Something You Should Know - SYSK TRENDING - The Power of Scarcity

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Starting point is 00:00:36 Why does a product suddenly seem more valuable when there are only a few left? And why can the mere possibility of missing out change our decisions, our spending, and even our relationships? Scarcity is one of the most powerful forces influencing human behavior, and it's everywhere, from online shopping to social media and everyday life. That's why today's SYSK trending topic. is the power and influence of scarcity. In my conversation with marketing expert Mindy Weinstein, we examine what scarcity is really doing to our brains

Starting point is 00:01:12 and how we can recognize when it's being used to influence us. We also explore the psychology behind scarcity, why it can be so persuasive, and how understanding it can help you make better decisions. And we'll begin right after this. This spring, Denham gets a softer, lighter update. lighter update. Introducing Old Navy's drapey denim wide leg, a new fit that moves with you. It's everything you want denim to feel like for summer. Easy, breathable, and effortlessly cool.

Starting point is 00:01:45 With a fit that creates natural movement and a wide leg that feels modern, not overwhelming. Plus, that signature, wait, for this price, moment. Old Navy's drapey denim wide leg. One interesting way consumers, you, me, everyone gets manipulated, is through something called scarcity. It's ingrained in us. When we think something is in short supply, it triggers and influences our decision making. In fact, when it comes to being influenced, scarcity is arguably one of the most powerful forces, invoking a kind of primal instinct, an instinct that we're was essential to our ancestor survival, but not so much today. It is the explanation for why when there's an approaching storm, people stock up on milk and toilet paper, because something

Starting point is 00:02:40 tells them that these things could become scarce, even though they rarely do. One of the leading authorities on scarcity is Mindy Weinstein. Mindy's a marketing instructor at Grand Canyon University and the University of Denver, as well as a program leader for the Wharton School and Columbia Business School. Hi, Mindy, welcome to something you should know. Thank you for having me. So briefly explain what is scarcity as it applies to the way we think and make decisions? To put it simply, scarcity is some type of unavailability. And when you think about it, it's just a restriction of some type.

Starting point is 00:03:20 And there can be a lot of different causes of that restriction, but it is something that is unavailable or it could even just be something that's hard to get. And I think everybody has a sense of what that's like when you go on Amazon and it says, hurry, only two left in stock or, you know, sale ends Monday, that that's kind of scarcity. And I think people have a sense that it may be baloney, too, that if you really wanted to find, they could find another one to sell you. And if you really came in on Tuesday, they'd probably match the price. And yet people pay attention to that. They absolutely do. And I'm just going to tell you a little bit more and expand on scarcity. So I mean, I gave you the simple definition,

Starting point is 00:04:05 because that's truly what it is. But there are really four different types of scarcity. And what's so interesting about it is that each one tends to have a different effect on us. And so I'll just go through them if you don't mind, just telling you a bit about them. Sure. But we have, you know, we have demand-related scarcity, and that is popularity. So something that's popular. It's harder to get because of that. That's where we get the bestsellers or the wait list or you're trying to get into that new restaurant that everyone else is going to, but it's very difficult. That's demand-related scarcity. But then there's supply-related scarcity, and that could be intentional. So a lot of big brands will do drops where it's very limited and they're restricting the supply. Or it could

Starting point is 00:04:48 be because of some type of supply shortage. Like I know that the PlayStation 5 is something that's a supply related scarce item. And that's just because of the distribution and chip shortage is what I think I read last. But then there's also time related. And time related is some type of limitation on the amount of time that you have. And that could be something like a flash sale or if you've ever been on a website and you see the countdown timer, that feeling that you have, that you start to get anxious, that is time-related scarcity because now you're competing against the clock. And then finally, there's a limited addition, which is really part of supply-related scarcity. But with limited addition, it's different in that it could be the same product,

Starting point is 00:05:33 just a different packaging or just a slightly different twist, but it's also still scarcity. And all of those areas and all those things I talked about, they have different effects on us. And that's part of why I wanted to study scarcity. My dissertation, believe it or not, was on the power of scarcity, and that's just really what catapulted this whole thing, because I realized how complex it really was. And so what is the effect that people have? Why is it that we pay attention to that? Why does something become more desirable when it's harder to get? That is what is so surprising. So during my studies and even through some testing that I've done, there is a reaction to when something is unavailable to us. And that actually dates back to early mankind when, you know, people were trying to survive and there were scarce resources.

