In the run up to Christmas I found myself logging on to the
website of a well-known online retailer on a daily basis. They had a fantastic deal on for the latest must-have
gift for 8 year old girls. But curiously
they had no availability, either for collection from one of their stores or for
delivery. So why would they have a
special deal on, yet no availability? What was going on? It made no sense!
Or did it? Why would
retailers have a deliberate policy of heavily advertising a toy on TV,
promoting it on their website, and then under-stocking it. Thinking back a similar thing happened last
year. And the year before…
Given how sophisticated retailers are at analysing consumer
behaviour, they couldn't keep making the same mistake, so this must actually be
a deliberate strategy. But why? There doesn't seem to be any logic in promoting
but not stocking the most sought-after gift.
What they are actually doing is using a very powerful
influencing tool – that of scarcity. The more difficult something is to get, the
more we can end up wanting it. We are
all too familiar with more blatant versions of this tool: “Sale must end
Friday!”, “Only 4 flights left at this price!”, “Limited edition available for
a short time only!” and so on. Adverts
on TV implore us to buy now, before the sale ends, and despite knowing in our
heart of hearts that the sale won’t end, we find the deal harder to resist when
we think they might run out.
But as easy as that is to recognise and understand it
doesn't fully explain what is going on when the desired product or service is
not available at all. To understand that
we need to reflect on what actually happens when we find we can’t get what we
really want, because it is in such short supply? What did I do this Christmas?
In the run up to Christmas my little girl wrote her letter
to Santa and on it specifically included this particular toy. To increase her
chances of getting it she also “mentioned it” in passing to me, her mum, her
grandparents… naturally I wanted to make sure it was under the tree on
Christmas Day. Yet I couldn’t find it anywhere.
So I found something else. Something better to make up for the
disappointment. So the retailer had my
money, but despite my efforts my daughter still wasn't going to get the one
present she really wanted.
We’re now well into the New Year and guess what – that
treasured toy is available. January is
traditionally a hard time for retailers as consumers cut back on their
spending. Hence the sales. But this toy isn’t in the sales. It’s at full price, and kids are spending
their Christmas money on it, and parents and grandparents are falling into the
trap of buying it to make up for not being able to get it for Christmas. This principle doesn’t just apply to gifts
for children (although admittedly with the added pressure from them this makes
it an even more effective approach).
So the retailers have not only made the sale in December, when
they were pretty much guaranteed to, but they have also managed to boost demand
post-Christmas as well by cleverly manipulating the scarcity principle to
ensure we continued to buy in January that which we couldn't get hold of in
December.
And the beauty of it is, even when we know it’s happening,
we still can’t resist the lure of that deal. Get it while you still can!