Less is More- The Scarcity Principle


A product, service, or piece of content increases in value as it gets more scarce or difficult to acquire.

Several methods from economics and social psychology are included in marketing science. The effectiveness of any marketing plan may be boosted by taking advantage of people’s habits and routines.

The interplay of supply and demand is the engine that drives commerce. “Market equilibrium” or “equilibrium price” describes the point at which supply and demand are in perfect balance in a given market.

By introducing scarcity into the market, this equilibrium might be upset. Marketers may exploit the scarcity principle to increase sales, strengthen consumer loyalty to their brands, and gain an edge in the industry by creating artificial supply and demand mismatches.


A group of six people saw a discount message for a certain % off in research conducted in 2017. This notice appeared in a few different forms, with some versions indicating that the sale was valid just today, for the next week, or forever. Participants were asked to consider purchasing a product while connected to an fMRI scanner.

The amygdala in the brain showed increased activity every time a customer purchased due to one of the time-sensitive discounts. When supplies of the goods weren’t limited, the same couldn’t be true. When choosing to purchase the limited goods, the researchers discovered that consumers mostly disregarded data that went against their decision.

According to the results of this research, when faced with limited options, people are more likely to act quickly and “buy it now.” This kind of thinking impairs our capacity to weigh rewards and drawbacks rationally. Instead, our minds go into “buying mode,” when they ignore any potential roadblocks to a purchase and instead concentrate on the reasons why something is a good idea.

Numerous studies have used fMRI to detect brain activity in response to shortage, and this work adds to the growing body of evidence that this effect is real.

Because of the survival instincts encoded in our brains, we tend to dwell on the things we lack. When resources are limited, the human brain prioritises other, more immediate concerns. When we have a strong desire for a product that is also difficult to get, our brains shift into high gear and direct our attention and resources towards making the right choice.

Concept of The Scarcity Principle

The scarcity principle states that when the value of an item rises, its availability decreases, leading to an increase in its price. A product’s value will surge if supply is limited and demand is strong.

This is a cornerstone of economics, and it addresses the psychological effects of scarcity in the marketplace. Products or deals with a restricted quantity tend to be more in demand because consumers mistakenly believe they are more valuable than they are.

When Does the Scarcity Principle Kick In? 

When businesses release restricted quantities of a product, they are using the scarcity principle. Customers will pay more for the chance to possess a limited edition product; hence, the manufacturer may charge much more for the limited edition.

How Does the Law of Diminishing Returns Operate?

The scarcity principle plays on the idea that people give greater value to things they perceive to be scarce.

Creating advertising efforts that incite a feeling of urgency may persuade customers to buy on the spot and boost revenue. Some applications of this economic theory include the following:

  • Value is increased because of scarcity.
  • FOMO is a powerful motivator since it causes people to act quickly.
  • Constraints on availability reduce indecision and delay.
  • Scarcity, whether real or perceived, may help firms gain an edge in the marketplace.


Marketing campaigns that employ the scarcity principle are successful because they appeal to primal human desires. Using the scarcity principle in advertising allows companies to create competitive advantages.

  • Boosts inspiration

The notion of scarcity in marketing has been shown to improve customer motivation. Getting people interested in your business may be as simple as using compelling advertising.

Scarcity boosts drive by playing on people’s natural reluctance to lose out on something. Fear of losing out is a powerful motivator, so when marketers present a product or service that is in short supply, buyers are more likely to act.

  • Increases consumer involvement

Customers will become more engaged with your business as they scramble to learn about new information, keep tabs on limited-time offers, and purchase products in the face of scarcity.

Improved customer engagement usually results in higher brand loyalty since it helps customers feel more connected to your company.

  • Increases sales

Customers are willing to pay a premium for your goods and services because of the greater value they perceive. Customers are more likely to interact with promotional material and take advantage of attractive discounts when the campaign emphasises scarcity.

  • Enhances commitment from customers

Creating an air of exclusivity through the introduction of new, unusual products may increase consumer retention. Consumers’ good associations with a brand may be strengthened by providing them with exclusive access to offers and discounts.

Scarcity marketing may encourage repeat business from buyers who need to buy from you so they can finish a set.

  • Provides a vantage point for your brand in the market

For successful advertising to increase revenue and client engagement, differentiation from the competition is essential.

Creating distinctive selling points is critical for staying ahead of the competition. Using the scarcity principle may help your brand sell more items or services, especially in competitive marketplaces.