Starting point is 00:06:29 Our brains are hardwired and they're still wired to overcome any type of scarcity. So something is all of a sudden we can't get it or it's a little bit harder for us to. then our brain kicks into high gear. And so you can see that when you observe people and their behavior, but is there a way to tell like what's going on inside of a person that causes them to act the way they do when they suspect scarcity is upon them? The things that I'm about to tell you,

Starting point is 00:07:00 they've actually been seen in brain scans, which is hard to argue with that because you can actually see the brain activity. But when faced with a scarcely, let's say product you're trying to buy and it's an auction because there was actually a study done that did an auction simulation and participants were hooked up to MRIs and the researchers could actually see that when they were faced with a product that they could bid on that was scarce, the part of their brain that's in charge of the evaluation process had all types of activity,

Starting point is 00:07:32 meaning that what happened in the brain just automatically is, okay, this item is a little bit more difficult to get. There's not as many of them or it's running out. I'm going to value that higher. And we do that. And the other thing, too, I mean, because really it's so multi-layered is that when we are faced with this situation of scarcity, let's say if it's something that is popular, the example I like to give is going to the grocery store and you're buying a product you haven't bought before and you're looking at the different brands. You're not really sure what to get. But then there's one brand that there's only one box left, let's say, you're going to go for that one because your brain's going to take a mental shortcut. And that's also something that we've seen through brain scans, that when faced

Starting point is 00:08:16 with something that's scarce, our brains kick into gear again. And they also skip the normal process of decision making and just go straight to decision. Running out, it's hard to get. I want that. So it's just amazing. It's just how powerful it really is. And to me, I mean, when I started studying scarcity. Originally, I was looking more at just what influences us and the factors. And then when I started digging into that, I realized that out of all of them, scarcity is the one that is so innate in us and so strong. Don't you think that when people hear, when most of us hear these claims, these scarcity claims, only four days left, limit five, hurry, time is running out kind of claims that it's a tactic. Some retailer is trying to manipulate you to buy and prey upon this

Starting point is 00:09:11 scarcity response that happens in all of us when we hear these claims. So my question is, does knowing, being very conscious of the fact that this is a tactic, does that help mitigate the power of these scarcity claims? Because you know, they're just saying that. does help. You'll still find yourself in situations where you're going to have to stop and say, okay, what's really going on here? And I'll be completely candid with you. I am a researcher, you know, I have my PhD in general psychology. I'm a marketer. I'm a marketing instructor. So I come from this background where I understand all this. But as a consumer, I still get caught up in it. If I find that there's a product that interests me and I see that it keeps selling out,

Starting point is 00:10:00 oh, you better believe that that pool and that desire to purchase it is there. It's strong. And so it doesn't mean, though, that all of this is something you can't overcome. And I think that's really important to think about. So knowing that this happens, you can't just stop. And that's usually what I like to think about is like stop. You're about to make an impulse purchase. Ask yourself, why are you purchasing this? Is it because you think that it's something that's not going to be available that day, the next day, you're fearful that you're going to miss out. But if you just pause and think about why am I truly purchasing this and wait. I mean, wait a day. It sounds really simple, but the next day, if you feel like you still want to buy that and it's still available,

Starting point is 00:10:44 purchase it. There's also been studies done that show that that feeling that we have of the fear of loss or the thought that we might regret our actions or inaction in this case, it goes away. It doesn't last that long. So you just have to remember that. And I think it's just a reminder. So as a consumer going back to being candid, I have to remind myself of that of, am I really filling my shopping cart online on this website because I wanted all these things? Or is it because I just got a text messages saying that I had exclusive access to a sale?

Starting point is 00:11:18 So you just again, pausing is the best thing. Pausing is the best thing. I think that's the big takeaway here when it comes to scarcity. Mindy Weinstein is my guest. She is author of a book called The Power of Scarcity. So, Mindy, one of the things I've never really understood because I've never been part of the phenomenon, and I think it's part of this whole conversation about scarcity,

Starting point is 00:11:44 is when a movie first comes out and people line up like the night before, and I'm thinking, why? In two weeks, you could walk into that theater. it'll be half empty and it's the same movie. Why would you want to be the first to see it? Is that kind of part of this? A hundred percent. So here is what, again, is just, it looks, stepping back,

Starting point is 00:12:12 when you look at scarcity, how I said it's multi-layered. And the situation you just described, that still is a bit of, I mean, there's high demand there too, but people want to be the first ones. And so the different types of scarcity that exist out there, they speak to different people. And so, you know, that was high demand that I talked about. But it's a bit of supply too because there's only so many movie seats in the theater that you could go to and sit. But what happens when it's something like that is that people want to be unique. And so that's a huge draw.

