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What is behavioral economics? Why does it matter to you?

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Podcast Episodes

What is behavioral economics? Why does it matter to you?

270. Scarcity: Why Does Less Available Feel More Valuable? (Refreshed Episode)

Today’s episode is all about scarcity. This is a term you are familiar with, but I am willing to bet you aren’t using it in all the ways it can be leveraged in your life and business. The term gets thrown around a lot and people know some of how it works, but the nuance is so so so much more than you can imagine. 

This refreshed episode, which originally aired in the fall of 2018, will introduce you to the depth that this topic can have to set you up for this Friday’s episode with Mindy Weinstein, author of the book The Power of Scarcity which will absolutely blow your mind. It is so good. Within the book, she includes so much depth and nuance in a way I have never heard anyone else talk about scarcity. It’s fascinating. 

Today is a primer to expand your thoughts about scarcity in a way that will get you ready to continue your learning when that episode comes out on Friday. As you listen, reflect upon times in your own life where you have been pulled in by scarcity, and where you can incorporate it more into your business.

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HERE'S A 2 MINUTE TIP.

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SHOW NOTES:

  • [00:39] Today’s episode is all about scarcity. This is a term you are familiar with, but I am willing to bet you aren’t using it in all the ways it can be leveraged in your life and business.
  • [02:15] In traditional economics, scarcity occurs when an item has limited availability but unlimited desire for that item. This could include natural resources like oil and water or more abstract concepts like time.
  • [02:55] Studies have proven that we see things as more valuable when they are less readily available.  
  • [05:55] Scarcity and value are closely tied together. Our crazy brains think less equals more…even when it is kinda weird. When something is scarce it triggers our loss aversion because we don’t want to miss out on the opportunity. 
  • [08:13] Scarcity can only take effect when items are truly limited. This means not everyone gets one.
  • [10:49] Scarce items can take on a life of their own.  
  • [11:37] Scarcity can create a cult following, which means other people do the marketing for you. This makes the brand bigger than anything you can do on your own.
  • [14:57] These examples from Starbucks and Disney are a combination of scarcity and availability. This is essentially capitalizing on something popular and becoming part of the craze. 
  • [15:26] If you are going to take a shot at incorporating scarcity, know that not everything will cause an uproar of epic proportions. Sometimes there will be duds and that is ok. The question is what did you learn from them for next time?
  • [16:50] There are some words you can use to trigger scarcity in the brain of your consumer, including: limited time, extended, custom, handcrafted, one of a kind, closeout sales, everything must go, and last chance. These terms can be added to more than products, extending into services as well. 
  • [18:27] If you do a promotion or discount, make sure it is short term and remind people when it ends. You can also limit the quantity available and stick with it. 
  • [20:16] Contests and giveaways can work really well for you, but there are a lot of rules and you need to make sure you play the game. 
  • [21:37] It is easy to sound like a cheesy infomercial when you’re using scarcity, so take a step back and don’t get too over the top.
  • [23:23] Scarcity and availability are another peanut butter and jelly sort of concept grouping like anchoring and relativity. 
  • [26:15] Scarcity is a tactic that works especially when combined with availability. 
  • [27:05] If there is not enough value they need to control the supply that is available to keep demand high. 
  • [28:12] Melina’s closing thoughts

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