Using Exclusivity to Create Product Demand

Red velvet rope cordoning off an exclusive area, representing the concept of exclusivity.
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If a product is not selling well, there is a reason. You may have overestimated its demand, have it overpriced, or are selling to the wrong market. If product demand is the problem, perhaps creating artificial demand through exclusivity might be the solution.

Patti Stanger, founder, and CEO of The Millionaires Club, a matchmaking service for the rich and famous, keenly understands the value of creating demand. Stanger restricts the number of paid memberships she accepts each year thereby creating a demand for her services by limiting them through exclusivity.

Exclusivity of Ownership

International marketing expert, David B. Wolfe, began his early career as a landscape architect. He can be credited with designing many playgrounds and public and private parks throughout Maryland, Northern Virginia, and Washington, D.C.

One of the parks he designed in Montgomery Village in Gaithersburg, MD during the 1970s was being vandalized. After discussing strategies with the community's developer, he came up with a simple and cost-effective approach that worked: a sign was erected at both ends of the park stating that the park was now a private park belonging to the residents of the adjacent subdivision.

Wolfe believed that by creating a sense of ownership—exclusive membership by way of being a homeowner—the residents would not only take better care of their park but would keep an eye out for vandals. He proved to be correct and continued to embrace the important concept of creating a sense of belonging and loyalty through exclusivity many years later when he became a successful business marketer.

The Members-Only Strategy

Retail giants Sam's Club and Costco know the value of members-only retail. These retail warehouses only allow members to purchase their goods. In return for buying an annual membership, you get benefits of shopping for items at a reduced price. Some of the merchandise is offered only at this retailer. Other items are the same as you would find in other stores, only in larger, warehouse size, packaging. These stores offer discounts on everything from credit cards to business services to healthcare plans. Costco and Sam's keep their prices low by selling in bulk and by making a profit from the membership dues paid on an annual basis for the privilege of spending your money there.

Medium and large-chain grocery stores nationwide including Ralph's, Stater Brothers, Vons (Safeway), and Giant, have followed suit, but with a twist. Here, membership is free, but without becoming a member you do not get to take advantage of sales prices. Open your wallet and you probably have a rewards or bonus card from a litany of businesses where you can earn points or discounts the more you purchase.

Instead of making money from paid memberships, stores track individual shopping preferences, can determine the times and days people shop, and use the collected information to better target products, coupons, and sales.

Limited Availability Equates to Desire

Coin, stamp, and collectible ad campaigns are often successful because they work from the concept of exclusivity by limiting the number of items that will be produced. When the items are sold out, they will "never be offered again."

This "limited edition" concept leaves many consumers to believe they are not just getting something other people won't be able to buy in the future—the exclusivity factor—but that the high purchase price often associated with collectibles is justifiable because the consumer is buying an investment.

The reality is that simply limiting an item to a finite quantity does not necessarily increase its monetary value or collectability. However, it creates a demand for something where there otherwise might not be much of one.

The next time you watch a television ad or infomercial, count how many use the term "exclusive offer" (or "limited") is used. Exclusive offers to "call in the next 20 minutes,"—that usually repeated so often there really is no true exclusivity—sell products. They sell not just because of the deal itself, but because of human nature. Consumers like to feel that they have gotten a better deal than someone else.

Just For You

Before you scrap your idea, try promoting it with a "limited time only" approach, or with an "exclusive Internet savings" offer.

Many online stores show a fake number of items left to purchase stating there are only a few items left, to encourage you to make a quick decision. Think of your last vacation as you booked hotel rooms or air flights. Or, tune into any televised shopping channel.

If there are 200 items left, you not only think your item is less coveted, but that you have time to come back later and shop. If you are on the fence about an item and see that only 2 are remaining, you are more likely to put it on the spot to get the "thing" everyone else already has.

If "limited" does not work, suggest a 15% discount if the customer subscribes to your newsletter, follows you on Facebook, or even sends out a Tweet or blog post about your business. This marketing approach allows someone to "earn" something others do not get by simply merit.

Apply The Scarcity Principle

Perhaps the most impressive example of creating an artificial demand for something can be seen in the diamond business. Diamonds are not rare, they are hoarded in mass quantities by diamond companies like De Beers and carefully doled out in limited quantities to keep the prices artificially high.

When something appears to be scarce, there is almost always a higher demand for the item, service, or goods. This is known as the Scarcity Principle in marketing and it plays on the powerful human instinct to gather for the future.

Incentives Can Increase Demand

Incentives offered to new members, new customers, shoppers who come in before noon, or even in a particular geographic location create an air of exclusivity.

Anything that is denied to someone else, becomes exclusive to someone else. And anything that becomes exclusive usually has a higher demand value.