The scarcity illusion

I'm going to tell you straight up. YOU MUST BE SCARCE!

I bet after reading this post you will go scarce immediately! Yes allow me to introduce to you Giorgio A. Tsoukalos of the History channel, he is a Greek-Swiss personality who specializes in talking about ancient aliens. Any way he's going to be joining us in talking about the scarcity principle today. Luckily not about ancient aliens. Giorgio can you repeat that quote that got you so famous?

Catherine I of Russia

So why do I say you must be scarce? Let me sight this example, you'll see. Some time back in the early 1700s back then in Russia, the Russians had nothing to do with potato. In fact they thought it was poisonous. But something remarkable happened, the Empress of Russia, Catherine I, secured this large field and began planting and harvesting potatoes, she even went as far as to fence this field and warned people not to STEAL her potatoes. Guess what? People started protesting why they could not have potatoes, they went "hey why can't we have potatoes" "why must only the rich have potatoes" "we want potatoes! We deserve potatoes". Remember it is the same "poisonous" potatoes. Amazing right?




So that kinda makes you wonder, why in the world would these people who initially thought potatoes were poisonous suddenly want to have potatoes? That's what is called the psychological reactance. One thing about humans is we suddenly want what we don't have or cannot have. Girls themselves are always surprised by how they want to be with the guys that don't want them when they already have several guys after them.

To buttress this point, some time back a group of researchers carried out a study involving 2 year old boys, these boys were left in the room with two toys, one toy was placed behind a glass barrier and the other was very much within their reach. Guess what happened? You thought right, these toddlers desired the toy that was placed behind the barrier more. Some of the toddlers whose hands could reach over to the other side of barrier stretched their hands just to play with the toy and some of the other boys went as far as to go to the other side to have that toy. It must be noted that the toy had nothing spectacular in it. What's amazing is that when these toys were placed side by side each other without any barriers, the kids had no preferences for any. That is psychological reactance in it's effect!

Same thing with restrictions, studies have shown that parents who excessively restrict/ban their children from junk food have a hand in their children's long term obsessions of those same junk foods they were instructed not to eat.

Strict parenting
Image source: nobullying.com

Little girl eating chocolate
Image source: medimanage.com

A research taken by Professor Jane Ogden proved this to be true. Two sets of children were examined, one group was banned from eating chocolate and the other group had no restrictions placed on them. Later on, the group which were restricted from chocolate had the restrictions raised. Professor Ogden observed that though the children in the first group consumed less chocolate than those in the second group but in the long run they consumed chocolates more frequently than the second group. From this study, it shows that entirely restricting children from certain things could bring short term rewards but could be devastating in the long term Generally, being excessively strict with children builds up a rebellious attitude within them that makes them do exactly what their parents would never have them do, and that's usually when they finally get their freedoms. Right Giorgio?

Image source: dir.indiamart.com

What's more, when something is banned, people somehow begin to see the need for it, even if it is of no value. Some time ago, Florida banned the use of phosphate-based detergents because it was claimed that it was harmful to the environment and barely washed clothes clean. Before the law was passed, it was recorded that the demand for and sales of phosphates-based detergents increased remarkably. Even when the law was underway, stores outside Florida still experienced an increase in sales of phosphate-containing detergents. Later when consumers of the phosphate-containing detergents were asked as to why they preferred that detergent, they claimed it washed clothes better. Wow! This is what is known as psychological reactance, it occurs when a person's freedom or options have been limited.

“Order while stock last” "limited edition""majority of stock sold" are words being thrown about by many businesses, these phrases however are just to create urgency and force you to act as soon as possible. They are --in other words --just to activate your psychological reactance. The stock is likely not ending any time soon and that shirt is probably not going out of stock but giving the impression that it is going scarce raises anxiety in your mind till you fear you might never get the chance to get that commodity elsewhere, then you are forced to act immediately. Even travel sites lie about the number of tickets left, they often show only “3 tickets left at this price”. In most instances, there are usually more than 3 tickets available, it’s only a tactic to force people to act immediately.

To make the idea of scarcity even more effective, these companies attach benefits to it and this works so much like magic.