Starting point is 00:12:47 So anything not supply related or even limited edition, that speaks to people who have a desire. for uniqueness. They want self-expression. So going to that movie theater, you know, they're going to take pictures before they go in, post them on social because they feel special because they got to be there before everyone else. The same thing when you think about like the latest iPhone that's coming out and people will wait in line for that. It's the same idea. It's that being one of those first movers, you know, the first to see it, the first to buy it, it sets you apart. Yeah. And well, and maybe the flip side of that is, you know when like a Broadway show announces that it's closing? And then the ticket sales go up, way up, because now it's going to be, now it's closing. It's going to be gone. Well,

Starting point is 00:13:34 those people could have gone to see it six months ago and probably got better seats. But now that they know it's closing, all of a sudden it becomes more desirable. Exactly. It's that fear of missing out. And you saying that is making me think about the McDonald's McRibb. I actually interviewed the former VP of global marketing for McDonald's. He was with the company for 40 years. And so they're a great example of using scarcity, but they take the approach of making it fun and adding excitement. And so the McRib, you know, that's been something that has been in and out in terms of being offered and available. And you never know what location it's going to be at. They've done farewell tours in the past. And currently they're actually, it's,

Starting point is 00:14:20 they've released it, but it's the farewell tour again. And so you kind of see things like that. And there's mass chaos to buy it. I actually even saw someone was selling a make rib sandwich on eBay for $5,000. I'm a little confused. Yeah, I'm a little confused because I don't know, like, do you just display it? Like, it's a museum item or do you eat it? No, I can't tell you they got $5,000, but I actually kind of laughed and I looked at the listing

Starting point is 00:14:48 for it too because it's like, your last. chance ever to get your micrrib sandwich, this is going to be gone for good. I thought, look at you, putting some scarcity into it. But it does create some excitement at the same time, but it's, it's FOMO. It's FOMO with the example you gave with Broadway and then even with the micrib. You see that? I don't get that because, come on, we know the McRib will be back. It has to come back. It's not like it's hard to bring it back. They do it all the time. So why would people actually believe that the McRib Farewell Tour is really

Starting point is 00:15:23 the McRib Farewell Tour. I mean, you know, the same thing happens at Taco Bell with their nacho fries, and I just finally got tired. I'm tired of going to Taco Bell and seeing they don't have them. So I just don't go to Taco Bell anymore because you kind of like

Starting point is 00:15:41 want them and they're not there. So it doesn't work on me, or that one doesn't work on me because I've kind of resigned myself. that I can live my life without nacho fries. Without nach? Yeah, I mean, and that's, you know, talking about scarcity. It's not that all of this is going to appeal to every person. You know, we're all different. So you talk about the nacho fries, but someone else might still keep going back because they're wondering when

Starting point is 00:16:07 they're going to be there. And as soon as they know they're back, they're going to continue to go buy them. We're just all different in the things that we are going to draw us in. So you mentioned the McRib. What are some other examples that we might know of market is using scarcity on us? Black Friday is like scarcity supreme with that because what happens with Black Friday is that, you know, the different stores, big box retailers, they're going to have a limited supply on purpose of certain items. And so they draw you in, you know, you get excited.

Starting point is 00:16:39 There's also all these people. There's excitement. There's all these things going on. That's a huge one. But I, some of the other big ones, and I'm going to tell you some of the more recent ones, too, like the Ford Bronco, they came out with their latest and greatest and sold out right away. People had to register to be on a wait list. And then now they're being told that it's probably going to be two more years before they even get their vehicle.

Starting point is 00:17:03 So those wait lists, anytime you see something like that, a wait list actually is scarcity because that signals high demand. And it's going to cause you to not want to miss out. You know, you want to be part of the group. You want to see what all the fuss is about. I'm thinking about some other ones. And this one might not be as well known, but if you look it up online, you're going to be blown away.

Starting point is 00:17:27 But there's this cup. It's actually a 40-ounce tumbler. It's the Stanley Quencher. And it's been like the internet sensation. So if you look up Stanley Quencher 40-ounce cup, first of all, you're going to see it sold out. That's the first thing.

