By: Shea Posey, Senior Account Executive, and Jake McKenzie, Chief Executive Officer
As marketers, when we hear the word “scarcity” the first thing we tend to think about is scarcity marketing – “Hurry in before they’re gone!”…“Only 3 left and they won’t last long!” Scarcity campaigns have been a popular and effective advertising tactic for decades. However, in a time such as this when people are already worried about being able to find basic life-sustaining necessities, like baby formula, let’s shift our focus to the other scarcity-related marketing topic: the scarcity mindset.
When fears about the economy are palpable and consumer confidence is dwindling with each passing day, it’s important for marketers to understand the scarcity mindset and how it impacts consumer psychology.
The scarcity mindset occurs when people go through a period of perceived scarcity, like when the stock market tanks and retirement funds start to take a hit or actual scarcity like not being able to fill up your gas tank or buy enough groceries to feed your family for the week because of inflation.
When the scarcity mindset takes hold, the brain undergoes actual physical changes, both perceptual and real. The major perceptual change is the instinct to pull back on things we consider risky, including spending. This also causes us to do normally-unimaginable things, like hoarding resources (e.g. The Great Toilet Paper Grab of 2020).
Most people probably think that the scarcity mindset only affects people with lower incomes. Interestingly enough, it affects EVERYONE. Rich…middle-class…poor – no one is immune to the perceptual changes the brain endures. However, the scarcity mindset obviously affects those in lower socioeconomic circumstances more strongly than those who are well-off.
Timing also matters. The effects of the scarcity mindset grow stronger the closer people come to running out of money, like at the end of a pay cycle. This is a non-rational phenomenon. When there’s too much month and not enough money, the scarcity mindset can literally lower one’s IQ as they enter a period of fight-or-flight-type response. This is also the time when consumers have less impulse control.
The scarcity mindset as a result of the current economy marks yet another change in consumer behavior. So, how can marketers get their messaging to consumers without adding more anxiety to an already tense situation or appearing to be capitalizing on fear?
Hyper focus on your point of differentiation. Find something that sets you apart from your competitors and make that your prime focus. In tough economic times, the two biggest selling points that work especially well are quality and longevity. Whatever your differentiation is, focusing on it like a laser and not bombarding consumers with too many messages at once will make it easier for them as they make purchase decisions.
Leverage Social Proof. Social Proof is the best way to build trust with consumers. Stay on top of your reputation management and highlight positive reviews, comments, and ratings in your marketing. Feature satisfied customers and share their testimonials. All of these things help build a sense of group consensus that will persuade consumers to your brand. Because the road has already been paved by those who went before them, they’ll feel confident that they made a smart choice.
Have a cause. We already know that consumers are more likely to support companies with a strong purpose. When the economy is bad, giving to charities becomes less of a priority for most people. By partnering with non-profit organizations, not only will you be helping them out, you’ll be giving your customers the opportunity to still do some good even if they’re unable to donate directly. And maybe, just maybe, their scarcity mindset will start to shift to an abundance mindset!
Go back to your roots. Grassroots efforts are especially important for small businesses and mom-and-pop shops, but can also benefit large corporations on a local level. Sponsoring local events – concerts, festivals, farmers’ markets, baseball tournaments, races…the list is endless – allows consumers to see just how deeply invested you are in their community. Event sponsorships also give you the opportunity to put your brand out there. You may not see an immediate ROI, but by virtue of the mere-exposure effect, consumers will remember your logo and think of you first when the economy sees better days and it’s time for them to make a purchase.
To discuss how we can help you navigate the murky waters of marketing in a tough economy by turning psychological insights into great creative advertising, give us a call at 833-579-1905 or email us at firstname.lastname@example.org. And for a deeper dive into how much consumers have changed over the last two years and what marketers can do to adapt to those changes, check out our Psychology Behind the New Normal webinar!