Like offering discounts, why do you think when you go to sites like Jumia and many e-commerce stores, you see them crossing out prices and offering discounts? The truth is, many times, you are simply buying these products for the real price if not more but by offering a discount or in many cases free shipping, you simply do not want to miss out and would do almost anything to ensure you don't miss out from this "one in a lifetime offer". This is what is called the FOMO(Fear Of Missing Out) effect. Nobody wants to miss out on anything, everybody wants to save money, offering discounts is seen as an avenue to save money. A digital marketer;  Yaro Starak, attested to this at his first trial, by placing a label of limited offers, setting a deadline and adding some perceived benefits, he was able to drives sales. He revealed that 24 hours before the offer ends sales could increase at a minimum of 50%.

Image source: Bunnyfoot.com

Let me tell you about this one too, a research was carried on groups of people in 1975 by Worchel Lee and Adewole, which perfectly explained the psychology of scarcity, there were two jars of containing cookies, one containing ten cookies and the other containing just 2 cookies. Guess what happened? Participants in the study rated the cookies in the second jar higher. It must be noted that the cookies in the jars were the same! That kinda makes you wonder, why in the world will people value 2 cookies over 10? They simply perceived that the cookies with less quantity transcended to higher quality when in actuality they just the same cookies.

Patek Phillipe's $1 million watch
Image source: trinityroad.essex.sch.uk

This is where smart marketers get us.That's why they keep screaming "limited supply" sometimes they can go as far as selling their commodities at selected stores. Although, these products could be "worth the hype" but in actuality, the hype on it is what majority of your money is going into. A wrist watch maker Patek Phillipe had this wrist watch which was separated from other watches with a price tag of $1 million, what is most amazing is not even the price tag but the fact that those who have interest in the watch have to prove that they deserve that particular wrist watch by writing him a letter why they deserve it! He would then decide if the person who in fact can pay $1 million DESERVES the wrist watch! Shocking! Just that single watch automatically makes all other watches in his gallery looks more valuable. Listen to what Giorgio has to say.

Still talking about scarcity, for the football lovers, remember the time Lionel bought a luxury car for around $36million? It was an auction for a 1957 Ferrari 335 S Spider Scaglietti? 

Ferrari 335 S Spider Scaglietti
Image source: dailymail.co.uk

It is valued much more the price of a Bugatti. It was noted that Cristiano Ronaldo was also interested in that luxury vehicle. Why do you think people bid in auctions? Majorly because the commodities sold in auctions are scarce and owning a scarce product gives them a distinct feeling of uniqueness. Lionel Messi himself has not driven that vehicle more than once and that was at the exhibition of his newly purchased car in front of the cameras. Lol. People who bid in auctions, most times come with a budget, they make up their minds they won't bid for more than a certain price but they end up bidding for far the amount they initially set out for. This is simply because the pain of missing out of the commodity that can never be seen anywhere else is much more than saving money.

Fashion industries also makes use of this principle to good effect, in fashion, there is always room for exclusivity, fashion websites usually display exclusive collections on their websites and these prices can be very high. Same thing with Apple Inc., they would intentionally stack up their Apple stores with only a limited number of the newly launched Apple product. They even go as far as to limit export to some countries.on the day it has been launched. Ironically, this only increases the thirst for it as the queues goes longer and longer. and you know, this attracts the media even more.

People queuing up to purchase iPhone
Image source: dailymail.co.uk

People who have a very strong thirst for not-to-common products are the ones many marketers like, here they are able to sell their luxury products to them at any price and what is really cool, buyers even help advertise for them by displaying their brands and even boasting about them. The fact remains that when you buy a luxury product, majority of what you pay for is the hype around it.

One tactic used by smart marketers and many top industries is creating artificial scarcity, this way, they make their commodities look more valuable than it actually is. It's a simple principle of demand and supply. By limiting supply(ie creating supply), they are able to increase demand. For example, during petrol scarcity in Nigeria, it must be noted that the petrol itself is usually available but hoarded in order to force an increase in price. During the scarcity, petrol was being sold for about 10 times it's price but people still purchased because it is necessary, when the official price of petrol was eventually officially raised to N145, nobody complained.

Long queue in petrol station in Nigeria during fuel scarcity

Scarcity however has a good side and a bad side...

