Does FOMO Mediate the Effects of Time-Limited Scarcity Promotions for Material and Experiential Purchases?

Abstract

Scarcity tactics have been used extensively in marketing, largely because such appeals signal the current or potential unavailability of a product which enhances its perceived value and desirability. Such perceptions then in turn increase consumers’ interest in the item and purchase intentions. Due to their extensive use across time and contexts, multiple theories have been put forward to understand why scarcity appeals have such strong, positive effects on consumer behaviour. However, the existing theories have neglected the consideration of consumers’ emotional responses. This thesis aims to enhance the literature by exploring how consumers’ emotional responses to scarcity appeals influences their interest in the item and their purchase intentions. Specifically, we propose the Fear of Missing Out (FOMO) as a common emotional response and relevant motivator of consumer behaviour within the scarcity context. We also extend our findings into a new context by exploring whether the strength of scarcity appeals varies between material and experiential items, as prior studies have demonstrated that scarcity effects differ across product level characteristics. We begin by reviewing the current state of the scarcity literature before conducting two experiments to test our propositions. We then employ independent samples t-tests, mediation analyses and a two-way Analysis of Variance to test our predictions and validate the relationships. Our results reveal that time-based scarcity appeals elicit feelings of FOMO, which enhances purchase interest. We also found that such appeals increase consumers’ FOMO and purchase interest for material goods, however there is no significant change for experiences. Our findings contribute to the literature by introducing an alternative way of understanding why scarcity influences consumer behaviour, and by examining scarcity effects within a previously unexplored context. They also have significant practical implications in that we can recommend that material good retailers utilise time-based scarcity promotions to drive purchase interest, particularly those which incorporate FOMO appeals, whereas experiential retailers would benefit from alternate strategies.