What really is Demarketing?
Within the larger Nigerian context, the word “Demarketing” has been used to mean one thing – when your competitors engage in activities to demean your brand and to turn consumers away from your products; which connotes a negative implication. The usage of this word was quite prevalent many years ago within the financial services industry and it came to fore again recently with a recent occurrence in the beverages sector.
What really is Demarketing? Interestingly you will discover that the real context of Demarketing is different from the way it has often been related to. According to BusinessDictionary, Demarketing is defined as “Efforts aimed at discouraging (not destroying) the demand for a product which (1) a firm cannot supply in large-enough quantities, or (2) does not want to supply in a certain region where the high costs of distribution or promotion allow only a too little profit margin. Common demarketing strategies include higher prices, scaled-down advertising, and product redesign”.
Aside demand issues, demarketing also applies in situations when a company takes a strategic choice on whom they want to serve and they place barriers for different reasons – in case of social causes (e.g., demarketing drugs, tanning salons) & Protecting their brand and customer mix (Demarketing – Six Reasons For Turning Away Customers by Rags Srinivasan)
Given the definition above, we can confirm that demarketing is not a negative concept but an integral part of marketing management. Marketing efforts mostly focus on creating demand for a product while demarketing focuses on reducing demand when required and it leverages the use of the 4Ps of marketing in as much the same way as marketing. From a marketing concept perspective, demarketing is done by a company regarding its own products, rather than against a competitor.
When is demarketing deployed? Companies use the 4Ps of marketing to execute demarketing strategies.
1. Restricting product availability: When demand outstrips supply and a company realizes they cannot fulfill all the demand for its products, demarketing becomes an option to adopt. This can be due to inadequate production capacity or in a case where there is unexpected rise in product demand. While the company is making efforts to increase their output, they can temporarily halt distribution to some locations or channels. I have experienced this a couple of times in my career; there was a time that a brand I managed had to be restricted to a certain part of the country which contributed the most to the sales due to the inability to fulfill a national product coverage.
2. Increase in Price: Price increase is a path to take in certain cases; this may be when a company/brand decides to be selective in terms of who they make their brands available to, in order to protect their core users. In this case, they discourage other people from patronizing them. They can do this by creating a price barrier, increasing the price automatically shuts some people out and makes the product attractive to those who really want to have it.
3. Reduce promotion on a brand: In a situation when a brand struggles to meet demand, the most logical thing will be to either eliminate any promotion on that brand or reduce it to the barest minimum. Most common form is to stop advertising on the brand until a time when adequate supply is guaranteed.
4. Product/Packaging change: An interesting example of product demarketing is tobacco, due to the inherent risks associated with consumption, government often imposes regulation to reduce demand for health considerations. As such, companies are mandated to communicate on their packaging the dangers of consuming tobacco.
Whatever the motive of demarketing, it is an integral aspect of the marketing mix focused on making a choice and it helps to ensure that only the customers who want a brand gets it.
Bolajoko Bayo-Ajayi