‘Hunger marketing’ of a Chinese smartphone maker

According to IDC, Xiaomi is the third largest smart phone maker in the world following Samsung and Apple. Co-founded in 2010, it merely took 4 years to grow up into a leading bellwether for the industry. An important strategy Xiaomi adopted in selling its products is ‘Hunger marketing’. That is, they sell new products on-line in small batches, saying that they were unable to supply large quantities of smart phones to match the consumers’ needs. Thus, consumers had to sit in front of computers, anxiously waiting to click the button as soon as possible or nice and cheap products would be sold out. The effect of huger marketing was so strong that even instructions on how to optimize browsers to avoid missing any chance were forwarded millions of times.

Xiaomi selle people products using persuasive technique of scarcity, meaning placing limitation on services or products to make people feel stressed to buy things. In economics, scarcity brings value and in Psychology, scientists noted the role of scarcity on people’s reactions to commodities long before. A study conducted by Verhallen and Robben (1994) showed that books of limited availability due to market circumstances (supplies and needs) were perceived as more costly and more unique than those that were accidentally unavailable or abundantly available.

120 homemakers were randomly selected from the telephone directory and were told to participate in  product investigations. Participants were randomly assigned to social constraints versus non social constraints situations. In the constraints condition, people were told they were the first group in the product test and their choice may influence the following groups, while in the non constraints condition, they were told as the last group whose choice wouldn't influence others. Participants were presented with infomation about18 recipe books. Different information about availability (still in a large amount or in a limited amount), causes of availability (see the note for Fig 1) were presented for different groups and similar information about other properties among groups.  

Participants were then asked to rate asked to rate how much they liked 3 of the 18 books (1 = first choice, 3 = last choice, they can take their first choice home), how unique the 3 books were (1 = very unique, 5 = very common) and how much the books would be. Results were shown in Fig 1 (right: under no social constrain situation; left: under social constraints situation) that limited availability due to a market cause make the book more preferable and costly in both situations, while the books of limited availability were evaluated as more unique when others were not stressed (non constraints condition) than stressed (social constraints situation).

 

Fig 1. UL = unlimited availability; LMC = limited availability due to market cause; LA = limited availability due to accidental circumstances: LP = limited availability as due to popularity; LS = limited availability as due to limited supply; LP + S = limited availability as due to popularity and limited supply (the latter four are causes of limitation) 

To conclude, the technique of scarsity is used widely in selling processes to persuade consumers to buy things and scarsity (especially  because of market reasons) really makes people value and choose the products more.

Reference:

Verhallen, T. M., & Robben, H. S. (1994). Scarcity and preference: An experiment on unavailability and product evaluation. Journal of Economic Psychology, 15(2), 315-331.

Written by:

Feiyi Ouyang