Manufacturing Scarcity

Manufacturing Scarcity

“When you don't have food in your life, just for a day, it makes you realise you're lucky to have it the next day. So the day after fasting, the music that comes out will be very joyous.”
- Chris Martin,Coldplay

Have you ever been on a diet?  I am partial to juice fasting myself.  While there is a clear physical benefit in responsibly denying yourself calories, there is an even greater psychological impact.  The more times you deny yourself something that brings you pleasure, the greater your appreciation and desire for that thing becomes.  For instance, on the third day of a juice fast, pizza takes on an almost spiritual quality.  Honestly, if I was stranded on an island for months without anything good to eat and someone brought a freshly cooked pizza, I would cherish each and every bite and remember that pizza with the kind of strong emotion usually reserved for major life experiences.  While that same pizza given to me today would engender only minimal appreciation and sustenance. 

The only difference, scarcity.

When you deny yourself something, whether voluntarily or forced to by circumstance, inevitably you establish a greater appreciation and desire for that thing.  In the past, scarcity was a major issue. Quite often people did not have the things they needed to provide adequate safety and security.  Today we live in a culture of excess.  Deprivation still exists, of course. But much of the western world’s population has a good deal more than they need.  This has led to something I’ve highlighted before—a lack of appreciation, at epidemic levels.  And this lack creates a new modern need—the need to cultivate appreciation. 

One of the ways we can cultivate appreciation is by manufacturing scarcity.  We do this by starving ourselves of whatever it is we desire.  For example, my wife and I were advised not to see each other for a week before we were married.  While this is highly counterintuitive, it was an amazing experience.  After dealing with all of the craziness and emotions surrounding engagement and wedding planning, we said a temporary goodbye to one another seven days before we got married.  Yes, it made some of the final preparation more difficult, but it also allowed us the space to be ourselves and focus on what we truly love and appreciate about one another. 

We reunited about thirty minutes prior to our ceremony, surrounded by family and friends, and then truly reconnected under the Chuppa in the marriage ritual.  The feeling was unbelievable—a rush of positive emotion and gratitude for being able to spend our lives together.  Yes, we still would have enjoyed the ceremony without this separation period, but the scarcity we instituted amplified our desire and enhanced our appreciation of one another in the moment.  

It left a profound, unforgettable emotional imprint.

And—to switch gears—this same principle applies to business.  In a culture where excess is rampant, scarcity is rewarded.  This is the underlying principle of the luxury industry.  If you acquire a limited-supply product—a car, boat, handbag, pair of sneakers, etc.—it can make you feel special, and maybe even superior to your peers.  According to Wikipedia: “Hunger marketing is a psychological strategy that focuses on the desire of consumers, making them hungry, thus having strong desire to buy products which other people also want to buy.  By stimulating psychology, it drives people into emotional rather than rational decision-making by means of driving up the scarcity of the product. This marketing strategy boosts people’s interest, and through word-of-mouth helps businesses have more potential customers.”  

But what happens when excess exists?  For example, when a luxury conglomerate like LVMH or Kering has hundreds or thousands of stores, their products cannot really be considered scarce, right?  Or when developers build an oversupply of luxury condominiums, they can no longer be considered scarce, right?  In these situations, marketers have to work to cultivate artificial appreciation (a phenomenon also known as manufacturing scarcity) to maintain demand.

The diamond business has been doing this expertly for years.  It is well documented that De Beers—the world’s largest seller of diamonds—has an almost endless supply of diamonds in storage and controls how much they release in order to maximize the price.  Are diamonds rare? Yes, but actually they are much less rare than the price suggests. This practice is very similar to OPEC’s role in the oil business.  Millions of gallons in storage, released sparingly to maintain price. And it is the reason online shopping platforms say “Eight other people are looking at this product right now” or “Only five left” when that may or may not be true.

It is undeniable that we appreciate things and people more, and thus are more likely to take follow-on actions, when we feel this thing or person is less available.  Whether the context is personal relationships or fine wines, this response to limited availability—something hard to get—is hard-wired into us.  Like many aspects of being human, this trait, depending on the circumstance, can be a blessing or a curse. But one thing is certain. Only when we understand the impact of scarcity on our lives and in our work can we begin to truly realize the true abundance we have.

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