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‘Demarketing: A Relook’ by Dr. Salil S., Assistant Professor-Marketing Area, TKM Institute of Management

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Is the scope of marketing still limited to demand driving activity? The term demarketing was coined four decades back by Kotler and Levy. It represented the marketing activities for reducing demand of the marketing offering.

While marketing is viewed as a demand driving activity, demarketing represents instances of unwholesome and unwanted demand. This  gives an impression that demarketing is the opposite of marketing.     The real opposite of marketing is counter-marketing which negates the whole relevant demand. According to Phillips and Sidney all attempts to discourage customers in general or a certain class of customers in particular on either a temporary or permanent basis can be considered as demarketing. Demarketing does not destroy demand completely. It works on a group of customers or in a specific region selectively.

 Marketing literature talks about three approaches to demarketing.

a)      Selective Demarketing: Discouraging demand from specific customer segment. An example is sale of tobacco to minors.

b)     General Demarketing: This form is used to reduce the total demand for a specific time period. An example is the efforts by companies owing to shortage or unmanageable-popularity.

c)      Ostensible demarketing: Ostensible demarketing is creating artificial scarcity for product of services for image building. This is ethically questionable.

 What is the business sense and context of demarketing?

First is the condition of inadequate supply or production. Conventional wisdom of economics says, when the demand is higher than the firm’s capacity to produce, demarketing can be a good strategy. At the same time, availability of substitutes, utility of the offering and competition in the market should be factored in. Eastman Kodak applied demarketing when its newly launched instamatic camera struggled to meet the overwhelming demand.

Secondly, demarketing can also be used for postponing demand. This can be understood from the demand for hotel rooms and airline seats in peak seasons.

Thirdly, if the marketer does not want to cater to a particular territory or specific customer segment owing to high cost or lesser profit margin, demarketing comes handy. Many companies and retailers unknowingly use demarketing in a variety of business situations. For example, while a telecom player discourages an unprofitable tariff plan, it is doing demarketing. Another case is that of Blue Mountains National Park, Australia, who could not accommodate exorbitant number of tourists owing to ecological sensitivity. A set of demarketing tactics were initiated including increasing the entry fee resulting in better visitor management.

What is the social sense in demarketing?

Perhaps demarketing is better known for its social reasons. Marketers are increasingly interacting with public policy initiatives. Heightened attention towards sustainable practices in marketing and concern on depleting environmental resources demand a cautionary response from the marketer. This is also supported by the evolution of eco-conscious customer segments in a variety of product categories. There are many who think marketers are pushing too much.

Beyond the above two sets of reasons, demarketing takes a strategic role in contemporary marketing. Researches into consumer psyche suggest that less available products are more valued in certain categories. Similarly, scarcity can signal high quality (Stock & Balachander, 2005). Making sense of this, demarketing is being used to address consumers’ NFU (need for uniqueness) and for brand building. But for this, some times companies create artificial scarcity. At times strategic demarketing deteriorates to ostensible demarketing. Marketers can use demarketing for strategically managing customer expectations on quality and satisfaction. More positive attempts in this regard are yet to be seen. Again, Kotler has the last word, ‘unselling has as much social justification in a democracy as does selling.’


15 TACTICS USED FOR DEMARKETING
  1. Raising prices
  2. Reducing advertising
  3. Reducing promotion expenditures
  4. Reduce product benefits or attractiveness
  5. Reduced service
  6. Reduced or altered convenience
  7. Restrict availability
  8. Redesign the product
  9. Increase the availability of substitute
  10. Highlight product harm
  11. Increase taxes
  12. Decrease consumption spaces
  13. Decrease distribution space
  14. Warning labels
  15. Strengthen entry barriers

 

[message_box title=”About the Author” color=”red”] Dr. Salil S is Assistant Professor (Marketing Area) in TKM Institute of Management, Kerala. In this article he discusses the diverse approaches in demarketing, its social sense and its uses in the business context as well. [/message_box]

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