Influence: Science and Practice (50 page)

Author’s note:
Although Procter & Gamble executives may have been perplexed by this seemingly irrational consumer response, they inadvertently contributed to it. Discount coupons have been part of the American scene for over a century, and P&G had actively “couponed” its products for decades, thereby helping to establish coupons as something consumers had a right to expect. And it’s always the long-established rights that people fight most ferociously to preserve.

Competition for Scarce Resources: Foolish Fury

Let’s look back to the cookie study for another insight into the way we react to scarcity. We’ve already seen from the results of that study that scarce cookies were rated higher than abundant cookies and that newly scarce cookies were rated
higher still. Staying with the newly scarce cookies now, we find that certain cookies were the highest rated of all—those that became less available because of a demand for them.

Remember that in the experiment the participants who experienced new scarcity had been given a jar of ten cookies that was then replaced with a jar of only two cookies. Actually, the researchers created this scarcity in one of two ways. Certain participants were told that some of their cookies had to be given away to other raters in order to supply the demand for cookies in the study. Another set of participants was told that the number of their cookies had to be reduced because the researcher had simply made a mistake and given them the wrong jar initially. The results showed that those whose cookies became scarce through the process of social demand liked the cookies significantly more than did those whose cookies became scarce by mistake. In fact, the cookies made less available through social demand were rated the most desirable of any in the study.

This finding highlights the importance of competition in the pursuit of limited resources. Not only do we want the same item more when it is scarce, we want it most when we are in competition for it. Advertisers often try to exploit this tendency in us. In their ads, we learn that “popular demand” for an item is so great that we must “hurry to buy”; we see a crowd pressing against the doors of a store before the start of a sale; we watch a flock of hands quickly deplete a supermarket shelf of a product. There is more to such images than the idea of ordinary social proof. The message is not just that the product is good because other people think so, but also that we are in direct competition with those people for it.

The feeling of being in competition for scarce resources has powerful motivating properties. The ardor of an indifferent lover surges with the appearance of a rival. It is often for reasons of strategy, therefore, that romantic partners reveal (or invent) the attentions of a new admirer. Salespeople are taught to play the same game with indecisive customers. For example, a realtor who is trying to sell a house to a “fence-sitting” prospect sometimes will call the prospect with news of another potential buyer who has seen the house, liked it, and is scheduled to return the following day to talk about terms. When wholly fabricated, the new bidder is commonly described as an outsider with plenty of money: “an out-of-state investor buying for tax purposes” and “a physician and his wife moving into town” are favorites. The tactic, called in some circles “goosing ’em off the fence,” can work devastatingly well. The thought of losing out to a rival frequently turns a buyer from hesitant to zealous.

There is something almost physical about the desire to have a contested item. Shoppers at big close-out or bargain sales report being caught up emotionally in the event. Charged by the crush of competitors, they swarm and struggle to claim merchandise they would otherwise disdain. Such behavior brings to mind the “feeding frenzy” phenomenon of wild, indiscriminate eating among animal groups. Commercial fishermen exploit the phenomenon by throwing a quantity of loose bait to large schools of certain fish. Soon the water is a roiling expanse of thrashing fins and snapping mouths competing for the food. At
this point, the fishermen save time and money by dropping unbated lines into the water, since the crazed fish will bite ferociously at anything, including bare metal hooks.

Contagious Competitiveness
The struggle is intense in the china department of Harrod’s as shoppers compete to grab the best bargains during the famous London department store’s summer sale.

There is a noticeable parallel between the ways that commercial fishermen and department stores generate a competitive fury among those they wish to hook. To attract and arouse the catch, fishermen scatter some loose bait called chum. For similar purposes, department stores holding a bargain sale toss out a few especially good deals on prominently advertised items called loss leaders. If the bait—of either form—has done its job, a large and eager crowd forms to snap it up. Soon, in the rush to score, the group becomes agitated, nearly blinded, by the adversarial nature of the situation. Human beings and fish alike lose perspective on what they want and begin striking at whatever is being contested. One wonders whether the tuna flapping on a dry deck with only a bare hook in its mouth shares the what-hit-me bewilderment of the shopper arriving home with a load of department store bilge.

Lest we believe that the competition-for-limited-resources fever occurs only in such unsophisticated forms of life as tuna and bargain basement shoppers, we should examine the story behind a remarkable purchase decision made in 1973 by Barry Diller, who was vice president for prime-time programming of the American Broadcasting Company and who went on to head Paramount Pictures and the Fox Television Network. He agreed to pay $3.3 million for a single television showing of the movie
The Poseidon Adventure
. The figure is noteworthy in that it greatly exceeded the highest price ever before paid for a one-time movie showing—$2 million for
Patton
. In fact, the payment was so excessive that ABC figured to lose $1 million on the
Poseidon
showing. As NBC vice president for special programs, Bill Storke, declared at the time, “There’s no way they can get their money back, no way at all.”

How could an astute and experienced businessman like Diller go for a deal that would produce an expected loss of $1 million? The answer may lie in a second noteworthy aspect of the sale: It was the first time that a motion picture had been offered to the networks in an open-bid auction. Never before had the three networks been forced to battle for a scarce resource in quite this way. The novel idea of a competitive auction was the brainchild of the movie’s flamboyant showman producer, Irwin Allen, and 20th Century-Fox vice president, William Self, who must have been ecstatic about the outcome. How can we be sure that it was the auction format that generated the spectacular sales price rather than the blockbluster quality of the movie itself?

