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The science of exclusivity

Diane Hall


Demand and supply make the world go round. If there’s a plentiful supply of something, it usually costs pennies to buy. If something is in high demand, however, because supply of the item is scarce, then it follows that its price is likely to be high.

From a marketing perspective, it can be lucrative to have a product that is in high demand and short supply. The profit margin associated with an exclusive product could become hugely inflated as a result, and you’d likely have people breaking down your door to purchase one. Financially, production costs will be low (to ensure a limited supply of the item), as will your marketing budget—after all, why spend thousands on advertising when you’ve already filled your sales ledger before the product has even been made?

Contrast this with someone who has loads and loads of a certain item, which is sold for peanuts. The number of sales they would have to make to achieve the same turnover as you, with your exclusive product, would need to be significant. Their net profit would probably be less, due to higher production costs, in order to create a lot of stock. They may also have to invest more into their advertising—because, whilst it may be easy for them to make a sale, if the item is everywhere and sold by many different suppliers, consumers will need persuading to buy it from the producer in question, rather than Joe Bloggs on the next street.

When comparing these two scenarios, there certainly seems a lot more work involved with the high supply/low-cost product.

If you enjoy exclusivity with your product or service, you will almost certainly be dominating your market. Other companies and brands may wish to benefit from your exclusivity by proxy, too, which could see opportunities for collaboration or further sales fall into your lap.

Should we, therefore, aim to create exclusivity around what we offer?

Before you jump to change your whole marketing strategy, exclusivity is not necessarily the golden goose it seems. And it’s blooming difficult to create in the first place—you can’t just enter a market and proclaim that your product is in high demand and expect it to be so. You must first evoke desire in consumers then continually stoke their interest, which is difficult to do if they’ve never seen the item or heard of anyone who has one.

Exclusivity certainly takes some crafting. And once you have it, you have to maintain it. Imagine if you were a consumer on the waiting list for the exclusive product you offer; too long a wait time and they may give up and turn elsewhere for an alternative. You can’t capitalise on impulse buyers. You risk your brand being seen as smoke and mirrors…(though an established brand, remember last Christmas, when parents couldn’t get hold of a PS5 for love nor money? Fast-forward six months and some people (even those who had prepaid) have still not had their orders fulfilled). If that were me, I’d be panicking that I’m not going to see my money again, even with a company as big as Sony.

Exclusive brands are not immune from shifts in the market and changes in consumer tastes. For example, Burberry used to be seen as an exclusive, luxury brand. Their beige-tartan pattern, which is their own, unique design, was soon ripped off and used on numerous fake goods that sold for pennies. Unsurprisingly, this cheapened their brand, as it was difficult to differentiate the real thing from the copies—and all of this was out of Burberry’s control.

You may also stunt the growth of your company by making your product exclusive. Your income and growth will be limited—because, if you were to produce more of your product to capitalise on more sales, you’d be tipping the supply/demand seesaw. This could make your consumers believe that what you offer is no longer exclusive or sought after.

Neither will it be easy to appeal to other markets or bring out products with a lower price point without it having a detrimental impact on the privilege of your higher-priced offering.

Exclusivity can work for some brands—if it didn’t, no one would do it. For the average business owner, there’s nothing wrong with adding a bit of prestige and uniqueness to what you offer, even if it’s a product used by consumers every day; otherwise, how do you differentiate it against similar products/services offered by your rivals?

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