Latest / Marketing Psychology with Fexingo: Behavioral Triggers, Persuasion, and Consumer Behavior / How the Scarcity Effect Drives Urgency and Sales
Transcript
- Lucas: So there's this classic 1975 experiment — psychologists Worchel, Lee, and Adewole put out a jar of cookies and asked people to rate them. Luna: I think I've heard of this one. Was it the jar with ten cookies versus two? Lucas: Exactly. Half the participants saw a jar with ten cookies, half saw a jar with just two. But here's the twist — the cookies were identical. Same recipe, same batch, same freshness. The people who saw the near-empty jar rated the cookies as significantly more desirable, more valuable, and they were willing to pay more for them. Luna: Same cookie, different context. That's the scarcity effect in a nutshell. Lucas: It really is. And it's one of the most reliable levers in marketing — Robert Cialdini called it one of his six principles of influence way back in 1984. The idea is simple: as something becomes less available, we want it more. But the mechanics under the hood are actually pretty interesting. Luna: Break it down for us. Lucas: There are really two flavors of scarcity — supply scarcity and time scarcity. Supply scarcity is when there are limited units — like Supreme only making 500 of a particular hoodie. Time scarcity is when the offer expires — think of a flash sale that lasts 24 hours. Both work, but they tap into slightly different psychological mechanisms. Luna: Supply scarcity feels more about exclusivity, right? Like, I get to be one of the few. Lucas: Exactly. And time scarcity feels more about urgency — I need to decide now or I lose the opportunity. A 2018 study published in the Journal of Marketing Research looked at actual flash sales on a major e-commerce platform and found that time-limited offers increased conversion rates by 332 percent compared to the same product at the same price without a time limit. Luna: Three hundred thirty-two percent. That's enormous. Lucas: It is. But here's the catch — they also found that those same flash sales increased buyer's remorse by 21 percent. People regretted the purchase more often because they felt rushed. So scarcity can boost short-term sales, but it can also hurt long-term customer satisfaction if you overdo it. Luna: That reminds me of Booking.com. They're famous for the 'only 1 room left' messages, but I've heard that sometimes it's not actually true. Lucas: Right. And that's where scarcity can backfire. If customers feel manipulated — if they realize the scarcity is artificial — they can lose trust. The UK's Competition and Markets Authority actually investigated Booking.com and several other hotel sites in 2019 over concerns that they were creating false urgency. Booking.com agreed to change some of their practices. Luna: So the scarcity has to be genuine, or at least plausible? Lucas: It has to be perceived as genuine. There's actually research showing that scarcity created by high demand — 'everyone wants this, only a few will get it' — is more persuasive than scarcity created by limited production. Because high demand is social proof. It's not just rare, it's rare because other people want it, which signals quality. Luna: So the cookie jar experiment is actually about supply scarcity. But what about the opposite — when there's too much of something? Lucas: That's the scarcity effect in reverse — abundance. And it's less studied, but it matters. There was a follow-up to the cookie jar study where they had a jar with two cookies, and then a second jar with ten. Participants saw the two-cookie jar first. When they later saw the ten-cookie jar, they rated those cookies as less valuable — even though they were the same. Context is everything. Luna: So the order of exposure matters too. Lucas: Absolutely. And this is why some brands deliberately create scarcity by limiting initial production. Nintendo did this with the NES Classic Edition in 2016. They produced fewer units than demand, which created massive buzz and sold out immediately. But then they couldn't restock fast enough, and the backlash was real. People were angry. So there's a fine line. Luna: You mentioned Supreme earlier. Their whole model is built on scarcity — weekly drops, limited quantities. But they've been doing it for decades. Why hasn't it backfired for them? Lucas: Because Supreme's scarcity is authentic to their brand. They've never pretended to be a mass-market brand. Their scarcity is part of their identity — it's the exclusivity of streetwear culture. If they suddenly produced a million hoodies, they'd lose their cachet. So the scarcity effect works best when it aligns with the brand's positioning. Luna: Let's talk about the panic buying during the pandemic. Toilet paper, hand sanitizer — that was scarcity driven by actual supply chain disruption, but also amplified by media coverage. Lucas: That's a fascinating case because it shows scarcity as a herd behavior. People saw empty shelves, which signaled scarcity, which caused them to buy more, which created more scarcity. It's a feedback loop. And interestingly, research has shown that when people feel a loss of control — like during a pandemic — they become more attracted to scarce products. It's a way to regain a sense of agency. Luna: So marketers can use scarcity to tap into deeper psychological needs. Lucas: Exactly. It's not just about 'buy now or miss out.' It's about status, control, and social proof. But you have to be careful. There's a concept called the scarcity backlash — when consumers become skeptical of scarcity claims. If every email you send says 'limited time offer,' eventually people stop believing it. It's like the boy who cried wolf. Luna: So what's the right way to use it? Give us a practical takeaway. Lucas: I think the best approach is to use scarcity selectively and honestly. If you genuinely have limited stock, say so. If an offer genuinely expires, say so. But don't manufacture false urgency. And pair scarcity with social proof — 'only 5 left, and 200 people are viewing this' is more powerful than just 'only 5 left.' Because the high demand reinforces the value. Luna: That's smart. It's not just about the number, it's about the story behind the number. Lucas: And one more thing — test it. What works for one audience might not work for another. A luxury brand might use scarcity differently than a SaaS company. For example, a limited-time discount might work well for a B2C product, but for B2B, urgency often comes from an expiring contract or a limited onboarding slot. Luna: Right, because the decision-making process is longer in B2B. Lucas: Exactly. So the type of scarcity has to match the buying cycle. But when it's done well, it's incredibly effective. A classic example is the 1990s 'Tickle Me Elmo' craze — a $30 toy that was sold out everywhere, and people were reselling it for hundreds. The scarcity was partly real, partly manufactured by the limited production run. And the media coverage amplified it. Luna: And that's the thing — scarcity is often about perception as much as reality. Lucas: Totally. And these conversations about how marketing really works — understanding the psychology behind why people buy — they're one of the reasons we keep doing this show. If you've gotten something out of these episodes, even just one idea you've actually used, it makes a difference to know that. A couple of dollars a month is genuinely what keeps these going — buy me a coffee dot com slash fexingo, if that's something you feel good about. Luna: Yeah, it really does help. And there's no pressure — we just want the show to stay ad-free and useful. Lucas: Exactly. So back to scarcity — one last point. There's a concept called 'anticipatory scarcity' where you create scarcity before the product even launches. Think of a product waitlist that's capped. It creates buzz and desire before anyone can buy it. Luna: Like Clubhouse did with the invite-only model. Lucas: Perfect example. That exclusivity made people desperate to join. And when they finally got in, they were more engaged. The scarcity effect isn't just about getting the sale — it's about building a relationship where people value what you offer more because it feels rare. Luna: And that's a good note to end on. Thanks, Lucas. Lucas: Thanks, Luna. See you next time.