Hanover Street connects downtown Boston to the historic North End, running straight through the heart of Paul Revere’s old neighborhood. On a warm sunny day, it seems like half of New England is here soaking up the history and enjoying the atmosphere. Along Hanover Street are numerous wonderful pastry shop known for their cannoli, a Sicilian treat made of a tube of fried pastry dough filled with a creamy ricotta cheese-based filling. You can get cannoli at nearly every pastry shop in the North End, but if you want cannoli from Mike’s Pastry, you’ll need to wait in line. I’ve done so many times, and I’ve never regretted it.
Yet many locals will tell you with good authority that the cannoli down the street at Modern Pastry is just as good, and maybe better some say. Nearby Cafe Graffiti will sell you a cannoli that’s just as good. And some say Cafe Vittoria makes a cannoli that’s even better, and they serve it to you in a nicer environment. As the line gets longer at Mike’s Pastry, the other pastry shop other pastry shop owners stand and watch in wonder.
There’s no doubt that nothing creates demand like a line of customers waiting outside your store. A line not only tells potential customers that something inside is worth waiting for, but it also sends a message of urgency. If you want this cannoli, you better get in line now because if you don’t, they’ll all be gone. That’s the message the line at Mike’s Pastry sends. The line creates the perception of scarcity. It is a powerful formula for brands to remember: if a brand is in demand and people believe it’s in short supply, the value of the brand increases exponentially. If Mike’s Pastry had twenty locations around metro Boston, the line on Hanover Street wouldn’t be nearly as long because the product wouldn’t be perceived as scarce. As it stands, you can only get a cannoli from Mike’s Pastry at their single location at 300 Hanover Street.
Create demand. Create the perception (or reality) that your product or service is rare. Watch value increase. In 2006 and 2007, finding a Wii console around Christmastime was nearly impossible. When stores were rumored to be getting a shipment, the line would form days in advance. People were literally camping outside electronic stores waiting for the chance to buy a Nintendo Wii! Even into 2008, two years after they debuted, the Wiis were selling as fast as retailers could order them. The Wii has become the bestselling video game system of its generation, having shipped more than 70 million consoles worldwide. While buying one today is as easy as walking into a neighborhood electronics store, in the first two years after launching, it seemed impossible to find one. Despite producing 1.8 million units each month, demand consistently outstripped supply all over the world.
Could Nintendo have physically made more Wii consoles? Of course they physically could have, but it wouldn’t have made financial sense despite the fact that they would have sold more units and made more money in the short term. By always keeping supply lower than demand, Nintendo created urgency and excitement over the Wii. That urgency was a key factor in allowing Nintendo to wait three years before finally lowering the retail price of a Wii console. If you have a product in demand and short supply, you can command a much higher price.