principle coming into play. In this post, we’ll learn what the scarcity principle is and how you can use it to create high demand.

What is the scarcity principle?

The scarcity principle of persuasion coined by Dr. Robert Cialdini means the rarer or more difficult it is to obtain a product, offer, or piece of content is, the more valuable it becomes. Because we think the product will soon be unavailable to us, we’re more likely to buy it than if there were no impression of scarcity.

The perceived scarcity can inspire a sense of urgency within consumers, and they make purchasing decisions faster than they usually might. People are also more willing to pay more money because a cost-benefit analysis might say that losing out on a product or service is worse than the money it costs to get it.

How does scarcity impact demand?

When a product or service is low in supply, consumer demand rises as people want to purchase it before it becomes available. In this scenario, some businesses opt to raise prices because of the increased demand, which is how the scarcity principle can increase profits.

Scarcity Principle in Marketing

Marketers leverage the psychological response to scarcity, which is consumers not wanting to miss out on what others have.

A customer might think that a product, offer, or piece of content is difficult to get because it’s so valuable that people keep buying it. This can cause them to take quick action and purchase before time runs out because they want to experience the same value as their peers.

Marketers might activate the scarcity response in consumers by doing things like:

• Offering flash sales where consumers have a limited time to take advantage of a deal before time runs out.
• Listing the remaining stock amount on a product so consumers decide to purchase before it’s too late.
• Notifying customers when products are back in stock so they rush to purchase to not miss out on the value this time around.

Brands can use the scarcity principle to persuade people to fill out a lead form, purchase a product, or take another desired action. Here’s an example: On many air travel booking sites, such as KAYAK, flight listings are displayed with a note that only a few seats are left at a certain price. Check it out below:

We know that airfare pricing is incredibly volatile – that’s why some of us wait until certain times or days of the week to make purchases – so …read more

Source:: HubSpot Blog

Author: Aaron