Starting point is 00:17:43 But what was interesting about that, it was actually a product that was discontinued years ago. and a group of bloggers really petitioned Stanley to come back with it because they liked it. And so they were able to have 5,000 units that they were able to get their hands on, the bloggers. And they sold them to their following. And they were sold out right away. Well, now fast forward to today is Stanley is releasing these, but they just can't keep up. And so you see all these people talking about it on social media.

Starting point is 00:18:13 On TikTok, there was a hashtag related to the Stanley Quencher. I believe it had, oh my gosh, it was in the millions of usage, like on the hashtag. It was insane. It made it into like major publications. Everyone was trying to get their hands on it. So then, of course, that opened up this big, you know, market on eBay for them too. And so with that one, even though it's not a ploy, and that's why I'm also giving you that example too, is that sometimes scarcity just happens naturally. And, you know, we see that with supply shortages.

Starting point is 00:18:42 But when that happens, we still need to think to ourselves, okay, do I really? really need a 40-ounce tumbler. Is that something I really need? Because just, just because it's something that's selling out, again, doesn't mean you need it or have to get it. So just things to remember. So there's lots of different examples, but I wanted to, like I said, mention the ones that weren't even necessary marketing ploy. It's just things that happen. Is it usually just things that happen? Or is it usually a marketing ploy? It's both. I mean, it can be both. And so, of course, time-related scarcity. So like I said, those are your sales, flash sales, coupons, countdown timers, those type of things. I mean, that's, of course, intentional because there's

Starting point is 00:19:29 a specific time limit. And that's okay. Because with that, I mean, you are building brand awareness and so companies do that. And I think as consumers were okay with that, we're used to them. If it's a trustworthy brand and you bought from them before, you know, most likely it is above board because it can also be helpful with scarcity. If we want to buy something like on Amazon and you know that there's only one left, okay. Yeah, I mean, that's definitely trying to get some urgency. But if you really want that and you need that, you're going to buy it right now. But if it's something your company you're not as familiar with, like go do your research first to see if it's just them doing those tactics or whether it is truly something that's scarce and they're really

Starting point is 00:20:10 just trying to inform you. One of the times that I'm very suspicious of it is, when you try to book an airline flight and it'll say only four seats left. And if you really need that flight, that really gets your attention because if you don't book it now, it's only four seats left, they'll be gone and then you won't get to go see Grandma for Christmas. If it's real, it's real. But I'm just, I just wonder if it's real. I hear you. But a lot of those, you know, with airlines, it is real.

Starting point is 00:20:42 I also look at it as, again, if it's a brand you know, a company you trust, an airline you've been buying from, they also do inform you with that at the same time. And yes, they're trying to get you to buy now. There's no doubt in my mind. But at the same time, they're not just making that up either. And I had in my book, I have an interview with Kevin Harrington. So he was one of the original Shark Tank investors and then also very involved in QVC and Home Shopping Network. And we were even talking about how like QVC, you see, you know, if you've ever watched that, it'll say how many items are left. And it's definitely that sense of urgency. But the way he was talking about it, he said, it is true. Like what, what we're saying when you're looking at that product and you're watching how many are going down, being bought, it's all accurate. He said, we only buy a certain supply, but they're informing their viewers that are watching of like, okay, yes, you know, five left, you know, two left. Oh, we're sold

Starting point is 00:21:36 out. So at the same time, you don't, even though we're skeptical, there is a lot. of truth to that. Again, it just goes back to, do you really need it? In a case of an airline ticket, you probably do, like you said, if you're wanting to go home and see Grandma, if you're watching something on QVC, I don't know, just depends what it is. Well, it's really amazing the power that scarcity has over us. And as you say, it appears to be like this primal instinct. And it's really, I think, important for people to understand. Mindy Weinstein's been my guest. She is a marketing instructor at the University of Denver and Grand Canyon University, as well as a program leader at the Wharton School and Columbia Business School. And the name of the book is The Power of

Starting point is 00:22:21 Scarcity, leveraging urgency and demand to influence customers' decisions. And there is a link to that book in the show notes. Thank you, Mindy. Thanks, Mike. This has been so fun. I really appreciate you having me. You bet. And that's it for this SYSK trending episode. I'm Mike Carruthers. Thanks for listening today to something you should know.

Something You Should Know - SYSK TRENDING - The Power of Scarcity

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