Minjung Kwon, Assistant Professor of Marketing, Syracuse University, Whitman School of Management
Masakazu Ishihara, New York University, Stern School of Business
Makoto Mizuno, Meiji University, Japan
Year of Publication: Journal of the Academy of Marketing Science (2022)
Summary of Findings: This paper unpacks the empirical aspects of scarcity marketing, with the case study of limited-time products in the beer market, by quantifying its impact on consumer choice and the spillover effect to the related products under the umbrella branding.
Research Questions: 1. How do consumers react to scarcity marketing encountered in their actual purchases? We conduct an empirical investigation of the scarcity marketing strategy, whereas most of the extensive research on scarcity marketing is conducted in laboratory settings.
2. Do the impact of scarcity marketing spill over to the related products beyond the focal product that creates the perceived scarcity? Our study explores this understudied topic by utilizing a stylized feature of a limited-time product—umbrella branding.
What we know: As a mode of new-product introduction, a limited-time product essentially places a limitation on produce availability and elicits a consumer’s perceived scarcity. Limited-time products are often implemented by restricting supply quantity—e.g., while single-batch stock lasts—or by announcing the planned exit schedule—e.g., for the fall season. Despite the popularity of such a scarcity marketing strategy in consumer-packaged goods categories, little empirical work has studied how this practice affects consumers’ actual choices. Using individual-level rich datasets, our paper adds to the literature on scarcity by empirically modeling consumers' reactions to the scarcity marketing strategy.
Full Citations: Ishihara, M., Kwon, M. & Mizuno, M. An empirical study of scarcity marketing strategies: Limited-time products with umbrella branding in the beer market. J. of the Acad. Mark. Sci. (2022). https://doi.org/10.1007/s11747-022-00899-y
Abstract: We analyze empirical aspects of the limited-time product strategy—introduction of a new product that is available only for a limited time—that involves the use of umbrella branding. Despite the popularity of such a marketing strategy in many consumer packaged goods categories, little empirical work has studied how consumers react to this scarcity of marketing in their actual choices. We use individual-level transaction data from the beer market and model consumers’ beer purchases using a multiple discrete-continuous choice model. The proposed model captures the patterns of consumer choices in response to the limited-time product and the asymmetric sales spillover effects between a parent product and a limited-time sub product. Using the model estimates, we quantify the effects of incorporating a product’s limited-time nature and adopting an umbrella brand for a limited-time product. Our analyses indicate that (1) the product’s limited-time nature is associated with a rapid jump in demand in the launching period; (2) the return from store coverage for limited-time products decreases over time; and (3) umbrella branding for limited-time products increases the brand-level demand despite the cannibalization of the sales of a parent product. Managerial implications about the nature of perceived scarcity associated with the limited-time product and the effective targeting and distribution strategy are discussed.