A repository of acronyms, jargon, and useful definitions perfect for eCommerce founders & marketers like yourself.
Scarcity Marketing is basically derived from the supply and demand principle of Economics. Scarcity Marketing uses the law of supply and demand according to which low supply and high demand for products drive the price of the products upwards. Scarcity Marketing uses this principle to make the products and services more costly. If the customers are made to think that a certain product is going to vanish from the market, the chances of that product being bought by the customers increase under this impression of scarcity. As a business owner, you can use the principle of scarcity to make your customers check out your products.
Imagine you want to go from Delhi to Goa via flight and you want to book the tickets for the same from ABC Airline, then unless you have to reach Goa at some specifically constrained timing then you would wait before buying the tickets until the price goes down. Now suppose that at that moment your favorite seat is available at XYZ airline at a discount price, then you will definitely buy the ticket from XYZ airline at the discounted price. The last thing on your mind will be waiting until later when you might have to spend more money on the same tickets. This is scarcity marketing where instead of buying your tickets from ABC airline you buy your tickets from the XYZ airline.
Scarcity marketing works on the principle that the lesser is always more precious. People always want to have what they can't have and that is what scarcity marketing does to your products, it takes your products and services away from the limelight and makes them hard to get. Suppose you have a great product and your customers are also eager to buy it. Now from an unprofessional perspective, we can say there is no other way to boost your company sales but even when a business is booming, scarcity marketing can always be used to boost the sales more.
Suppose you create a time-sensitive promotion for your products that gives out freebies on the purchase of particular products, the risk of the offer being time-sensitive will inspire your customers to act sooner rather than later because they will want to avoid the risk of missing out. This is what scarcity marketing is.