The Best Businesses in the World are Overbooked
It is no secret that Apple artificially limits the supply of their products when they are set to release, yet this marketing gimmick is just as effective every time it’s employed.
Three years ago, during the pandemic Apple deftly demonstrated its mastery in creating a demand-supply imbalance with the release of its iPhone 12 series. It was the company's first range of 5G-enabled smartphones.
Apple staggered the release dates of the iPhone 12 models. The iPhone 12 and 12 Pro were available for pre-order first, followed by the iPhone 12 Mini and 12 Pro Max. This not only sustained the hype but also spread out the demand over several weeks, making each release an event of its own.
The pre-order demand was so high that delivery estimates quickly slipped from the original dates, with many customers facing backorder statuses. This signaled high demand and limited availability.
Of course, this was done purposely to create the perception that demand outstripped supply – a tactic the best businesses on the planet employ. David Priestly, author of “Oversubscribed - how to get people lining up to do business with you” is a big proponent of this tactic. Priestley suggests that businesses should aim to create a perception of scarcity and exclusivity around their offerings. By doing so, they make their products or services more desirable.
This goes against the grain of how most businesses operate. Most businesses aim to satisfy as many customers as quickly as possible to maximize profits. Their products are readily available for purchase, whenever their customers need them. While this might be convenient, it does not increase the perception of value in the eyes of the public.
We want what we can’t have. It’s a basic truth of human psychology that good businesses ruthlessly exploit.
Hermès epitomizes the art of creating an imbalance between demand and supply with its iconic Birkin bags, crafting an aura of ultra-exclusivity. By producing the bags in strictly limited quantities and through a meticulous process that justifies both the wait and the lofty price tag, they've cemented the Birkin as a symbol of luxury and status.
The bag was recently labeled the “most coveted designer bag across the globe.” According to hypebeast the company’s sales skyrocketed this year, recording a 36% YoY growth at a whopping 2.2 Billion EUR. net income.
While imitating these companies' strategies on that scale is a hard feat, it’s wise to adopt some of their strategies in little ways. Even how you frame product pitches and the impression you leave on your prospects – demonstrating scarcity of supply – can go along way to increase the perceived value of whatever you're selling.
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