The Psychology of Scarcity: How FOMO Shapes Buying Behaviour

Is it a Great Sale, or are you Falling for FOMO?

Have you ever bought stuff not because you need it, but because the sale was running out? Only 2 left, 70% discount until stocks last, Sale is Live – these are just some of the terms that businesses use to create a sense of urgency and drive impulsive purchases. 

This marketing strategy has its roots in FOMO, or the fear of missing out. FOMO is a social anxiety disorder, where people feel stressed out at the prospect of missing out on any event that others may be enjoying.

How Companies leverage FOMO-led Marketing Tactics

FOMO-based tactics are often used successfully by several major brands, such as: 

• Booking.com, a well-known travel fare aggregator website, uses FOMO by highlighting the number of people currently looking at the same hotel room and how many rooms are left. This type of real-time data creates a sense of urgency and can induce customers to make impulse purchases.
• Amazon creates a sense of urgency and encourages customers to make a purchase immediately. This tactic, where low stock levels are highlighted on product pages, plays on the fear of missing out on a desirable item, especially if it's in high demand or offered at a discounted price.
• Nike's strategy of releasing limited quantities of highly sought-after sneakers is a prime example of FOMO in action. The limited availability of these products generates a sense of exclusivity, immense hype and high demand, leading to long queues, online crashes, and resellers marking up prices exorbitantly.
• Black Friday Sales, with their limited-time discounts and countdown timers, are designed to trigger FOMO in shoppers. When combined with a rabid mob mentality, Black Friday sales have been known to cause disastrous incidents and even fatalities. 

Numbers Don’t Lie: How FOMO Impacts People

• Almost 40% of people fall into debt while trying to keep up with their social groups.
• About 69% of millennials experience FOMO regularly.
• 55% of people spend their money on live events such as concerts out of FOMO.
• The number of US outbound flights increased by about 97% due to summer FOMO
• A survey conducted by Expedia found that 67% of travellers have booked a trip based on FOMO.

What Causes FOMO?

When something is scarce or appears to become scarce, people want it more. This psychological phenomenon creates urgency and causes customers to rush to obtain the product.

Daniel Kahneman and Amos Tversky’s Loss Aversion Theory offers one a compelling explanation for this behaviour. Kahneman and Tversky found that people fear losing more than they enjoy gaining. There is a genuine sense of fear of missing out when consumers see a product in limited supply. This fear overrides reason, resulting in impulsive buys. 

Marketing strategies such as Flash Sales take advantage of this psychological inclination. In today’s commercialised social landscape, the risk of missing out on an opportunity evokes an emotional response. This makes scarcity-based marketing incredibly effective in driving sales.

What Causes Impulse Purchasing?

Impulse buying occurs when a consumer makes an unplanned purchase driven by emotions rather than rational decision-making. Key factors influencing impulse buying can include:

1. Psychological Triggers

• Instant Gratification: Human beings want to feel pleasure or receive a reward immediately. When experiencing a highly emotional state, such as stress, excitement, or sadness, people are more likely to indulge in impulsive purchases.
• Scarcity Effect: When a desirable object seems like it will run out before it can be experienced, it creates a sense of urgency that will prompt buyers to buy without thinking twice. 

2. Store & Online Environment

• Store Layout & Product Placement: Stores and markets are designed to maximise impulse buys. This includes the display of sweets, snacks or gum that is present at the arterial flow of a store, around the cashier counter.
• Sensory Appeals:  Music, light, and scents can be mindfully combined to make shopping environments more compelling.
• Easier Payment Options: From interest-free pay-in-instalments to single-tap mobile payments, seamless payment methods that do not ‘feel like spending money’ can lead to overspending without realising it. 

3. Marketing Strategies

• Discounts & Flash Sales: Unforeseen price cuts can lure buyers into making impulsive purchases.
• Celebrity & Influencer Endorsements: The positive associations between consumers’ favorite celebrities and influencers and the products they endorse, along with discount codes, can encourage mindless purchases. 
• Personalized Ads: Targeted adverts are curated to be attractive to specific consumer segments. The sense of familiarity these ads offer can cause compulsive purchases.

Monetizing the Psychology of Scarcity

FOMO-based Marketing is a balance between persuasion and manipulation. While persuasion uses placement that informs and entices customers, manipulation pulls on psychological triggers to coerce customers into choices they otherwise would not have taken.

FOMO’s psychological power can induce stress, anxiety, and regret in consumers. The thought of scarcity takes precedence over logical reasoning and leads to poor decision-making. The scarcity effect leans on social validation – this is the thought that if others want it; it must be good. This psychology of scarcity incites an emotional bond that generates an increase in conversion numbers.

FOMO may also have an adverse effect on businesses in the long run. Building a brand that is centered on avoiding feeling like you’re missing out rather than on fulfilling a necessity or a market demand would leave the consumer wishing they never bought that stuff. This is particularly true for the new wave of mindful consumerism, such as minimalism, thrifting and sustainable buying practices, where customers are aware of FOMO tactics and look down upon brands that overuse it. 

How to Overcome FOMO-Induced Buying

• Think before you buy. Ask yourself if this product you are considering purchasing, is really something you need and value. Resist the temptation to buy things out of a fear of missing out, because ultimately, that fear is not based in reality. 
• Set time and budget limits on shopping. This can help limit impulsive purchases and invites introspection. Making a shopping list, sticking to it and avoiding aisles that you know will tempt impulse buys can also be helpful. 
• Knowledge is power. Understand that the marked down prices may not actually be marked down, that the trends you are chasing will fall out of favor faster than you can think, and products in demand are very likely to return to the shelves. 
• As much as possible, try to pay with cash, rather than single tap mobile applications, debit cards or credit cards. This will mentally reinforce the actual exiting of money from your bank account, unlike ‘tap to pay’ tools which psychologically distances us from the reality of paying.

Conclusion 

FOMO Marketing is incredibly effective and has the potential to be excessively misused. While persuasive tactics only attempt to sway buying decisions, manipulation forces choices upon them. The worry and guilt born out of FOMO purchases highlights the importance of responsible marketing. 

Companies that combine a healthy sense of interest in products with ethical marketing through transparency and value are more likely to win consumer loyalty and retain trust. So, the next time you see a "Limited Stock" label, think before you buy.  

Sources:

Trustmary. Available at: https://trustmary.com/ (Accessed: 2 March 2025).

WiserNotify. Available at: https://wisernotify.com/ (Accessed: 2 March 2025).

Mailchimp. Available at: https://mailchimp.com/ (Accessed: 27 February 2025.