How Scarcity Marketing Tricks You to Spend More

By Emily Guy Birken on 9 March 2018 0 comments

When I was four years old, Xavier Roberts took the toy world by storm by launching the Cabbage Patch Kids. These dolls seemed to be everywhere, except on store shelves. This was back in 1983, when shopping meant showing up at a brick-and-mortar store. Most stores at the time only stocked between 200 and 500 of the dolls, which did not meet demand of the thousands of parents desperate to get their hands on the must-have toy of the year. Fights sometimes broke out between shoppers, and these reactions were dubbed the Cabbage Patch riots.

It was unclear whether scarcity was an intentional tactic to help sell Cabbage Patch Kids, but many believed it was a marketing strategy — including the Consumer Affairs Department of New York's Nassau County, which accused the company of "harassing" children with advertisements for unavailable dolls. Meaning that Roberts was offering goods without the intent to supply them. This false-advertising charge, along with the news reports of violent altercations in toy stores, added even more truth to the idea that Cabbage Patch Kids were so scarce that kids would be lucky to ever get their hands on one.

The Cabbage Patch craze was a textbook example of how scarcity marketing (whether fully intentional or not) can trick people into spending money. Looking back, a Cabbage Patch doll was hardly worth the time, effort, and money necessary to buy one in 1983. They were kind of funny looking, and children moved on to the next hot toy by the following year.

But that sense of scarcity has a way of making us forget how to think rationally, and marketers are well aware of this. It's important to understand how scarcity marketing tricks you into spending more money, and what you can do to fight it.

Understanding scarcity marketing

The point of scarcity marketing is to make you fear that you'll lose out on something you want. In effect, scarcity marketing is triggering your sense of loss aversion. This is the cognitive bias that causes us to more acutely feel a loss than we do a gain. When our loss aversion is triggered, we'll work harder to avoid kicking ourselves for losing something than we would work to gain something we want.

This is what makes scarcity marketing so pernicious, because it's pairing a gain (whatever it is we want to buy) with the fear of losing that gain. (See also: 4 Ways Your Brain Tricks You Into Spending)

There are three main strategies retailers use scarcity marketing to make you keenly feel loss aversion.

Having a small amount of inventory

This was what happened in the great Cabbage Patch shortage of 1983, and is also something you will often see with Black Friday sales. Black Friday sale flyers will promise some really great deals, but they will all sport the caveat, "supplies are limited!"

This also happens with online purchases. You might notice that Amazon will helpfully let you know that only four hard copies of the book you are about to order are left, so you should hurry and make that purchase. Never mind the fact that Amazon is literally open 24/7. Similarly, if you are searching for anything from concert tickets to vacation rentals, the website will share with you just how many other people are interested in the tickets or weekend getaway — thereby making you fear missing out.

Putting an expiration date on a purchase

Parents of Disney-loving children understand the frustration of learning that a beloved movie is "in the vault." This savvy scarcity marketing strategy from the House of Mouse limits how often and for how long different Disney movies are available for purchase before they are "returned to the vault" for another seven years. If you miss out on purchasing a replacement DVD of Beauty and the Beast or Fantasia, then you are out of luck until after your toddler has become a preteen. (This strategy worked best for Disney before eBay was invented, but it's still a smart marketing move.)

You'll also see these kinds of expiration date strategies on everything from Groupon offers to "One day only" sales. They make you feel like you must grab the purchase now before it goes away, possibly forever — which is what seven years feels like if you can't find a copy of 101 Dalmatians and it's all your child wants.

Adding a timer to your purchase

Have you ever noticed that Ticketmaster.com asks you to finalize your purchase in two minutes? The site even provides you with a countdown clock of that two-minute time frame before "your tickets are released for others to buy."

While Ticketmaster (reasonably) claims that it offers a countdown in order to make it fair for all fans to be able to purchase tickets, the extremely short two-minute time frame (which assumes you haven't left your wallet in another room) plus the reference to "your tickets" are all set up to maximize your sense of loss aversion.

Ticketmaster and other companies that provide a timer for your purchase are counting on your inability to think rationally about a purchase when you feel as if time is ticking away. (See also: 5 Mental Biases That Are Keeping You Poor)

Outsmarting scarcity marketing

Just because salespeople and marketing departments know how to manipulate your sense of loss aversion doesn't mean you have to fall it. Here are some tricks for keeping scarcity marketing from removing money from your wallet.

Buy gifts early

Part of the reason why Cabbage Patch Kids were so insanely popular was because of the timing of their release — just in time for Christmas in 1983. Many of the parents who found themselves in shouting matches in the aisles of the local Toys 'R Us felt like they had to get one of these dolls in time for Christmas Day.

But parents who plan and purchase Christmas gifts early do not feel the same kind of desperation for the season's hottest toy, because they know they already have plenty of great things to wrap and put under the tree. Being deliberate about choosing and paying for gifts well before the gift-giving season frees you from the frenzied thinking that this particular toy is what will make this a memorable and happy holiday for your child.

Imagine throwing the item away

In many cases, the items sold to you via scarcity marketing are things that you simply don't need — and you can probably remember the short life cycles of various items in your life that went from cute product offered for a limited time, to something collecting dust on a shelf, to a Goodwill donation within a few short years.

So when you're tempted to buy something because it's on sale for one day only or may otherwise soon be out of your reach, imagine how it will feel to donate or throw that item away in a relatively short time frame. Wouldn't you rather save your money and avoid the clutter?

Institute a 24-hour purchase rule

When we're in the grips of loss aversion, whatever it is we feel like we need to buy seems urgent. The best way to release yourself from that artificial urgency is to institute a 24-hour rule. If you're not sure if you should buy something, then wait 24 hours to see if you still want it as badly after a full day has passed.

Waiting 24 hours to make a decision to buy is not going to make a difference in the majority of purchases, and as Mikelann Valterra of Forbes puts it, "in the space between thought and action resides judgment. Give yourself some space to consciously think."

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