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How Product Scarcity Impacts on Choice: Snob and Bandwagon Effects

Authors:
  • Tilburg University and Vrije Universiteit Amsterdam

Abstract

The value of products is not only determined by the utility that consumersderive from the products¿ attributes and their functional consequences, but has animportant social component as well. Specifically, scarce products are generally deemedvaluable, independent of the utility that their intrinsic attributes deliver. This effecthas been found in several studies and appears robust (Lynn 1991). This paper identifiestwo distinct routes through which scarcity can increase product choice. These routes areexpected to have distinct effects in the product valuation process, which have until nownot been examined in detail.The first route examines scarcity due to excess demand. Consumers see thatothers have bought the product, and this may induce them to follow that behavior. Thiseffect can occur out of conformity with others. Consumers may also extract informationabout the value of a product from the buying behavior of others. When consumers are unsureabout the value of products, information on the valuation of others can help refine theirown valuations. Hence, scarcity due to excess demand increases inferences of productpopularity and quality. This is related to the bandwagon effect described in economicliterature. The second route concerns scarcity due to insufficient supply, whereproduct exclusiveness leads to inferences of product quality (snob-effect). Consumersvalue the exclusivity of possessing rare products, and may see these products as a mean toemphasize their uniqueness. Being one of the few who own a particular product may increasethe product utility. We examine how scarcity operates in both routes, which theoreticallyexclude each other. By separating the two routes, we hope to gain new insights into thecommon situation where product scarcity influences consumer choice, and where less of aproduct increases sales. To gain more insight into the two routes, and the dual forces of followingothers (bandwagon) versus being different from others (snob), our study relates theseroutes to consumers¿ need-for-uniqueness (NFU). The ability of scarce products tocreate a sense of uniqueness has been proposed as a reason for scarcity effects (Fromkin1970). We propose that NFU only moderates the relation between scarcity and quality whenscarcity is due to supply limitations, not when it is due to excess demand. After all,excess demand implies that the product is popular rather than exclusive. As an application area, this paper examines the influence of productscarcity as communicated by empty shelf space in stores. The visible (lack of) supply of aproduct is powerful signal of product scarcity (Stiff, Johnson & Tourk 1975). When aproduct is almost out of stock, this may act as a scarcity cue, and it is a situation thatconsumers commonly experience during shopping trips. In fact, if our research indeed showsthat product scarcity, as expressed through empty shelf space, increases preference andchoice of scarce products, this implies, somewhat counter intuitively, that reduced stockspromote increased sales. Two experiments test our framework. The first experiment examines bothscarcity caused by excess demand, and scarcity caused by limited supply in a virtualshopping environment for a sample of the Dutch population. This study confirms thatscarcity due to excess demand leads to inferences of product popularity and quality, andthereby increases product choice. In a second experiment, we used a different setting(liquor store). To gain more insights into the processes underlying the scarcity effectson choice, we also examined the influence of NFU. In this second experiment, the reasonfor empty shelf space and the degree of empty shelf space were manipulatedbetween-participants. Each participant viewed a shelf with two different wine bottles onthe computer screen. One of the wines was scarce, and product evaluations were asked forboth products, within-participants. Results show that both scarcity routes exist andincrease product choice, while NFU only enhances quality inferences when scarcity is dueto limited supply. Theoretical implications concern the identification of two scarcityroutes. While previous scarcity studies have mostly focused on limited supply, we showthat excess demand and limited supply promote distinct inference processes. Although bothroutes lead to increased product choice, the process and moderating variables aredifferent. Practical implications of our study concern sales forecasting, inventorymanagement and the influencing of product preference. The accelerating effect of emptyshelf space implies that stock-outs may occur sooner than one expects. Using empty shelfspace as an efficient management tool would only be feasible in stores that sell arelatively small amount of products. Especially in combination with a sales pitch,scarcity can increase sales here. The insight that our study provides into the response ofconsumers to demand versus supply reasons for scarcity has important implications for sucha sales pitch. In one case, emphasizing product uniqueness can be advantageous while inthe other case it may be detrimental.