Some comments from the auction participants provide impressive evidence. First came a statement from the victor, Barry Diller, intended to set future policy for his network. In language sounding like it could have escaped only from between clenched teeth, he said, “ABC has decided regarding its policy for the future that it would never again enter into an auction situation.” Even more instructive are the remarks of Diller’s rival, Robert Wood, then president of CBS Television, who nearly lost his head and outbid his competitors at ABC and NBC:

We were very rational at the start. We priced the movie out, in terms of what it could bring in for us, then allowed a certain value on top of that for exploitation.

   
But then the bidding started. ABC opened with $2 million. I came back with $2.4. ABC went $2.8. And the fever of the thing caught us. Like a guy who had lost his mind, I kept bidding. Finally, I went to $3.2; and there came a moment when I said to myself, “Good grief, if I get it, what the heck am I going to do with it?” When ABC finally topped me, my main feeling was relief.

   
It’s been very educational. (MacKenzie, 1974, p. 4)

According to interviewer Bob MacKenzie, when Wood said, “It’s been very educational,” he was smiling. We can be sure that when ABC’s Diller vowed “never again,” he was not. Both men had clearly learned a lesson from the “Great
Poseidon
Auction.” The reason that both could not smile as a consequence was that, for one,
there had been a $1 million tuition charge. Fortunately, there is a valuable but drastically less expensive lesson here for us, too. It is instructive to note that the smiling man was the one who had
lost
the highly sought-after prize. As a general rule, when the dust settles and we find losers looking and speaking like winners (and vice versa), we should be especially wary of the conditions that kicked up the dust—in the present case, open competition for a scarce resource. As the TV executives learned, extreme caution is advised whenever we encounter the devilish construction of scarcity plus rivalry.

Does the Vest Come with That?
To the astonishment of all concerned, a leisure suit worn by John Travolta in the movie
Saturday Night Fever
recently sold for $145,000. Perhaps we can help explain the astronomical price by noting two features of the sale. First, the suit is a special, one-of-a-kind item. Second, it was purchased at auction, where two buyers became locked into a competitive bidding spiral. When asked later whether he thought the final figure was excessive, the auctioneer remarked graciously, “Well, it certainly was a record for polyester.”

Defense

It is easy enough to feel properly warned against scarcity pressures, but it is substantially more difficult to act on that warning. Part of the problem is that our typical reaction to scarcity hinders our ability to think. When we watch as something
we want becomes less available, a physical agitation sets in. Especially in those cases involving direct competition, the blood comes up, the focus narrows, and emotions rise (Teuscher, 2005). As this visceral current advances, the cognitive, rational side retreats. In the rush of arousal, it is difficult to be calm and studied in our approach. As CBS-TV president Robert Wood commented in the wake of his
Poseidon
adventure, “you get caught up in the mania of the thing, the acceleration of it. Logic goes right out the window” (MacKenzie, 1974).

Here’s our predicament, then: Knowing the causes and workings of scarcity pressures may not be sufficient to protect us from them because knowing is a cognitive act, and cognitive processes are suppressed by our emotional reaction to scarcity pressures. In fact, this may be the reason for the great effectiveness of scarcity tactics. When they are employed properly, our first line of defense against foolish behavior—a thoughtful analysis of the situation—becomes less likely.

If, because of brain-clouding arousal, we can’t rely on our knowledge about the scarcity principle to stimulate properly cautious behavior, what can we use? Perhaps, in fine jujitsu style, we can use the arousal itself as our prime cue. In this way, we can turn the enemy’s strength to our advantage. Rather than relying on a considered, cognitive analysis of the entire situation, we might well tune ourselves to just the internal, visceral sweep for our warning. By learning to flag the experience of heightening arousal in a compliance situation, we can alert ourselves to the possibility of scarcity tactics there and to the need for caution.

Suppose, however, we accomplish this trick of using the rising tide of arousal as a signal to calm ourselves and to proceed with care. What then? Is there any other piece of information we can use to help make a proper decision in the face of scarcity? After all, merely recognizing that we ought to move carefully doesn’t tell us the direction in which to move; it only provides the necessary context for a thoughtful decision.

Fortunately there is information available on which we can base thoughtful decisions about scarce items. It comes, once again, from the chocolate chip cookie study, where the researchers uncovered something that seems strange but rings true regarding scarcity: Even though the scarce cookies were rated as significantly more desirable, they were not rated as any better-tasting than the abundant cookies. So, despite the increased yearning that scarcity caused (the raters said they wanted to have more of the scarce cookies in the future and would pay a greater price for them), it did not make the cookies taste one whit better. Therein lies an important insight. The joy is not in the experiencing of a scarce commodity but in the possessing of it. It is important that we not confuse the two. Whenever we confront the scarcity pressures surrounding some item, we must also confront the question of what it is we want from the item. If the answer is that we want the thing for the social, economic, or psychological benefits of possessing something rare, then, fine; scarcity pressures will give us a good indication of how much we would want to pay for it—the less available it is, the more valuable to us it will be. However, very often we don’t want a thing for the pure sake of owning it. We want it, instead, for its utility value; we want to eat it or drink it or touch it or hear it or drive it or otherwise use
it. In such cases it is vital to remember that scarce things do not taste or feel or sound or ride or work any better
because
of their limited availability.