SalesCrunch Blog

As the wait for my back-ordered iPad goes into week three, I can’t help but hate and admire Apple for using the scarcity principle so brilliantly to create buzz and demand for their products time and time again.  The scarcity principle simply states that the harder things are to get the more we value and want them. If you want a deeper understanding of the psychology of this and behind why people buy read Influence: The Psychology of Persuasion by Robert Cialdini.

Now, I am willing to give Apple the benefit of the doubt that it underestimated the demand for the first iPhone and therefore didn’t make enough phones to meet that demand, which caused the long lines and even more demand. If that’s true then Apple quickly learned from that experience that the scarcity principle was the mother of all marketing techniques and quickly built it into their launch plan with every subsequent iPhone release and the recent launch of the first iPad.  The once struggling, niche computer company is now a $15 billion a year juggernaut full of incredibly smart people who are more than capable of forecasting demand for their products and setting production accordingly, so don’t be fooled into thinking the current multi-week wait for the iPad and iPhone 4 are a result of unexpected demand on their part.

So why do we as consumers respond to this tactic time and again?  Cialdini points to three main reasons in his book:

1. We are more motivated by what we have to lose than what we have to gain!  This is why free trial offers work so well. It eliminates the barrier to entry and immediately replaces it with a psychological barrier to exit.  In this case, those who care worry about losing out on all the coolness and perceived efficiency the iPhone and iPad will bring.
2. We generally perceive that things that are difficult to get are typically better than things that are easily available.  If everyone wants it then it must be good right? This actually taps into another principle in Cialdini’s book called social proof, but we’ll save that for another post.
3. As opportunities become less available, we lose options and freedom and oh boy do we humans hate to lose our freedom.

So now we know why, but how do we recreate it ourselves?  Here are the basic conditions under which the scarcity principle works best to help the rest of us apply it to our products and services:

• New scarcity has a bigger impact – people respond more profoundly when they can see availability dwindle in front of their eyes as opposed to it starting off small. Researchers in a study gave two groups of people a jar of cookies. One group got a full jar and the other a jar with just two cookies.  Not only did the group that got two cookies report that they tasted better, but also they valued them more when they saw the full jar earlier that others got a hold of first.
• Time limits – scarcity works best with a deadline.  Apple builds in waves of availability to create time limits. They ship batches to stores that never know when they might get the next batch, so if you don’t buy now who knows when you will be able to again!
• Competition – demand begets demand.  Once we see lines our natural competitive tendencies kick in and we become increasingly aggressive in our persuit.  The auction effect is a great example. When people pile into an Ebay auction it only makes us want it more, which sends us into a bidding frenzy.
• Legitimate – There is nothing worse than the appliance store that tells you a TV is sold out only to find one “in the back” when you express dismay. This dishonesty is transparent and only makes us all feel like fools, vowing never to buy from that company or store again.  While Apple manufactures scarcity, it is still legitimate. By choosing to under-manufacture it creates a very real limited supply at any give time, so it doesn’t have to lie. Now, if the press discovered that Apple were sitting on a warehouse full of iPads and iPhones that would more than meet demand its reputation would take a big hit and it would likely lose the trust of lots of loyal followers like me.

So now you know how Apple uses scarcity to create buzz and demand so you can start recreating the effect yourself. All you need is an uber cool product and you are good to go!

Topics: creating urgency