Greetings! Jerry Garrett here, returning with another weekly post. This time, I’ll be discussing the concept of Scarcity in the realm of business, specifically within the context of an MBA topic I’ve recently explored.
Picture this: you enter a store and spot an item you’ve been coveting for some time. Though you could purchase it right then and there, you opt to wait for reasons unknown. As time passes, the likelihood of making that purchase dwindles – an unfortunate outcome for both you and the store owner. To combat this, retailers employ various tactics to encourage customers to make purchases sooner rather than later.
Tactic #1: Announce impending price increases. If an item costs $100 today but will rise to $120 in three days, shoppers are more likely to buy now in order to secure that discount.
Tactic #2: Emphasize that the current price is the lowest it will ever be. This is similar to the first tactic but with a slight twist – if an item originally cost $140 but has been reduced to $100, customers will feel compelled to seize this rare opportunity.
Another approach involves setting deadlines. Retailers might state that a product will no longer be available after a week, creating a sense of urgency for customers who don’t want to miss out.
Some stores also capitalize on limited quantities or edition items. Imagine a mouse company partnering with Nike (an unlikely pairing, I know) to create a limited edition Nike-branded mouse. The exclusivity of such a product would drive demand and prompt consumers to purchase immediately.
A prime example of this strategy occurred in the 2000s when plush toys became increasingly popular. One well-known toy company released a limited edition plushie that every child desired. Parents scrambled to buy these toys to please their children, resulting in significant sales for the toy company.
Read the original one from Josh Kaufman here: https://personalmba.com/scarcity/
And that concludes this week’s discussion on scarcity tactics in business. Join me next week for another insightful topic!