School of business - research
Buy now. Regret later.
Bombarded by headlines about how we are wasting the planet’s resources and feeling the squeeze on our own personal resources (think time and money!), why do we still feel compelled to buy something just because it’s a “final sale”? Marketers know they can move products by making us believe it’s our last chance to buy something we want. But what happens when they also add a price range – such as a discount of 5-15% – to such offers? In a recent paper, Dr. Shirley Li from the Department of Marketing and fellow researchers explain how a general perception of resources scarcity can entice consumers to buy and investigate the effectiveness of offers combining a sense of scarcity with price ranges.
Both a fact of human life and a fundamental concept in economics, resource scarcity is closely connected to how we perceive a product: if we believe something is rare, that product or service tends to become both more desirable and valuable in our eyes.
Offers suggesting that a product is scarce, and thus more desirable, work by stimulating promotion orientation, or the habit of certain consumers to perceive an otherwise banal item (say a coffeemaker) as being more than just a product, but also an ideal worth striving. Consumers prone to having a promotion orientation tend to focus on the pleasure they will get after buying a product while dismissing any negative concerns, thus explaining why so many of us still buy expensive beauty products or gym memberships even when times are tight. Marketers can activate that promotion orientation feeling by placing scarcity reminders in our environment.
As the authors predicted, consumers buy more of a product when a price range is added to scarcity-suggesting offers. Why? Because price ranges – provided they include the price we use as reference for that product– give us alternative ways of satisfying our desires as we strive to take advantage of this “deal”. Findings also confirm that wider price ranges – because they offer favorable outcomes to a larger pool of consumers – are more effective that narrower ones and that scarcity reminders, if effective at supporting normal and backdown price range offers, can’t be used to raise prices.
The study gives marketers several insights about pricing strategies. Highlighting product scarcity while proposing a price range may entice more consumers to buy, while activating promotion orientation by inducing emotions, making consumers feel unique or pitching an abstract ideal can enhance the effectiveness of price range offers.
As for consumers, the lesson is simpler. Do we really want something just because it’s “10% cheaper and may be sold-out tomorrow”?
Reference:
Fan, L., Li, X., & Jiang, Y. (2019). Room for Opportunity: Resource Scarcity Increases Attractiveness of Range Marketing Offers. Journal of Consumer Research, 46(1), 82-98.