By Andrew Choi
Abstract
Have you ever gone to your favorite clothing brand website and saw an upcoming drop releasing soon, but you can only get it for a limited time, or you need to be a “member” to purchase it? As a matter of fact, companies, mostly clothing companies, implement these time boundaries or “member only” incentives to not only attract more awareness in the market, but to provide a psychological decision for their customers.
Scarcity Effect
First off, it is important to understand the underlying concept that drives our desires to purchase a good in “limited stock” or for “exclusive drops:” Scarcity. Scarcity is the “psychological phenomenon that compels us to desire something more when we believe it’s in short supply” (Mohammed, 2023). Additionally, with the scarcity effect, the idea of the “fear of missing out (FOMO)” comes to action as it creates customers to not only have the willingness to pay more for the product, but to have a greater urge to purchase it.
Psychological Factors
Other psychological factors that these limited time offers create within customers are “Collectability, Perceived Value, Status, Emotional Value, Social proof, etc...” (Wong, 2023). All these psychological factors are intentionally created by the companies themselves. By acknowledging the fact that companies have loyal customers or customers that are on and off, they implement these exclusive/limited time products or offers that will help not only keep/gain customers, but to help establish a bigger drive of demand.
Currently, exclusivity is found to be very important in both social status as well as personal well being. People are willing to do whatever it takes to show that they have something that other people do not, especially in very trendy/popular brands. The idea of not only collectability comes to play, but both perceived and emotional value is highlighted through these actions. The “impulsive feelings and excitement” as well as the idea of needing to have it as it may not be available again shows the complete incentives of why customers wait and buy so frequently for limited time drops (Mohammed, 2023).
Company Benefits and Cons
Limited time drops are purposeful. Companies strategically plan out when and how to drop limited time collections for their customers. Through this whole process, they aim to not only achieve a short-term increased demand for sales, but to heighten both the excitement and perception of their brand (Christopher, 2023). However, these limited time drops could be harmful for many companies. Through the long-term, supply of the good may shoot up, but the demand of the good could shoot down, hitting a surplus of goods that could negatively affect the
sales and profit that a company is making. Additionally, customers could be frustrated by not being able to possibly buy the product, or companies could be missing out on more sales due to ending the promotion so early.
Christopher. (2023, March 9). How to Create a Successful Limited Drop Marketing Campaign. Uphance. https://www.uphance.com/blog/limited-drop-marketing-campaign/ Mohammed, S. (2023, September 15). Limited Time, Limited Stock: Exploring How Brands Exploit the Scarcity Effect. Medium. https://shahmm.medium.com/limited-time-limited stock-exploring-how-brands-exploit-the-scarcity-effect-ccb8cf35855c
Wong, S. (2023, May 17). 7 Reasons Why Limited Edition Items Always Sell. M2comms. https://m2comms.com/2023/05/17/limited-edition-items/
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