Scarcity Principle free essay sample

The trick is to recognize them and use them in the right way Robert explains that this Scarcity Principle works on the idea of Reactance. Essentially, it happens because none of us like to be told no, limited in any way, or have our freedom constrained. So, when we think we might miss out, not be chosen, or be denied what we want, we react. That reactance makes us try all the harder and want what is denied us all the more. Think of it like reverse psychology used on little children. When you tell Tommy he can’t play with dirt, he will do it. Apparently, according to the research, grown-ups are no different. Scarcity, in the area of  social psychology, works much like scarcity in the area of  economics. Simply put, humans place a higher value on an object that is scarce, and a lower value on those that are abundant. The thought that we, as humans, want something we cannot have drives us to desire the object even more. This idea is deeply embedded in the intensely popular, â€Å"Black Friday† shopping extravaganza that U. S. consumers participate in every year on the day after  Thanksgiving. More than getting a bargain on a hot gift idea, shoppers thrive on the competition itself, in obtaining the scarce product. There are two social psychology principles that work with scarcity that increase its powerful force. One is  social proof. This is a contributing factor to the effectiveness of scarcity, because if a product is sold out, or inventory is extremely low, humans interpret that to mean the product must be good since everyone else appears to be buying it. The second contributing principle to scarcity is  commitment  and  consistency. If someone has already committed themselves to something, then find out they cannot have it, it makes the person want the item more. . Scarcity and Indecision in Dating and Relationships One study that supports this assertion came from Whitchurch, Wilson, and Gilbert (2011). The authors had college women view Facebook profiles of four male students. They were told that the men had previously viewed their Facebook profiles as well. The authors then randomly told the women that the men had one of the following reactions to their profiles: 1) the man like d them a lot, 2) the man liked them an average amount, 3) the man was uncertain of his feelings. Initially, women reported liking the men who liked them a lot a bit more than the ones who only liked them an average amount. However, the women liked the uncertain men the most of all. They rated the uncertain men as the most attractive and even thought the most about them over time. Scarcity at work Another study supporting this scarcity effect on desire comes from Johnco, Wheeler, and Taylor (2010). These authors were interested in the bar phenomenon of all the girls get prettier at closing time or â€Å"beer goggle†. In other words, the phenomenon that men and women both rate members of the opposite sex as more desirable, the closer a bar gets to closing. Historically, this phenomenon was attributed to alcohol consumption. It was reasoned that patrons simply got drunk, which negatively influenced their decision-making and impulsivity. However, Johnco and associates came up with a different answer. They measured both blood alcohol concentration (BAC) of participants and attractiveness ratings of opposite sex individuals during the course of the night. BAC increases (i. e. getting drunk) did not account for the whole increase in attractiveness of the opposite sex. Given that, the authors reasoned that the effect was at least partially due to scarcity. As the night goes on, the time left to find a partner diminishes. Also, the people who are left to choose from reduces too. So, it becomes just like a one-day sale at the mall. The leftovers look mighty attractive as they become scarce at the bar—much like they do on the sale rack. 3. The psychology of scarcity in marketing: How many times have you bought something impulsively simply because you felt it wouldnt be available later due to consumer demand? Not only does the principle of social proof tell us that a product is good because other people think it is, but we are also in a hurry to buy this product because we are in direct competition with others. Advertisers consistently and slyly attempt to exploit our natural tendency to want scarce products and services in high demand. Realtors may tell an indecisive prospect interested in a house that there is another potential buyer. Appliance retailers advertising close-out sales events make it painfully clear that merchandise is limited and that large crowds are expected. And grocery and department stores are notorious for generating a competitive fury by advertising great deals on certain items. It is a good idea to be on your guard any time you feel the pressure to buy anything that appears to be scarce, especially when you are given the impression