[Book Sip] Order Rush Nearing Deadline... The Psychology of Limited Editions

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Starbucks sells its popular "Pumpkin Spice Latte"?which has sold over 200 million cups worldwide?only during the fall. Many customers visit Starbucks stores to enjoy this special menu that is unavailable after the season ends. Luxury watch brand Panerai previews limited edition products a year before release to heighten customer anticipation and create a sense of urgency that the product might sell out. As a result, despite the products costing tens of millions of won, they sell out quickly. The common strategy is to forgo selling more by emphasizing "scarcity" and selling at a higher price. ▲Limiting the purchase period ▲Restricting supply ▲Emphasizing high demand and popularity. The marketing expert author details, based on real cases and evidence, why our brains are attracted to scarcity and how companies use this psychology in marketing.

There are several principles that influence human psychology and behavior, among which scarcity holds the most powerful force. This is because it stimulates primal instincts essential for survival. Our ancestors had to survive in situations where everything was scarce. While we no longer need to hunt and gather scarce resources like our ancestors, we still carry these instincts. Therefore, we suffer from feelings of great loss and regret if we fail to obtain scarce goods or services. The urgency to act is also driven by this. - p.15

Celebrities like the Kardashian family utilize scarcity in a new way called a "drop." The Kardashians tell consumers that they have prepared 10,000 products for tonight only, and once sold out, they will never be restocked. This causes a surge in orders, and the products sell out within hours. More and more brands, from Nike, Supreme, Off-White to Amazon, are adopting this method. Amazon even runs a program where influencer-curated clothing collections are available for purchase only within 30 hours, surprisingly calling it "The Drop." Regardless of terminology, this method is very similar to the sales techniques used in infomercials and home shopping broadcasts for decades. - p.35

A 2017 study showed participants advertising messages with different discount periods while monitoring brain activity. Some participants were told the discount was valid for one day only, others for one week, and some had no expiration on the discount. Participants were asked to press a button if they wanted to buy the product. fMRI scans revealed that each time participants chose to buy a limited-time discount product, the brain area related to emotions (the amygdala) was activated. - p.37

Special discounts, short-term sales, and low-stock alerts are all ways companies exploit consumers' fear of loss to gain profit. Coupons work similarly. Companies use coupons to trigger fear of loss. When consumers first receive a coupon, they perceive a potential gain (saving money), but as time passes without using it, they begin to see it as a potential loss. Consumers fear losing money by not using the coupon. - p.112

Research on discount frequency and scarcity shows that products from companies that frequently offer discounts generally have a lower reference price. The problem at Black Angus Steakhouse was that repeated similar discount events for "dinner for two" led customers to perceive the discounted price as the appropriate reference price. In other words, customers considered the value of dinner to be the discounted price of $49.98 rather than the regular price of $66. A research team conducting in-depth interviews with consumers found that people infer sellers' behavior through price discounts and their long-term patterns, and these inferences affect customers' brand perception and expectations. - p.146~147

According to several studies, when faced with the burden of making a decision, the amount of information we can process decreases, leading us to focus only on features that can be evaluated quickly and effortlessly. People feel stressed when they perceive they have insufficient time to complete a task. Recall times when you felt pressured to finish a project quickly or when you procrastinated on homework until the last minute during school. You likely felt stressed. Surprisingly, people experience similar emotions when viewing products with limited-time discounts. - p.159

When communicating scarcity due to limited supply or exclusivity, messages are designed to make customers feel the product is special and recognize its distinctiveness. However, caution is needed. It must be clearly stated that the limited availability is due to restricted supply, not high demand. High demand means the product is "popular" among the masses, not an "exclusive luxury" product. Owning a popular product does not satisfy the desire for uniqueness. The more people own a product, the lower its perceived value, often the opposite effect. - p.191~192

Limited edition products shine most as conspicuous consumption goods (anything visible to others such as cars, jewelry, clothing). Whether acquiring a hard-to-get bourbon or wearing newly released luxury glasses, when trying to show off, people take pride in being noticed by others. Conspicuous consumption satisfies the desire to stand out from others. At the same time, limited edition products can attract emotionally. They make one feel valuable and enhance self-perceived worth. Buying a Coca-Cola can with a Santa Claus design (Christmas limited edition) may not cause this, but purchasing a special edition Panerai wristwatch might. When limited edition products are used as status symbols, they can convey the owner's high social status. This can make the owner feel not only valuable but also envied and respected by others. - p.223~224

Scarcity caused by demand appeals to those who want to feel a sense of belonging or identify with a particular group. While we discussed the desire for uniqueness earlier, many people also have the opposite desire to conform to the group. Humans, as social beings, want to be part of a group. This is biologically ingrained. It means that when we set norms and rules, we consider people in the same group. Whether a large group (peer groups or social classes) or a small group (art lovers or food critics sharing interests), these "norms and rules" include our thoughts, beliefs, behaviors, and even criteria for choosing what to buy. People with a strong desire to conform determine a product's value by how many others have purchased it. They buy scarce products because "others are buying them." - p.244~245

The Psychology of Limited Editions | Written by Mindy Weinstein | Mirae's Chang | 292 pages | 18,000 KRW

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