Should You Use Scarcity Tactics in Marketing?


As entrepreneurs, we always need to look for effective ways to increase consumer interest and compel them to buy our products and services. One common strategy – scarcity marketing – is the source of significant disagreement in the marketing world.

What is Scarcity Marketing?

scarcity marketing, marketing strategies, limited availability marketingAt its core, scarcity marketing is a strategy that uses limited availability to influence consumer purchasing decisions. Specifically, by placing limits on the availability of a product or service, or by imposing time limits on availability at a certain price point, marketers can increase urgency and compel prospects to make short-term buying decisions.

As I noted above, there are two primary limits that scarcity marketing can place on product availability:

1) Limited availability of the product itself. There are only a certain number of units available, and when they’re gone, they’re gone. Alternately, the product or service is only available for a specified, limited time.

2) Limited availability of the product at a specified price point. Most commonly, marketers offer a discount on the target product for a certain number of hours, days, or weeks. At the end of the specified period, the product is only available at a higher price.

What’s Wrong with Scarcity Marketing?

On a fundamental level, there’s nothing wrong with using scarcity as a marketing technique. It’s no less ethical than writing brilliant sales copy, offering incentive bonuses to customers, or using a CGI gecko to capture prospects’ attention.

The derision that many people hold toward scarcity marketing comes from the fact that it is frequently misused… or, more accurately, misrepresented.

If you’ve ever skimmed an online sales letter or landed on a squeeze page, you’ve undoubtedly seen scarcity marketing copy like, “Get Your Copy Now – This Product is Only Available to the First 100 buyers!” or “Hurry – the Price Will Double at Midnight!” Lots of squeeze pages and Internet sales letters even feature a “countdown timer” that shows how much time the reader has left to claim the offer.

That’s all well and good… but have you ever gone back to the sales or squeeze page later and found the same scarcity copy? I have. To protect the guilty, I’ll not include the link, but I visited a sales page for a WordPress theme a couple of weeks ago, and the price was $47 — 50 percent off the standard price — but only for the next 48 hours.

At the time, I wasn’t quite sure it was what I needed for a particular site, so I bookmarked the link. A week later, I decided to take another look at the theme. When I returned to the site — you guessed it — the theme was available for $47… for the next 48 hours.

With so many marketers using similar tactics, it’s little wonder that the marketing world in general has called B.S. on scarcity tactics.

Created Scarcity vs. False Scarcity

The point that I want to drive home here is that created scarcity is not unethical; false scarcity is. When I say “created scarcity,” I mean that there are no external factors driving availability. You might have 10,000 product units sitting in a warehouse, so if you advertise that only the first 1,000 buyers can purchase the product, you’re not really going to run out. You’re just placing a cap on how many orders you’ll take (for the time being, anyway.)

Created scarcity isn’t lying unless you say the availability limits apply to your business (in other words, that you won’t be able to produce any more units or produce them at a certain price point). You’re limiting the availability of the product to the customer, not to you.

“False scarcity” refers to the kind of nonsense I described with the WordPress theme site. It creates distrust, which can jeopardize your business. People quickly realize that you’re bluffing, and all sense of urgency is lost.

To use scarcity effectively and protect your reputation, you have to stick to your word. After those first 1,000 orders come in, stop selling the product until you launch your next promotion. Similarly, if you only offer a discount until midnight on Sunday, then you need to adjust the price at 12:01 AM on Monday.

What about the people who miss out on your offer? If you’re getting them to subscribe to your mailing list (and if you aren’t, you should be), you can notify them when the next offer is available. If they missed their chance the first time, you can be sure they won’t procrastinate a second time.

The Bottom Line

Although there’s a lot of grumbling in the marketing world about scarcity marketing, don’t be afraid to use it. A well crafted, authentic scarcity campaign can boost sales by 50 percent or more. Just make sure you’re using created scarcity, rather than false scarcity.  This seemingly small distinction can make a huge difference in your business.


Image Credit: Ana Philbrook

Categories : Marketing Strategy

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