Biz Tips: The Simple yet Powerful Economics of Artificial Scarcity

Biz Tips: The Simple yet Powerful Economics of Artificial Scarcity


The Simple yet Powerful Economics of Artificial Scarcity

The “Got Milk?” was one of the most iconic marketing campaigns of all time.

This article explains the concept of scarcity principle exploited by companies around the world in order to achieve objectives that include monopoly, survival and growth. It also explains a few case studies in which artificial scarcity has been effectively applied to change overall consumer behaviour.

Scarcity has always been one of the primary economic factors that increases that perceived value of a commodity. Prof. Robert Cialdini, in his classic book, “Influence — The Psychology of Persuasion” lists scarcity as one of the six core principles of persuasion.

People always want what they can’t have!

The interesting fact about scarcity is that it is effective in most cases. From the “Ending in 00:15 minutes” offers to “Limited Edition” products, businesses have mastered the art of using scarcity as a powerful technique to influence customers.

The story of Cupid

Robert Liton, in his TEDx talk “An Economist Walks into a Bar”, explains how survived the noisy world of Dating by using the scarcity principle.

In the world of online dating, the demand for women is relatively higher than men. This led to an overwhelming number of requests from men trying to setup a date with a fewer number of women which in-turn was driving women away from online dating

This problem was brilliantly solved by Cupid simply added a restriction to the number of women a man can connect with. This led to women receiving a lower quantity but higher quality of requests from men who then started taking time to go through the complete profile of a woman before trying to setup a date. This technique, imitated by all dating sites today, is a fundamental factor for the existence of the multi-billion dollar dating industry.

Limited Edition

“Limited Edition” products are high margin commodities often launched by companies with an existing market to target an exclusive group of high paying customers.

Interestingly, the only factor that drives the sales of a limited edition product is the fact that it is scarce. From Nike’s shoes to Lamborghini cars, the “limited edition” concept has been a stunningly successful strategy that rides on the scarcity principle and still works today.

The “Got Milk?” Campaign

Nothing can explain the power of scarcity like the iconic “Got Milk?” campaign that ran successfully for nearly 20 years.

The “Got milk?” campaign was not created to sell milk, but rather to sell more milk in a market where milk was already a necessity. It was found by marketers that the more milk the customer’s stored, the more they consumed.

The phrase ‘Got milk?’ induced a fear in the mind of the consumer about the possibility of running out of milk. By displaying a simple, self explanatory slogan in large billboards where customers could easily read it from a distance, the California Milk Processing Board quadrupled the sales of milk bringing in record breaking profits.

Here is the original “Got Milk?” ad:


Scarcity has always been a powerful tool in influencing individual and mass consumer behaviour. Mastering this technique provides businesses an unique advantage in employing it to influence business outcomes and to obtain an edge with the competition.

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The Simple yet Powerful Economics of Artificial Scarcity was originally published in Marketing And Growth Hacking on Medium, where people are continuing the conversation by highlighting and responding to this story.

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