Recently we ordered three hot chocolates for our three children in one of those places where the barista makes fancy designs in the foam. One of them came out with its milky heart a tad less symmetrical than the others and was delivered by chance into the hands of the youngest child. Shocked and enraged at the injustice, he screamed his head off and drama ensued. Sound familiar?
Conventional wisdom suggests that scarcity creates demand. But this is only part of the story. In this case, the hot chocolate is a “positional good” – something whose value is measured in comparison with the possessions of others rather than by its own inherent value. For our 6-year-old, the hot chocolate was all about relative status.
Diamonds are the classic example of a positional good. Diamonds are plentiful and without inherent value, but a clever marketing strategy initiated in the 1960s transformed them into the universal American icon of successful adult life. The quality and quantity of one’s diamond jewelry has a powerful signaling effect that people find irresistible. We desire the diamond - or car or house or coat or shoes – that is as good as or better than the one our neighbor has.
What truly creates value is desire.
This aspect of human nature has meaningful implications for marketing. A well-crafted brand story brings to life a product’s differentiators; a truly inspired one goes one step further and captures the imagination and inspires desire. It addresses not just an unmet functional need, but also an aspiration of a high-order, tapping into deep emotional territory.