On the strategic use of product scarcity in marketing

Abstract

When does product scarcity create lasting value for consumers and firms? We propose a framework overlaying the dimensions of demand-driven versus supply-driven scarcity and strategic versus non-strategic drivers of product scarcity. This framework generates three insights for the strategic use of product scarcity in marketing. First, because value from product scarcity is co-created by firms and consumers, it varies significantly across consumer segments, even for the same brand and product category. Second, the value generated by product scarcity tests to be longer lasting when product scarcity is both demand-driven and supply-driven. Third, the allocation mechanisms used to match demand and supply in response to product scarcity play a critical role in shaping consumer responses.