Marketplace Scratch Pad

Intentional scarcity

Scott Jagow Jul 21, 2009

Giving away free food in a recession sounds like a winning idea, but I have my doubts. This morning, Starbucks offered free pastries, but one of the Starbucks we went to had already run out of them and another was about to. Remember KFC a couple months ago?

A person behind the Starbucks counter told our producer there were some pretty upset customers when they found out they weren’t getting a pastry for free. I’m just trying to figure out what these companies are doing. In KFC’s botched giveaway, the company offered a two-piece meal to anyone with a coupon, but then ran out of chicken.

People were angry enough that KFC offered rain checks. But do customers walk away after campaigns like this? Or do bad publicity and bad execution not matter? It’s publicity, period, and they got people to come into their stores.

Or is running out an intentional strategy?

Consider Knob Creek Bourbon. A few weeks ago, Knob Creek announced that it had run out of its product. The company is owned by Beam Global Spirits of Jim Beam fame. Knob Creek said it wouldn’t have a new batch until November. That’s when the batch turns 9 years old, and the company said it didn’t want to release the bourbon a day before the 9 years is up.

It doesn’t mean you can’t go to the store and get a bottle right now, but when those run out, there won’t be anymore until November. Here’s how Charles Cowdery, the Chicago drinks examiner, put it:

Beam hopes attention generated by the shortage will cause people to rush out, snag the rare remaining bottles, empty the pipeline, and then queue up to ensure that the next batch sells out even faster than this one did. If that sort of marketplace manipulation offends you, grow up.

It doesn’t offend me, I’m just curious about it. A product in demand, not enough of it — seems like a pretty good strategy. But I don’t think that’s what Starbucks had in mind today. Here’s what the company’s PR department sent us:

Starbucks focus in making the recent changes in food was to bring customers delicious products made with high quality ingredients. We know “tasting is believing” and sampling is a great way for customers to try out new products and in this instance learn more about Starbucks recent changes to its food at participating U.S. locations.

These two campaigns aren’t really the same, and I don’t have a profound conclusion to draw… just making some observations. Cowdery says, if all goes well, Knob Creek may run out of bourbon every year:

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