Scarcity and long queues are a marketing strategy

Scarcity and long queues are a marketing strategy

Summary: If you plan on buying a Sony PlayStation 3 or a Microsoft Zune this Christmas, then you will join an elite group of individuals who will have the privilege of beta testing that product. On top of that, you'll be expected to market that product aggressively during 2007 by actively promoting it to your friends, colleagues and family.

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TOPICS: Banking
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If you plan on buying a Sony PlayStation 3 or a Microsoft Zune this Christmas, then you will join an elite group of individuals who will have the privilege of beta testing that product.  On top of that, you'll be expected to market that product aggressively during 2007 by actively promoting it to your friends, colleagues and family.

Take the PS3.  I've talked about this before.  It's a pretty fair bet this particular games console is going to be in short supply over the holiday period.  Partly this is down to problems in the supply chain, but that is only part of the reason.  The rest is down to marketing.

There are a number of very good reasons why any new product should be scarce at the time of launch.  To begin with, scarcity is a fantastic marketing tool.  "If you want it, order it now!  No time to wait!  No time to think!  Do it!  Do it NOW!!!"  This is a fantastic marketing tool because people no longer want the product because of features or merit, they want it because they don't want someone else to beat them to it.  Pre-ordering also means that no one sees the product on the shelves because they've already made it into the hands of the buyers as soon as they come off the supply chain, adding to the feeling of scarcity.  This trick doesn't only work at the launch, if the manufacturer and distributors all play their cards right, they can keep it up for months.

The manufacturer also wants the early adopters to really, really want the product.  In an ideal world, everyone who has the cash has an equal chance at getting their hands on a product, but the reality is that those early adopters are more determined than average.  This is what the companies behind the big products want – the kind of people that stand in lines for hours, pay over the odds and are really passionate about the product.  Why?  There are a number of really good reasons why this is important.  First, the long-term success of a product is partly based on how those early adopters feel about it.  By creating an initial scarcity you are guaranteeing that everyone who wants to be the first to get their hands on your product are already passionate about it.  If they are passionate enough then they will spread the word about the product far and wide.  In an era where traditional marketing is losing traction, this kind of free vital marketing is key to a product's success.

Also, all that initial fervor clouds judgment.  This is important.  Even if the product doesn't match up to their initial expectation of it, early adopters will still brag about being "one of the first" to get their hands on one, because a big part of what was special about having the product was being "one of the first".  Buy now - worry later.

Another key feature about the early adopters is that, broadly speaking, they have large social circles (if you've read Malcolm Gladwell's book "The Tipping Point" you'll know these people as "connectors").  They're going to talk about the product, blog about the product, build websites about it and generally spread the word – think about how the Firefox community have done this!  Put simply, they will market the product for months - all for free.  The early-adopting connectors are the people that others in their social circles look to for guidance.  Get the connectors talking about your product and you're guaranteed the herd will follow.  Resistance is futile!  While selling to the early adopters is important from a marketing point of view, the real money is made from the herd.

Having a limited release also offers manufacturers a safety net.  If the product suffers from teething troubles (as is almost inevitable nowadays) then the pool of users affected are some of the most passionate and dedicated, and they're not likely to give the manufacturer too much of a hard time over it!  They're the kind of people who will buy all the accessories and make a real investment in the product.  They really want the product and are not the kind of people to be put off by small (or even a not so small) problems and will comply with the manufacturer (which might mean jumping through hoops of fire) in order to get the problem solved.  The early adopter isn't suffering a problem, they are helping to make the product better for everyone else.

But isn't there a danger that problems can annoy the early adopters creating in a backlash?  Sure, it can happen, but it doesn't happen all that often.  The reasons for this are many and varied.  Partly it's because a large proportion of early adopters will also have made a big financial investment in the product which keeps them locked in (for example, maybe they bought a lot of accessories and this means that taking the defective product back and asking for a refund means being stuck with all the accessories).  More importantly though, they would have to U-turn in front of their social circle, something connectors have a problem doing (being the leader of a herd still makes them part of the herd).

So, when you have to struggle to find a PS3 or a Zune or some other box packed with electronics for your little ones for the Holidays (or for yourself, go on, be honest ;-) ), realize that this isn't some kind of failing on the part of the manufacturer or supplier, it's all part of the overall marketing strategy.

So, this holiday season, why not see if you can identify who the early adopters for a particular  product are and notice what makes them tick.  If you are an early adopter, what makes you tick?

Topic: Banking

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  • Other important factors here for the Zune

    Some other things come into play when assessing this as a strategy:

    1) MS has already stated that they're going to be losing money on every single Zune they sell. They had to meet the 30 GB iPod price point. To do so, they're taking a hit on every Zune sold. Eventually they hope to be able to profit from sales, but don't expect to for several years. So perhaps limiting the number you sell is a good thing, as it will cut down on your losses.

    2) Much of the Zune's alleged appeal is based on social interactions with other Zune users. The big "attraction" is being able to beam crippled versions of songs to other people with Zunes, and have them beam back severely limited songs to you. The fewer devices you sell, the fewer chances that users will encounter one another. If you don't sell enough of them, then there's really not much point in having Wifi at all, is there?
    tic swayback
    • I think that . . .

      MS may be looking at the potential profits off the subscription service/song sales. That's pretty much what they did with the xbox and the 360. After all, look how much profit Apple is getting from it . . .

      I agree with you about the wifi "social interaction". If they had made it a way for the user to buy and download new songs, then Apple might have cause to be worried. But the way it stands right now, Mr. Jobs doesn't have to worry about this potential white elephant. The only hting that could change the dynamic would be for MS to undercut the ipod's prices, AND make it compatible with current DRM schemes, neither of which they plan to do.
      jlhenry62