Monday, September 11, 2017

Influence with Trustworthy Scarcity

Why does interest in a product, service, or experience climb when it’s described to the shopper as scarce? An abundance of studies on that question say the appeal is generally due to one or more of the following:
  • Desirability. “People in the know are wanting what’s available.” 
  • Distinctiveness. “I’ll have something others don’t have.” 
  • Status. “Many aren’t able to afford what I have.” 
  • Nostalgia. “I’ll preserve memories of expired possibilities.” 
  • Quality. “Lavish attention must have been devoted to each item.” 
  • Competitiveness. “Others who don’t have this are comparative losers.” 
  • Reactance. “I want to have what others tell me I can’t have.” 
     Successful marketers use these levers. Scarcity opens opportunities for higher profit margins as long as customers accept that the reason for the scarcity is genuine. Florida International University researchers wondered whether any suspiciousness is greater with supply-related explanations (“Buy it before supplies run out” “We won’t be getting a new shipment for a while”) or demand-related explanations (“Someone else has made an offer.” “We’ve already sold more than 500 of these.”)
     The answer is that it depends on what the consumer trusts the seller to know. A manufacturer is expected to be more current about supply channel logistics than about store demand, so supply-related explanations would be trusted. A retail salesperson is on the front lines of purchase patterns, allowing for trustworthy demand-related explanations.
     Whatever the type of explanation, trust is more likely when shoppers have been warned in advance about possible out-of-stocks. Financially profit from pricing scarce items higher, but for long-term good will toward the store, provide ample notice to customers about impending shortages. Tell them how long you expect the shortages to last. Suggest alternatives they could purchase until the shortages ease. Have those alternatives in stock.
     When consumers learn that an item you carry is in scarce supply, they get emotionally aroused. Researchers at American University and University of Arizona found that one result of this is that the difference in preference between a sought item and the other alternatives grows. Therefore, the degree of disappointment if the item ends up out-of-stock (OOS) is keener.
     You don’t want disappointment generating irritation directed at your store. To head this off, take personal responsibility for the OOS. University of Bologna research indicates that outrage about the outage will be less when the salesperson says, “I didn’t adequately anticipate demand,” rather than, “We didn’t adequately anticipate demand”

For your success: Retailer’s Edge: Boost Profits Using Shopper Psychology

Click below for more: 
Offer Scam-Free Scarcity
Show Them What They’ll Never See Again
React When Faced with Reactance
Sweeten Scarcity with Ample Warning
Steer Shoppers Away from Settling

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