The Business Principle of Scarcity

[Jack Loomes]

I've undertaken an excellent business and public speaking course recently and one of the principles that consistently came up was scarcity. When generating a need in customers - a.k.a. demand, there is a certain way to create want in customers that is often successful, and that is by creating the mirage of a limited ability to produce - a.k.a. supply. Apple are masters of this technique. Want an iPhone? Well guess what, even though Apple are the biggest company in the world they can't produce the new iPhone X quickly enough to meet demand. As a result the public goes wild for the new iphone. Truth be told Apple can produce more than enough devices to meet demand, but they never do - demand. Another example, the De Beers cartel who control most of the world's diamond trade have supply of diamonds so well stitched up, using methods including burying vast tracts of land under 6 feet of concrete, that De Beers have us all thinking that diamonds are rare minerals when they are not.

Despite De Beer's successful advertising campaigns creating an illusion to the contrary, diamonds are not a particularly rare mineral in Earth's crust.

The sword world is no exception. Do you really believe these companies who swear black and blue cannot keep up with demand? Chances are they can, they just don't. There would be genuine exceptions perhaps, like one man shows, but I would put money on most of these companies being able to keep up with supply just fine if they wanted to. The real issue with the boutique sword making world is a lack of demand because reproduction medieval swords represent an incredibly small niche, and moreover, there are many excellent makers to choose from. In fact the balance of supply and demand is actually tipped against the boutique companies. Scarcity, or the appearance of it, is used to create demand where it may not have existed before.

While creating an illusion of scarcity is not a felony, I do think twice about whether I would want to endorse a company with my hard earned clams by buying from them if they are using deception to get my attention in the first place. There are many honourable sword makers out there who do not play social games using supply and demand paradigms, and for my money, these honourable companies deserve our patronage more than companies who use deceit as a selling tool.