623 Advances in Consumer Research
Volume 32, © 2005
How Product Scarcity Impacts on Choice: Snob and Bandwagon Effects
Erica van Herpen, Wageningen University
Rik Pieters, Tilburg University
Marcel Zeelenberg, Tilburg University
EXTENDED ABSTRACT
The value of products is not only determined by the utility that
consumers derive from the products attributes and their functional
consequences, but has an important social component as well.
Specifically, scarce products are generally deemed valuable, inde-
pendent of the utility that their intrinsic attributes deliver. This
effect has been found in several studies and appears robust (Lynn
1991). This paper identifies two distinct routes through which
scarcity can increase product choice. These routes are expected to
have distinct effects in the product valuation process, which have
until now not been examined in detail.
The first route examines scarcity due to excess demand.
Consumers see that others have bought the product, and this may
induce them to follow that behavior. This effect can occur out of
conformity with others. Consumers may also extract information
about the value of a product from the buying behavior of others.
When consumers are unsure about the value of products, informa-
tion on the valuation of others can help refine their own valuations.
Hence, scarcity due to excess demand increases inferences of
product popularity and quality. This is related to the bandwagon
effect described in economic literature.
The second route concerns scarcity due to insufficient supply,
where product exclusiveness leads to inferences of product quality
(snob-effect). Consumers value the exclusivity of possessing rare
products, and may see these products as a means to emphasize their
uniqueness. Being one of the few who own a particular product may
increase the product utility. We examine how scarcity operates in
both routes, which theoretically exclude each other. By separating
the two routes, we hope to gain new insights into the common
situation where product scarcity influences consumer choice, and
where less of a product increases sales.
To gain more insight into the two routes, and the dual forces
of following others (bandwagon) versus being different from others
(snob), our study relates these routes to consumers need-for-
uniqueness (NFU). The ability of scarce products to create a sense
of uniqueness has been proposed as a reason for scarcity effects
(Fromkin 1970). We propose that NFU only moderates the relation
between scarcity and quality when scarcity is due to supply limita-
tions, not when it is due to excess demand. After all, excess demand
implies that the product is popular rather than exclusive.
As an application area, this paper examines the influence of
product scarcity as communicated by empty shelf space in stores.
The visible (lack of) supply of a product is powerful signal of
product scarcity (Stiff, Johnson & Tourk 1975). When a product is
almost out of stock, this may act as a scarcity cue, and it is a situation
that consumers commonly experience during shopping trips. In
fact, if our research indeed shows that product scarcity, as expressed
through empty shelf space, increases preference and choice of
scarce products, this implies, somewhat counter intuitively, that
reduced stocks promote increased sales.
Two experiments test our framework. The first experiment
examines both scarcity caused by excess demand, and scarcity
caused by limited supply in a virtual shopping environment for a
sample of the Dutch population. This study confirms that scarcity
due to excess demand leads to inferences of product popularity and
quality, and thereby increases product choice. In a second experi-
ment, we used a different setting (liquor store). To gain more
insights into the processes underlying the scarcity effects on choice,
we also examined the influence of NFU. In this second experiment,
the reason for empty shelf space and the degree of empty shelf space
were manipulated between-participants. Each participant viewed a
shelf with two different wine bottles on the computer screen. One
of the wines was scarce, and product evaluations were asked for
both products, within-participants. Results show that both scarcity
routes exist and increase product choice, while NFU only enhances
quality inferences when scarcity is due to limited supply.
Theoretical implications concern the identification of two
scarcity routes. While previous scarcity studies have mostly fo-
cused on limited supply, we show that excess demand and limited
supply promote distinct inference processes. Although both routes
lead to increased product choice, the process and moderating
variables are different. Practical implications of our study concern
sales forecasting, inventory management and the influencing of
product preference. The accelerating effect of empty shelf space
implies that stock-outs may occur sooner than one expects. Using
empty shelf space as an efficient management tool would only be
feasible in stores that sell a relatively small amount of products.
Especially in combination with a sales pitch, scarcity can increase
sales here. The insight that our study provides into the response of
consumers to demand versus supply reasons for scarcity has impor-
tant implications for such a sales pitch. In one case, emphasizing
product uniqueness can be advantageous while in the other case it
may be detrimental.
