Decision-contextual and individual influences on scarcity effects

Purpose - This study aims to examine the relative effectiveness of demand-related and supply-related explanations of the scarcity of a product, and specifically the extent to which decision context and individual factors moderate purchase intention in response to those explanations. Design/methodology/approach - The first of two formal experiments examines the effects of the two kinds of scarcity on participants' purchase intentions with respect to utilitarian and hedonic product types. The second tests for self-monitoring differences in participants' relative susceptibility to scenarios characterizing scarcity as either demand-generated or supply-generated, when their decisions are either private or subject to third-party scrutiny. Findings - Experiment 1 shows that participants shopping for a utilitarian product are more inclined to respond positively to what they understand to be demand-generated scarcity, and less inclined to do so if the scarcity was attributed to limited supply; whereas the converse holds true for a hedonic product. Experiment 2 shows that for high self-monitors, increased purchase intention was the outcome of matching the alleged reason for scarcity to the demands of the decision context; low self-monitors were ready to consider demand-scarce products regardless of whether they knew that their consumption decisions would be subject to third-party scrutiny or private. Originality/value - The paper identifies contextual and individual factors that explain and predict the extent to which one type of scarcity appeal may be more effective than another in influencing consumers' purchasing decisions.