Harvard Business School’s Working Knowledge weekly newsletter had an interesting article, authored by marketing professor John Quelch about how you can take advantage of what he calls the “Scarcity Illusion Strategy” when you’re getting ready to introduce your new product or service.
By using the illusion of scarcity, [you] can accelerate demand. This false scarcity encourages us [customers] to buy sooner and perhaps to buy more than normalâ€¦ two excellent examples of this effect this summer [were] the launches of the iPhone and the seventh Harry Potter bookâ€¦
…pre-launch publicity was designed not only to fuel demand but also to create the illusion that supplies would be limited. In fact, there were very few supply shortagesâ€¦
It wasn’t just direct sales of these two products that benefited from the scarcity illusion, however: The heavy crowds drove sales of related products in Apple stores and bookstores during a relatively slow sales month.
Moreover, your expensive PR firm can generate such publicity, by telling reporters that you’re launching “a great product,” but that management doesnâ€™t have time for interviews because they are “working round the clock” to “do everything they can to meet pre-order demand,” etc.
However, there are risks with a “Scarcity Illusion Strategy”:
1. Hype invites heightened scrutiny, so you must make sure that your product is absolutely ready. Incomplete, semi-functional or buggy products will only do harm to your sales prospects.
2. Consumers can get frustrated by forced-waiting. They may give up, or opt for an alternative product/service, if the delay in delivery is too long.
Prof. Quelch also offers tips on how to recover from a Scarcity Illusion-play gone wrong (or a real product shortfall), using the example of VWâ€™s botched launch of the new Beetle in 1998.
Read more about this tactical marketing strategy …