that the item is in high demand. Realtors may not always be telling the truth when it comes to claiming another buyer is competing for a house you like. Appliance retailers having a close-out sale may have an unlimited supply of merchandise, whose price tags are not significantly better than the competitions. And grocery and department stores may severely limit the supply of â€Å"loss leaders† simply to get you into their stores. Organizations that provide false or misleading information about the scarcity and demand for their products and services are hoping that consumers feel automatically pressured to buy. These organizations know that peoples common reaction to the combination of scarcity and competition hinders an individuals ability to think straight. They are banking on cognitive processes being suppressed by emotional responses. If you ever find yourself being pressured by scarcity in a sales situation, use your emotional â€Å"hurry-to-buy† reaction as a warning that scarcity tactics may be in full force. Once you have regained a calm, rational perspective, ask yourself if you really want to experience the item or merely want to possess it. If you desire something for its utilitarian value (i. e. , because you want to use it), then remember that scarce items do not necessarily look, sound, taste, feel, or work any better simply because they are scarce. But if you desire something primarily for the purpose of owning it (i. e. , because you gain social, psychological, or economic benefits), then you can use its availability to determine how much you want to pay for it. 4. Does it work in Vietnam? The answer is YES. â€Å"Sale† banner are everywhere, and even if that is still not enough to attract consumers, there will be lots of â€Å"Big sales† and â€Å"Special offers† around the corner. Vietnamese people are human-beings, just like any other parts of the world, and thus must be under the influent of Scarcity Principle. Recently, there is an article posted on Vnexpress reporting about the â€Å"Fan street† in Hanoi. Nguy? n Luong B? ng street used to be the focuspoint of about twenty shops of house-hold appliances, mainly sells fans and ACs. Due to a construction plan for a new crossing bridge from Kim Lien to Hoang C? u, those stores are forced to be demolished before April 15th ,2013. Just to beat the deadline,shop-owners in that section of the street began their biggest sale of this year. All twenty stores discounted their goods, the average drop in prices is around VND300000, which is quiet significant. Consumers reacted positively with this â€Å"sale†,buyers crowded the street till midnight to bring home a new fan, some even bought more than one. Nonstop sales till midnight Of course shop-owners did not give up their business that easily, some revealed that they had already found a new place to move their store into. Clearly this is a opportunity for the sellers to gain a huge revenue. Their sales skyrocketed, with a though-significant-but-small drop in price. A small business trickery but a profitable one. The second â€Å"Scarcity† in Vietnam, sadly, relates with rare animals. The financial boom in Vietnam has led to a change in appetite. Protected bears, tigers, turtles, snakes, and fish are among the casualties of ‘refined’ culinary taste. It seems that for many, the best way to demonstrate new wealth and power in Vietnam is to eat something rare, something potentially illegal. Most of the â€Å"delicacies† come from poachers and foreign smuggling networks. And not just for the exotic meat, endangered animals are also traded for decorations â€Å"trophies† and medicines that hardly work †¦. And not just Vietnam, other countries like China and the majority of SEA are to blamed. Though actions had been taken but to fully stop the problem, the main problem lies inside people’ conception that consuming rare animals gives them more power. The truth is, you stay the same whether you eat a chicken or an eagle. Propaganda campaigns are set up to change people need of Scarcity but still changes are due in long-term plan. In both situations, Scarcity Principle is used by sellers to influence buyers’ attitude, thus the benefited is the selling side. Also misuse of Scarcity may leads to harmful effect, as animals went extinct. So each time you see a â€Å"sale† , just be careful not to be persuaded by a â€Å"generous† dealer, it might be a costly trap. 5. Conclusion: â€Å"The way to love anything is to realize that it might be lost. † The Scarcity Principle works with all aspect of our life, from self-motivation to a successful business negotiation, even have control over someone’s decision†¦etc. A simple yet universal law of human mind . References: -Influence: The Psychology of Persuasion by Robert Cialdini -Experiment results from psychologytoday. com -â€Å"Fan street† : http://vnexpress. net/gl/kinh-doanh/2013/04/giai-toa-pho-quat-dien-tieu-thuong-chay-dua-xa-hang/