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Selling less & Winning more

You are standing across the street staring at two restaurants A & B. Restuarant A appears half empty (being quite spacious) and Restaurant B is crowded with people lined up to grab a table. You decide to go for Restaurant A  to simply save time. Now, the next day you glance through Restaurant B and you spot an empty table. Can we assume that you would rush to grab a chair?

But what difference does it make? WORCHEL, LEE, AND ADEWOLE (1975), performed an experiment with two Jars of cookies which proves that you are likely to rate Restaurant B higher, even if you were served out of the same kitchen!

Let’s confirm this idea with one of the most competitive industry segments – Smartphones. Samsung enjoys the highest market share in the Indian Smartphone industry, but I don’t remember the last person talking about a Samsung phone. People are rather craving for OnePlus Two invites.

As per Economics, you are maintaining supply lower than demand which is not equilibrium. You are probably losing out on available demand, but are you gaining something in return? Yes you are – More available demand! Now you can slightly increase your supply and repeat the cycle.

A few pointers to ensure for the Scarcity model to work:

  1. High Quality – The product should be of a very high quality, else it will only be a disappointment for customers.
  2. Price Point – (*Corrections made) Your price point should be competitive and should be within the reach of a large audience. You need to create a “Steal deal” effect either through perceived quality or price.
  3. The buzz – It should be a product which people tend to talk about. I can’t imagine the model to work for “socks”. People tend to talk about phones (OnePlus),  bikes (Royal Enfield), etc.
  4. Exclusive Ownership – People are either privileged with your product or they are not.
  5. Slow Roll – You need to slowly roll out supply and capture more available demand.

I am not an expert in this area, so all disagreements welcomed!

Thanks for reading.

P.S. Thank you Bharath Sekar for the suggested correction in the point on pricing. You are right, I had to agree with it.

Originally posted on my LinkedIn Profile –

Mohammed Jamil Nasir
Nasir manages Products, by providing business oriented technology solutions. He is at the center of discussions ranging from a long-term vision or competitive strategy, or improving business processes, or a client demo, or the right marketing strategy, to, project delivery commitments, or improving UX, or technical architecture, or recruiting developers. He has a Global MBA from S P Jain, Engineering in Computer Science, 6 years of work experience and a flair for writing & poetry.