THE GOOD SIDE OF SCARCITY

It induces quality

Scarcity helps prospects see the value in something. For example, Quibb, are you an entrepreneur or tech-savvy? You might want to join Quibb an online discussion board of tech professionals and entrepreneurs, but wait! This site has an acceptance rate of just about 43-50%. The founder herself; Sandi MacPherson does the screening herself. She chooses who gets in and who gets rejected. In fact getting approval is like gaining entry into the biggest night club in your hood with hefty bouncers at the entrance. One thing is for sure though, you will be mixing with high-quality professionals if you get in. Imagine the doors were left open to just every "professional", then it would be no longer a place to get high-quality professional news and articles.


Personally, when I go through my Facebook news feed, I like almost everybody's post, sometimes I just read a line in a long post and I click the 'like' button and sometimes even click on the 'love' reaction. Now look at it this way, what if Facebook changes it's policy and says you can only give 20 'likes' in one day? Then I would surely learn to value my 'like' button and would only use it when I find something really exciting and engaging.

Some social networks do that anyway but not with the 'like' button but the "nom" button. I'll explain, so there is this social network, it's called Foodspotting, here people share photos of their meals and their faves, they have the option to "nom" their very favorite dishes but the number of "noms" that can be given is very limited. This people are more skeptical before 'noming' a dish. ☺

There's another website which uses the similar principle with Foodspotting, it's Dribbble, this is a online platform where creative pros and designers share photos of their works, what is sweet is they don't even bother hiding their scarcity principle; “in case it isn't obvious, the reason we throttle shots is to encourage players to post with care— we hope scarcity induces quality. (So far, so good.) We'll be introducing other ways to accrue shots for meritorious behavior, but we want everyone to know that you'll always have a base of 24 shots to work with each month.” So far Dribble has been impressive.

Even the Simpsons makers destroyed many cells of their animation characters in order to make the few more valuable.

It induces participation

Also scarcity helps to induce participation, what would be relevance and excitement of the Olympics game if all athletes go home with medals. What would be the need of Usain Bolt breaking records at the Olympic games only to share his gold medal with other athletes. Likewise, if there were unlimited cash in the 'monopoly' game then it would simply lose it's taste. The fact that only one football team can win a trophy causes competition, it stares motivation amongst them and that is what brings the excitement and make us pay to watch this guys. That's what scarcity can do. It passes out this message "There are only prizes for the best and you must work extra hard if you really want it."

These examples have been to show that applying scarcity helps to increase value, just like when you want to host a big event, you print tickets and sell them so as to ensure only a specific kinds of people can get in. Right?

However, there is also a bad side to this scarcity....brace up, don't make you hit you too hard.

THE BAD SIDE OF THE SCARCITY PRINCIPLE

It could be inhumane sometimes

I was going through Quora when a guy talked about his little experience of why he almost almost sacked at KFC. Sadly I failed to have a screenshot. He was almost sacked because he chose not to throw off bags of chicken at the end of the day and instead fed them to the homeless. He was strictly warned never ever to do that again when he was caught. Of course, companies would always have their own reasons for doing this, some people claim there is likely to be bacteria in left overs and  he and various other reasons. A guy just answered that question on Quora.

 While this is understable in some instances but the bottom line is things like this are only done to ensure they are making sales and to protect their brand. Of course many people especially the "classy" ones would not want to buy McDonalds anymore if they find out they can easily get it for free at the end of the day. This is also the reason why the H&M would rather destroy old stocks rather than donate them. They are just tactics to protect their brands even as inhumane as it seems like, I'm pretty sure you would probably not want to buy Gucci shirts any more if you found out the beggar down your streets happened to be wearing one himself.

It could be selfish

Another thing is, scarcity could also make companies monopolistic, De Beers company, --founded by a man I don't like, Cecil Rhodes --was a king when it came to this. Up until recently, De Beers was in almost total control of the diamond industry, they were able to persuade the world suppliers to sell diamonds to them. By so doing, they were successful in making diamonds seem much more than it actually is, they were very much capable of selling one pebble of diamond which hardly weighs more than a grain of rice for $20 000! What's fascinating is people never cared and still demanded for them, it's a rare rock after all.

It could lead to wasteful spending

You could end up buying what you really don't need because you have been persuaded to. This is what many 'hard sell' marketers are really good at, they don't necessarily need to know if you really need the product they are pitching to you, all they want is your money, they make it look like you could never get that same commodity anywhere else in the world, they mount extreme pressure on you till you buy the product which you don't really need and would later on regret purchasing. Some other times, we could make up our minds to buy something for ourselves and eventually end up buying something else because of these sales pitches and several other distracting persuasions coded as "limited time offers".