Application to Marketing

Advantages abound for businesses that employ the scarcity principle responsibly and with discretion. Using scarcity in any form, from time-sensitive promotions to limited-run sales, may boost interest in and demand for your wares.

Here are a handful of the many ways that exploiting scarcity as a marketing tool might help your company succeed:

  • Provide just a restricted quantity of your offering.

The law of supply and demand states that the greater the scarcity of a thing, the greater its demand. When goods are scarce on the market, the price tends to rise. Making your goods or services available in limited quantities may boost interest and sales.

  • Try to make things seem urgent.

Promote the urgency of your immediate purchase by making it clear that this deal is only available for a short period. Customers may be more motivated to buy if they are aware of a time crunch.

Low stock or restricted availability of a product is another powerful way to generate urgency and get people to buy quickly before supplies run out.

  • Employ examples from your social environment

Like the scarcity principle, social proof is a potent instrument of marketing psychology. The principle revolves around the reality that individuals often model their behaviour after that of other people.

To influence customer behaviour, marketers might take advantage of people’s natural inclination to look to others for direction. One strategy to get in touch with customers and promote special offers is to work with influencers or brand ambassadors.

  • Feature unique advantages

To make the most of the scarcity principle in your advertising, stress the unique features of your deal. Customers won’t be as compelled to buy if they can’t see any tangible value in the product above existing options.

Your time-sensitive offer has to highlight the special features and benefits that buyers will get from taking advantage of it.

  • Allow for advance purchases

There are several advantages to allowing customers to pre-order or reserve items before they are officially launched. The availability of pre-orders increases interest in the upcoming release. Businesses may learn a lot about client demand via pre-orders, which helps with forecasting.

  • Communicate effectively.

Customers should be made aware of any restrictions, such as a low stock of an item or a short window in which to make a purchase.

For a limited time, you may provide a discounted package to a certain percentage of your consumer base. For example, you may say, “The first 50 customers in the queue will receive our special bundle.” If you are open with your customers in your marketing communications, they won’t be as surprised by any changes to your brand’s policies.

  • Put out special editions of your merchandise.

Introducing limited-edition items or services is one of the most efficient ways to use the scarcity principle in advertising and sales.

When it comes to collectibles, one of the most well-known labels is undoubtedly Supreme. Supreme only produces a small batch of each new product and has no plans to resupply. Because of this, sales have skyrocketed, and Supreme has become one of the most coveted labels around.

  • Take advantage of the need for urgency to boost sales.

Any company, no matter its size, may achieve greater marketing and commercial success by learning the ins and outs of the scarcity principle and using it when appropriate. Use the principle of scarcity to strike an emotional chord with your clientele and promote repeat business.

However, overusing the scarcity principle may wear customers out and cause them to lose faith in your brand. Instead, think strategically about how you can use scarcity to build your brand and attract new consumers.


  • Nike

Within the SNKRs app, Nike drops limited-edition and limited-stock footwear.

Customers who want to increase their chances of receiving a pair of shoes despite the restricted supply can download the app minutes in advance and be ready to join the line at the precise moment it opens. Nike has hinted that it may be more of a lottery than a question of who gets in the queue first by saying that entries are picked at random depending on the availability of shoe size.

Despite this, the scarcity principle is at work, to the point that users have constructed dedicated bots to watch the website and submit their payment details as soon as the countdown metre hits zero.

nike scarcity
  • Starbucks

People couldn’t get enough of the brilliantly coloured, extremely Instagrammable drink, but coffee purists have criticised Starbucks for introducing the “unicorn frappuccino” to its menu, which consists of ice cream, fruit flavours, and sour candies. Starbucks was inundated with requests for unicorn frappuccinos after announcing on its website that the limited-edition beverage would be available for just a few days. Despite the lack of sales data, the hashtag #unicornfrappuccino has been used in approximately 160,000 Instagram photos.

The Starbucks Red Cups are another one of Starbucks’ infamous limited-time offerings that generates a lot of orders and buzz on social media. To attract customers during the December holiday season and encourage them to visit cafes and take pictures to share using the hashtag #RedCups, Starbucks began selling coffee in red cups for a short time only. The key to success in this situation is “food and drink scarcity.”

strabucks scarcity
  • Amazon

You have made purchases from Amazon. You’ve probably also seen the “only X left in stock” warning:

for instance, Amazon’s restricted availability.

Together with the “Want it tomorrow?” shipping urgency play, you’ve convinced me to move quickly or risk losing out on the rare book I’ve been eyeing.

amazon scarcity






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