Farming Magazine - June, 2012

COLUMNS

Farm Marketing: Does Scarcity Drive Demand?

By Diane Baedeker Petit

A while back, the Boston Globe ran an article on a certain type of doughnut that can be hard to find in local doughnut shops, despite the fact the pastry has many devoted fans. Those devotees sometimes go to great lengths to find the object of their obsession. The article quoted an expert on persuasion and influence who opined that scarcity of a product adds to its perceived value.

Other retail examples abound, including trendy must-have toys that are in short supply at Christmastime, the latest technology gizmos on release day, and sporting event tickets that prompt fans to camp out overnight while waiting in line. The harder a product is to come by, the more consumers seem to want it.

That got me thinking about whether the same principle might apply to farm products. I believe there are examples in the farm and food industry where scarcity does add value and fuel demand.

The seasonality of produce means that for part of the year locally grown products are scarce. That's part of the appeal of local products when they're in season. Of course, there are all the other positive attributes like better flavor, color and other qualities, but the fact that local products are only available at certain times of the year adds a sense of urgency that motivates customers to seek them out while they're available.

Then there are times during the growing season when local products might be scarce due to poor growing conditions like drought. The common wisdom among many growers is that if a product is in short supply, don't talk about it publicly, lest customers stay away thinking that a trip to the farm will be a waste of time and energy.

I do wonder, though, whether some daring farm marketer has ever tried doing just the opposite. When a crop was in short supply, did they announce it to the world with a message of "come get it while you can" and wait for the stampede of customers to show up? And was there, in fact, a deluge of customers?

You have to be careful what you wish for. If you try that, you may sell all of your product, but then what do you do about all the disappointed customers who got there too late? Guess that's why rain checks were invented.

Scarcity not only influences perceived value, it also influences actual value. It's the basic supply and demand principle. The scarcer a good is, the higher the price a seller can demand for it. That applies to everything from food to fuel.

We humans also highly value things that are rare, for example precious gems like diamonds and emeralds, and metals like gold and silver. A parallel in the produce world might be heirloom varieties, which are inherently scarcer than conventional varieties because they are not as widely grown. There is also an element of nostalgia that comes from a product that was once abundant in a past era and is now scarce.

Dictionary.com defines the word scarce as "insufficient to meet the need or demand." So, by definition, something can only be scarce if there is a demand for it. If no one cares that a product is unavailable, it's not scarce, it's just not available. It's sort of a "if a tree falls in a forest and no one is there, does it make a sound" kind of thing.

Conversely, demand can lead to scarcity. If demand is so strong that growers, manufacturers or service providers can't keep up, the product or service becomes scarce.

The question is: At what point do consumers give up seeking out scarce products? I suppose the answer might be: When they find a suitable, or better, replacement. That's the gamble a marketer would take by trying to engineer demand through artificial scarcity. An opportunistic competitor might step in to fill the void with another plentiful product and win over formerly loyal customers.

The author, a freelance writer, is public affairs specialist for the USDA Natural Resources Conservation Service in Amherst, Mass., and was previously director of communications at the Mass. Dept. of Food & Agriculture.