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.