Mindy Weinstein - The Power of Scarcity: Leveraging Urgency and Demand to Influence Customer Decisions

IT MIGHT SOUND MELODRAMATIC to say that everything changed that day in 2017. It was another 110-degree day in Phoenix, literally hot enough to fry an egg on the sidewalk. The heat didnt get to me that morning, though, because I had a meeting with renowned social psychologist Robert Cialdini. Dr. Cialdini had graciously agreed to meet with me to discuss an academic topic, but our conversation became so much more. Over a cup of coffee, we discussed persuasion and its powerful psychological impact. We talked about the subtle ways wording a message can lead to greater influence. We even talked about FOMO (fear of missing out) and the havoc it wreaks on the mind.

That one-hour conversation led me on a three-year journey into researching, experimenting with, and understanding scarcity.

Its no secret that scarcity can lead to tunnel vision. People become consumed with what they cant or dont havewhich is why marketers often use scarcity messages in their campaigns.

But there is so much more to scarcity than simple supply and demand. Its not as simple as, if we think something is scarce, well want it more. There are many more layers of complexity involved that can tip the scales on whether scarcity will prompt someone to take action or walk away.

In other words, scarcity isnt straightforward, and using it the wrong way can backfire. Lets look at two examples of scarcity, one recent and one classic.

As the worldwide Covid-19 pandemic quickly spread, consumers began stocking up on toilet paper and clearing out store inventories. It was not uncommon to see empty shelves, as retailers struggled to keep stocked with the now-hot commodity.

People became obsessed with getting their hands on toilet paperbecause obsession is a classic side effect of scarcity. The lower the inventories of toilet paper became, the more obsessed people were with getting their hands on it. Toilet paper became nearly impossible to find at local stores, and those stores couldnt get enough product from their distributors, even though distributors were getting their normal supply from manufacturers. Demand skyrocketed. Fights between customers erupted in stores, some so heated that police were called in to intervene.

The sudden toilet paper crisis baffled economists and researchersit wasnt just a national problem; it was a global problem. A caf in Australia started accepting rolls of toilet paper as payment. The price of that cup of coffee you wanted? Three rolls. Armed robbers in Hong Kong raided a local supermarket and took 600 rolls of toilet paper, but nothing else.

One of the prevailing theories regarding the sudden run on toilet paper is that people were afraid there wouldnt be any when they needed it. Toilet paper was perceived as a scarce resource sparking immense competition among consumers trying to purchase it.

Twenty-four years earlier, a different shortagealbeit no less unusualoccurred involving a talking Sesame Street toy.

The internet buzzes with rumors of toy-store cashiers trampled by Elmo-crazed crowds, of Elmos being scalped for $7,000 apiece. Newspaper classified columns bulge with ads asking $1,000 for Elmo, which retails for $29.99 and is the most hard-to-find holiday toy since the Cabbage Patch Doll of 1983. Even the Mafia has joined the frenzy.

NEW YORK TIMES, 1996

If you were a child, parent, or grandparent in the mid-1990s, you probably remember the Tickle Me Elmo craze that swept the nation. The 16-inch Sesame Street figure, which laughed and said, That tickles! when its belly was squeezed, caused mass chaos during the Christmas season of 1996. Tyco Toys Inc., the manufacturer of Tickle Me Elmo, expected moderate success of its toy during Christmas; Tyco certainly did not anticipate what actually happened.

Tickle Me Elmo was featured on Rosie ODonnells television show and promoted in ads on television as the holiday season approached. Just one day after Thanksgiving, nearly 800,000 Elmo dollsTycos entire inventoryhad been snapped up within hours. What happened next? News spread about the Elmo doll shortage, which only increased the demand for itand gave rise to the hysteria that followed. Parents became obsessed with getting the toy for their children. As the