Utilizing Vendor Scarcity Techniques
Studies suggest that people have an ingrained fear of shortage. Whether this is a psychological hangover from the days of lean harvests and not having enough food to tide us over during the winter months is up for debate.
However, it remains true that retailers can tap into these subconscious anxieties to gently persuade customers to add impulse purchases to both their online and in-store carts.
What are the most effective supermarket scarcity techniques?
Marketers will agree that by far the most widespread type of scarcity technique used is the “limited time offer” campaign. This is where the retailer temporarily reduces the price of a product. Although customers won’t have a problem purchasing the product in the future, they won’t be able to buy it at the current offer price. Even if the reduction is minor to the point of being negligible, customers will still make a purchase.
Another effective means of moving stock is to hold an “end-of-line” sale. If a product won’t be available on the shelves, you can guarantee this will pique the interest of customers–even if the line is being discontinued due to a lack of original interest. Customers appreciate choice, and if that choice is about to be reduced, chances are they’ll snatch up the bargain.
What are the benefits of using scarcity techniques?
When shoppers are under the impression that a product is valued by others (e.g., in a “while stocks last” scenario), they are much more likely to value it personally. Significantly, this sentiment was supported in a recent study in which participants rated the desirability of products in different situations. Products that were hypothetically limited due to high demand were deemed as more desirable in comparison to plentiful products or products otherwise limited by industrial shortages.
Are there any drawbacks to employing scarcity techniques?
Companies who utilize scarcity techniques with regularity run the risk of customers considering taking their business elsewhere. This makes sense if other shops are perceived to have more items in stock consistently. Likewise, frequent limited-time offers can have a negative effect in that you run the risk of devaluing your product. If a product is regularly at half-price, customers will be reluctant to purchase at full price.
While there are drawbacks to these techniques, there are also positives, and when used appropriately and effectively, they can have powerful impacts on your bottom line and customer loyalty. Weighing the pros and cons and looking to market research will ultimately help you and your business make the best choice in moving forward towards bringing customers in the door and pushing products out the door.