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Question of the Day: Is Jobs Using 'Scarcity Illusion' to juice iPhone2 debut?

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We’ve written previously about Harvard marketing guru John Quelch’s research into how companies deliberately create an “illusion of scarcity” to elevate product successes and profits. See, How to use the ‘Scarcity Illusion’ to boost your launch.

For a while now people have been writing about the perceived scarcity of iPhones. Earlier this week Om conducted a reportorial gut check, and determined–once and for all–that there is a shortage of iPhones nationwide. See, There *Really* Is A Coast To Coast iPhone Shortage.

The bigger quandry now is whether this is a production/supply chain problem at Apple, or a deliberate marketing strategy to keep the perceived value of the iPhone artificially high (even if it naturally would be very darned high!)

Piper Jaffray’s Gene Munster thinks the latter (for the record, so do I), and that Jobs’ may be using scarcity to lay the groundwork for a successful debut of iPhone2. According to Barron’s, “Munster figures there is an 80% chance that a new iPhone is coming earlier than expected; he sees a 20% chance that there is a production or manufacturing issue with the phone.”

So this forms our Question of the Day:

* Is Jobs using the “Scarcity Illusion” to boost iPhone sales, or an iPhone2 debut?

* What effect does this strategy have on you as an Apple consumer? (Like it, or hate it?)

* Would you emulate this strategy at your startup, or does it risk alienating customers too much?

For more from Prof. John A. Quelch, including how you can use his “Scarcity Illusion” at your startup, see this Sept. 2007 essay, How to Profit from Scarcity, originally published in in Harvard’s Working Knowledge.

4 Responses to “Question of the Day: Is Jobs Using 'Scarcity Illusion' to juice iPhone2 debut?”

  1. 1. I think they are using “Scarcity Illusion”. Apple knows its customers very well. I’m one of the early adopters, or as someone once told me a “professional line waiter”, so I usually try to nab a highly sought-after product on launch day.

    2. I don’t mind it because I already have an iPhone. If i didn’t have one in hand, I would probably be perplexed why stores didn’t have any in stock. I’d look to other channels to get one.

    3. At my startup? No, because we’re a web application. For a different startup, i’d only consider this strategy AFTER we’ve a) built a recognized brand/product b) built enough buzz and c) released information and/or testimonials about the product. Apple has all of those things and I’d assume that most startups are in a different stage of branding and development. You can only get this kind of buzz if reporters and journalists like/want to talk about your product or company.

  2. If there were a manufacturing issue with the phone, wouldn’t we have known about it by now?

    Another thing to consider is the propensity of Apple customers to cry like babies whenever they purchase a product that is revised or lowered in price soon thereafter. Removing supply from the retail chain may be a way for Apple to inoculate itself from that.

  3. I think Jobs and others are smart to encourage a scarcity of their products in so much as it helps maintain their brand/identity. Too often companies “max out” the identity credit card by flooding the market with the product (Krispy Kreme comes to mind).

    As I start my own business, I realize I don’t have the luxury of holding back product to create the scarcity, but I can position my product in such a way as to not “flood the market” (ie: spam, disingenuous marketing, etc).