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... However, prior research on scarcity has three crucial gaps. First, previous research on scarcity has predominantly focused on its roles in the retail industry (Gierl et al., 2008;van Herpen et al., 2005van Herpen et al., , 2009, and little work on the service industry has systematically analyzed different types of scarcity strategies. Therefore, service companies lack systematic guidance regarding effective ways to apply such strategies. ...
... Due to the popularity of scarcity strategies in the service industry, it is necessary to fill this research gap. Second, previous research has mainly highlighted the positive effects of scarcity strategies (van Herpen et al., 2005(van Herpen et al., , 2009; however, the backfiring effects have received far less attention. This research gap needs to be addressed since scarcity strategies are not always silver bullets. ...
... Moreover, service scarcity due to supply can signal exclusivity and serve as a status symbol (van Herpen et al., 2005(van Herpen et al., , 2009. As supply-based scarcity restricts the total number of services in the marketplace, customers who can enjoy the service with limited supply tend to perceive themselves to be superior in social status (van Herpen et al., 2005(van Herpen et al., , 2009. ...
... That is why sometimes people might stop buying products which have been bought by too many other consumers (Berger & Heath, 2007). Therefore, products with limited supply would be favorable for those who pursue a high social status or those who have a strong need for uniqueness (Herpen, Pieters, & Zeelenberg, 2005;Irmak, Vallen, & Sen, 2010). ...
... Finally, this paper extends the message framing literature on scarcity messages by providing empirical evidence that perceived risk mediates the joint effects of scarcity appeal and power on consumers' purchase intention. Prior research on scarcity appeal has documented the popularity signal of demand-framed appeals and the exclusivity signal of supply-framed appeals (Gierl & Huettl, 2010;Herpen et al., 2005;Ku, Kuo, & Kuo, 2012;Roy & Sharma, 2015), whereas our research goes beyond these two signals and reveals the risk signal of scarcity appeals with regard to competition among consumers. To the best of our knowledge, this research is the first to explore how perceived risk serves as the psychological mechanism underlying the interplay of scarcity appeal and power in online booking. ...
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Scarcity has been widely assumed (e.g., Cialdini, 1993) to function as a cue and thereby hinder evaluative scrutiny of compliance-gaining requests (appeals). In contrast, liberalized commodity theory (Brock & Brannon, 1992) postulated that scarcity should augment evaluative scrutiny of requests and thereby enhance behavioral correspondence to the merits of requests. In natural-setting tests, 143 telephone operators and 305 fast-food customers complied more with a request in response to strong than to weak reasons and did so especially when the request was accompanied by scarcity information, operationalized as a time restriction on responding. Thus, restriction did not function as a cue. Rather, in both service and consumer settings, scarcity enhanced behavior that corresponded to the merits of requests. Compliance theorists and practitioners should reconsider the cue claim for compliance appeals and should weigh the implications of bidirectional responding to compliance appeals.
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Commodity theory (Brock, 1968) deals with the psychological effects of scarcity. According to the theory, scarcity enhances the value (or desirability) of anything that can be possessed, is useful to its possessor, and is transferable from one person to another. This article introduces commodity theory to the marketing literature, reports a meta-analysis of studies designed to test the theory, and discusses the marketing implications of the theory along with suggestions for future marketing research.
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I. The nature of the problem, 183. — II. Functional and nonfunctional demand, 188. — III. The bandwagon effect, 190. — IV. The snob effect, 199. — V. The Veblen effect, 202. — VI. Mixed effects, 205. — VII. Conclusion, 206.
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Consumers acquire and display material possessions for the purpose of feeling differentiated from other people and, thus, are targeted with a variety of marketing stimuli that attempt to enhance self‐perceptions of uniqueness. Because the pursuit of differentness (or counterconformity motivation) varies across individuals to influence consumer responses, we develop and validate a trait measure of consumers’ need for uniqueness. Consumers' need for uniqueness is defined as an individual’s pursuit of differentness relative to others that is achieved through the acquisition, utilization, and disposition of consumer goods for the purpose of developing and enhancing one’s personal and social identity. Following assessments of the scale’s latent structure, a series of validation studies examines the scale’s validity. The presentation of empirical work is followed by a discussion of how consumers' need for uniqueness could be used in better understanding consumer behavior and the role consumption plays in people’s expression of identity.<br /
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