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Scarcity Marketing: A Viable Strategy For San Diego Investors?


Scarcity marketing tactics have become the source of a lot of buzz in marketing circles recently. Some, like Seth Godin, have discouraged professionals and brands from engaging in it. Others, however, have built entire brands around it. In particular, Under Armor and Domino’s Pizza seem to be using it incredibly effectively.

So what is scarcity marketing? How has it been abused in the real estate industry? How has poor execution done more harm than good for some companies? What other options are there?

Psychologists have long noted the benefits of scarcity marketing. Since the 80s, Rutgers University professors have commented on it, and brands have been deploying it. More recently, new behavioral economists have been featured in Harvard works highlighting the benefits of it. Quikly, a Detroit based media agency, has been deploying mobile scarcity campaigns for major retailers. Some of the advantages it may offer:

  • Creating urgency in prospects
  • Generating buzz around a brand or product
  • Speeding up the cash flow cycle
  • Driving in revenues
  • Attaching more value to products and services
  • Strengthening the emotional tie between prospects and product

In the past, real estate agents and investors have used scarcity to fill webinars and events, boost email response rates, get the phone to ring, and sell houses faster, and for more money.

Even though early marketing psychologists recognized the benefits of scarcity marketing, they have frequently warned against it. It has certainly been abused by all types of brands and real estate agents in the past. This has not only damaged the reputation of entire industries, but has killed the trust in various companies. Executed poorly, scarcity marketing is cheesy and can tear down a company.

Auctions may be a reasonable form of scarcity marketing. There is a limited amount of time and inventory. Like other bidding wars over homes, this can lead to properties selling fast and for more than hoped for. However, when the scarcity being promoted is false and fabricated, it can burn consumers fast.

Scarcity Marketing in Action

Other examples of scarcity in action in real estate:

  • Multiple showings at the same time
  • Urging prospects to reserve their spot before they run out
  • “This property won’t last”
  • “Prices are going up fast”
  • Only a few left
  • Interest rates are going up

These tactics either fall into the limited time, or limited quantity type. The essence of this marketing strategy is to engage consumers with a prompt to buy, and buy fast. However, if it turns out that there was no scarcity to begin with, they feel like they were taken advantage of – like they were duped. For example; sending a follow up email with an even deeper discount, or more places at an event. More than ineffective, it can be insulting. It kills all the attention you’ve earned, and that is the most valuable commodity today.

There are alternatives to scarcity marketing. In particular, discount marketing. Both discount marketing and scarcity can be used together, but this can be risky if not executed perfectly. Constant discounting can just lead to cheapening the brand or product and service. For example; cut rate California brokerage services. There may be some niches where 6% to 10% commission is still viable, but most consumers now expect to get a deal at 1% to 3% of the purchase price when selling a home. That is virtually irreversible. Where will it be in five years from now? $100? How will that degrade the industry? What decent California Realtor is going to work for $5 an hour, even if they could afford to?

In order to successfully run any real estate marketing campaign of this nature, real estate agents, brokers, and investors need to be willing to make some form of sacrifice that can be perceived by consumers, and they need to stick to them. Will you use scarcity marketing? Have you managed it with good results?

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