Late night coaching session with my son Dallin…
On today’s episode Russell teaches his son Dallin, and the listeners all about the concept of supply and demand. Here are some of the cool things you will hear in this episode:
So listen here to find out how to use supply and demand to make more sales and more money.
---Transcript---
Hey everyone, this is Russell Brunson. Welcome to the Marketing Secrets podcast. This is a special audio episode just for my audio friends. This will not be on video. I’m in the car right now driving to the grocery store with my son, Dallin. Dallin, how are you doing tonight?
Dallin: Tired.
Russell: He’s a little tired, it’s late. We forgot we have to have treats. He’s always tired though. He’s a growing boy. He asked me a question. I said, “Dallin, we’re going to answer this on the podcast.” So let’s queue in some music and we’ll come back and we’re going to share with you guys something very important for you to understand about supply and demand and Christmastime.
Alright everybody, welcome back. So Dallin came in the car and we were talking about headphone buds. Do you want to tell them what you told me, Dallin, when we were getting in the car about how much cheap headphones are versus these ones?
Dallin: So I was looking up how much the ear buds cost for apple, because I was looking at the iPhone 10.
Russell: He’s talking about the airpods that are super cool.
Dallin: And I looked up on Amazon, usually Amazon’s amazing, and it says it’s $850!
Russell: $850 for the Amazon headphones. He said, you can buy regular headphones for $5. And I pulled out those headphones out of my pocket, because I actually love those a lot. If you don’t have them you should get them.
I said, actually these sell for $100…
Dallin: Not from Amazon though.
Russell: Not from Amazon, and I’ll tell you why. I just explained this to Dallin. So I wanted to explain it to all of you guys, who I’m sure understand this but this sets up a teaching lesson I want to have here in a second.
So if you look at the pods, if you look at them they’re $150 on Apple’s site. But the problem is it takes two or three months to ship to you. So if you buy them and plan ahead it’s $150, but if you didn’t and it’s Christmastime and you’re like, “Ah, my wife, my girlfriend, my significant other, my kid, they need airpods, they’ve been asking all Christmas.” You try to buy it and you go to Apple and they’re like, “We’re not going to deliver til May.” And you’re like, “What, Christmas is in December.” And they’re freaking out. So they have to go look for other places, so they go on Amazon and they find people that had the foresight to know that people were gonna not have foresight. So they take their Apple Airpods that they bought for $150 and jack up the price for $800 on Amazon. And the people who are slow have to pay the difference.
So I was about to tell Dallin about Tickle Me Elmo, and then I said, “Wait a minute, we should share this story on the podcast.” So Dallin, here is the lesson of the story I want to tell you. And everyone can listen in on this.
So when I was a kid, it was right when Elmo came out. Sesame Street didn’t used to have Elmo. When Elmo came out, everyone, I remember being a kid and being like, “Elmo is the coolest.” He was just so much cooler than all the other muppets and we all loved him. And then one year for Christmas they came out with this, they called it Tickle Me Elmo. You guys have Elmo dolls now, but this was like the original Elmo one, where it’s a doll and you tickle it and it’ll giggle. And that was ground breaking 30 years ago.
Dallin: He’s scary.
Russell: He’s a little scary. So anyway, everyone wanted Tickle Me Elmo so the company that makes him, it’s the law of supply and demand. They made so many Tickle Me Elmo’s, and that was it, that was all they made. I don’t know the whole story behind it. But basically there was a lot more people that wanted them. Everyone’s kid wanted them, it was all over the news.
So Tickle Me Elmo started going, you’d normally buy them for like $20 and they got to $50 and $80 and people were auctioning them for tens of thousands of dollars for Tickle Me Elmo. And then other people heard about Tickle Me Elmo, and when they started talking about how there are none left. And then one of them sold on auction for $10,000. And people were freaking out, and people who already had them were like, “Well I can sell this and make some money.” So they would take the gifts away from their kids to make money by selling them to other people and it was just crazy.
Dallin: That would be sad.
Russell: Pandemonium. So the lesson that I want to teach you Dallin, and everyone who’s listening today, is the power of scarcity, supply and demand. So when you have a ton of stuff, like if there were a billion Tickle Me Elmo dolls, nobody cares and they’re not going to freak out and try to buy them. So the price goes lower. But when they’re high demand form and the supply is smaller, like the airpods, there’s a high demand for them, everyone wants them. But there’s only a few left, the people who sell them can charge way more for them because they need them.
So a lot of times in our businesses, depending on what we’re selling, a lot of times there’s not typically that built in supply and demand curve because we’re selling info products or supplements, or things that are kind of easy. But you can always do things in your marketing to create the illusion of supply and demand.
A good example is Bill Phillips, Muscle Media. When I was a kid it was the biggest supplement company in the world. In fact, some of my buddies now used to work for them, which is kind of fun. Anyway, Bill Phillips had Myloplex shakes and his whole EAS supplement line. He had unlimited stuff, he could sell as much as he wanted. But they needed to create urgency and scarcity to get people to buy it more, increase the price, all that kind of stuff. So there’s a marketing campaign that I believe Joe Polish was a part of or in charge of, Idon’t know. But I heard him tell the story one time, so somehow I know it’s credited back to him.
But what he did is they had two big shipments of supplements coming to their warehouse, two big semi trucks full. So they took a picture of it and they’re like, “We should do a marketing campaign around this.” So they sent a sales letter back to the entire Muscle Media Magazine list that basically said, “Hey, we over ordered. We’ve got two big semi trucks of supplements in the front. We need your help. Buy the excess stuff, that way we can get back to normal life.” So they sent the letter out and they sold a ton of supplents.
And then they’re like, “Well now we sold a bunch, so let’s decrease the supply, therefore increasing the demand.” So they took the exact same sales letter, and they took the picture of the two trucks and crossed out one of the trucks and said, “One down, one to go.” And then changed the letter to “one left, one left, one left.” Then they sent the same letter out to the same customer base. All it did was decreased the supply, therefore increasing the demand and they sold more from the second letter than they did from the first.
So that is what I wanted to share with you guys. Dallin already jumped out of the car, so maybe this is a lesson for you guys. Dallin, maybe when you are 25 working in a marketing company someday, you’re going to come back and listen to this podcast episode and hear the moral of the story, but until then we should go shopping for your treats.
Alright, that’s all I got guys. Anything to tell everyone who’s listening Dal?
Dallin: No.
Russell: Alright, you heard it here first. Alright guys, appreciate you and we’ll talk to you all again on the next episode of Marketing Secrets podcast. Bye everybody.