The best way proposed by Dr. Robert Cialdini is to overcome this is to kill off anxiety by calming down, not minding the pressure and decide if the product would be of real use to you or not.

APPLYING THE SCARCITY PRINCIPLE IN YOUR LIFE

This scarcity principle can be applied to our personal lives, you can apply the scarcity principle in your life also, in a situation where you feel underappreciated by people, you don't necessarily have to get angry or try hard to convince them about how you have been good to them, all you just have to do is to go scarce, they will most likely realize the value you have had in their lives and if they don't, the better for you!

You can also apply the scarcity principle in your relationships, for the guys, I know you might have really liked a girl so much that you dedicated all your time and attention to her alone? She is the only one you want to talk to every time, you call her every time, you text her every time, you are always there when she is need, she tells you all her problems, you have really fallen in love with her so much but she doesn't seem to like you that much. In fact she sees you as her "bestie". She friendzones you. LOL trust me I know that hurts. The solution? Apply the scarcity principle! If you are really interested in her though. When she asks to go to the movies, tell her you are going out with someone else, limit the favors you do, only friends do so much favours for each other other, don't always make yourself available. If she still friendzones you...then she was never yours and you should learn to let go to save yourself harder heart breaks! It's that simple. Giorgio teach this guy! This same principle is applicable for the girls too.

Why girls often friendzone guys is because these guys are simply always available, no matter how cute a guy is, she has got several other guys chasing after her. When you are readily available, then nothing seems special in you and you make yourself look like other guys to her. Never underestimate the power of the scarcity principle.

At the same time you must begin to spend more time on yourself. When a company applies the scarcity principle, it automatically makes them in control and they can then control the demand by limiting supply. Likewise, you must apply that same principle into your life and stop being available to anybody so you are not being taken for granted. I know how it feels like to be pushed around by "friends", those kinds of people who would always push their own personal tasks to you and blackmail you emotionally. Remember, the scarcity principle does so well because these companies or marketers are able to touch you emotionally into thinking they want to help you by selling that product at a "discount price". Likewise you must learn never to be blackmailed emotionally into doing everything for your friends. You might have to say no at certain times, if you are always available for everyone, you are automatically their maid and would hardly have any time to do anything for yourself, worse still, you could end up hating on yourself.

That said...

So what do you when you faced with scarcity, like scarcity of resources? We've been talking about artificial scarcity since.

It's simple, it's a mind thing, scarcity itself does not exist at it seems, as a matter if fact, it is in times of scarcity that real entrepreneurs shine. The first step is to change your mindset entirely, don't make the scarcity bring negative thoughts to your mind, guide your mind! Look at the cup down here, the way you see it and what you call it is a reflection of your mindset. If you say it is half empty, then you are looking at it from the lens of scarcity but if you say it half full, then you are looking at it with optimism, with the abundance mentality.

Presently, in Nigeria, virtually everyone is screaming scarcity, many people have gotten laid out of their work place, prices are going high but guess what the main problem is? It is FEAR! Instead of engulfing your mind with negative news and allowing fear take over, remain calm and think about the value you could add to the lives others. You must convince your mind that you are living in abundance and not in scarcity. Speak good things to your life. It works. You learn to stop looking through the lens of scarcity, scarcity mentality only brings selfishness.

If you an employer and your response to scarcity is laying off workers and over working your staffs, you might be doing it wrong. The truth remains that true leaders realize that there us never enough to go around. Scarcity is simply inevitable, it would always pop up one time or the other. Great leader and employers don't just address the symptoms by making hasty decisions but seek to dig deeper to diagnose the root cause. For instance, instead of laying off workers, why not have then acquire more skills that would be needed in overcoming the challenges currently faced by the company or rather having them go for unpaid leaves? Some groups of employees once approached a company when theu founf out they were soon to be laid off and offered one week of unpaid leave for 3 months.

In summary, the problem of scarcity of resources and its attendant solutions can be turned into teaching moments that solve problems and bring your team together.

I know this post has been of massive value to you. Please use the share button. ☺

Yea! Lest I forget, I'm going to be writing an ebook about this. Once it is ready, I'll be taking this post down! So hurry, share this post with your friends. Keep them informed!

By the way...thank you Dr. Giorgio Tsoukalo for joining us today, you can go back to History Channel to keep talking about "ancient aliens".