When success becomes a problem: Why “limited editions” that sell out quickly can damage brands in the long term

Few marketing tricks are as popular as the hype surrounding limited editions. Quickly sold out, highly coveted - this signals exclusivity, awakens the urge to collect and drives up demand - at least that is the assumption of many managers. But is the immediate sell-out of limited editions really a sign of a brand's long-term success? Or does it fuel frustration instead of loyalty in the long term?

A recent study involving Prof Dr Michael Steiner, holder of the Chair of Marketing at Witten/Herdecke University (UW/H), investigates this question.

Flash sales can damage the brand

The study shows that an immediate sell-out of hedonistic limited editions that are primarily intended for enjoyment, pleasure or prestige (e.g. luxury sneakers or exclusive fountain pens) has a negative effect on long-term brand loyalty. Instead of enthusiasm, the promotion generates disappointment; the willingness to buy again decreases. If coveted products are sold out too quickly, many customers feel this is unfair - they feel excluded and lose trust in the brand.

Particularly critical: If the limited editions are not sold directly by the manufacturer but via external retailers, the frustration increases even more when they sell out immediately, and many find sales via retailers intransparent - they don't know which retailers still have the limited edition available and therefore find the process particularly disappointing.

Distribution channels are crucial

According to the study, the manufacturer can provide a targeted counter-impulse by offering the limited editions in its app in combination with a prize draw. This form of direct sales by the manufacturer minimises the negative effects - at least for those who come away empty-handed. However, those who belong to the circle of successful buyers of limited editions find the prize draw less positive. The following therefore applies: for larger production quantities of limited editions, traditional retail is often the better choice.

Not every product is suitable for scarcity

And what about functional products, such as running shoes or electronic accessories? The recommendation here is clear: stay away from artificial scarcity. In the case of utilitarian goods, i.e. products that are bought primarily for their practical use, selling out limited editions - regardless of the sales strategy - consistently reduces brand value and customer loyalty.

Further information:

The study entitled "From Rarity to Desire: How Introducing New Limited Editions, the Immediacy of Sellouts, and Distribution Strategies Drive Brand Repurchase Intentions" has been accepted for publication in the renowned "Journal of Retailing " - the oldest and one of the five leading international marketing journals (VHB ranking A).

In addition to Prof Dr Michael Steiner (Witten/Herdecke University), Prof Dr Wayne D. Hoyer (University of Texas at Austin),
Prof Dr Manfred Krafft (University of Münster),
Lena Kamp (University of Münster),
Dr Christine M. Feddersen-Arden (University of Münster, Arden Automobilbau) were also involved in the study.

To the complete study:
https://www.sciencedirect.com/science/article/pii/S0022435925000272