Contents
What is demarketing?
Demarketing is a concept of reverse marketing aimed at consciously reducing demand both at the audience level and among its individual segments. This strategy can be applied in various business sectors, including the fitness industry, where clubs may intentionally limit access for certain groups of clients, such as male audiences. This approach allows companies to manage demand and focus their efforts on more profitable segments.
Why is demarketing necessary?
The term "demarketing" was first introduced by Philip Kotler and Sidney Levy in 1971 in their article for the Harvard Business Review. According to the authors, such a marketing strategy helps companies cope with excessive demand, control the consumption of unprofitable products, withdraw goods from the market, or limit interaction with certain groups of clients. There are several situations when demarketing proves particularly useful:
- Unprofitable product: Reducing demand for products that do not generate profit, focusing on more profitable goods.
- Existence of defects: Quickly withdrawing defective products from the market to protect reputation.
- Capacity shortages: Managing demand when the company cannot meet customer needs.
- Poor product reputation: Removing products with negative reputations to reduce risks.
- Change in target audience: Gradually decreasing demand for products aimed at the previous audience.
- Market change: Limiting demand in certain markets in favor of more profitable sales conditions.
Thus, demarketing helps businesses not only to reduce demand but also to increase overall profit, even with fewer sales.
Types of demarketing
Demarketing is divided into several types:
- Absolute demarketing: Complete withdrawal of a product from the market due to serious defects or harm.
- Active demarketing: Reducing demand through changes in advertising and increasing prices.
- Passive demarketing: Using government initiatives and social advertising to reduce consumption.
Types of demarketing strategies
Different demarketing strategies are defined by their approach to reducing demand:
- General demarketing: Artificially lowering demand for the entire audience.
- Selective demarketing: Reducing demand for specific audience segments.
- Show demarketing: Creating artificial scarcity to stimulate demand.
Demarketing tools
The choice of demarketing tools depends on the long-term goals of the business:
- Price increases: Reducing demand through price hikes, which can lead to increased profits.
- Limiting advertising: Reducing advertising campaigns to restore the balance between supply and demand.
- Demand switching: Promoting a new product to divert attention from less profitable ones.
- Termination of promotions: Stopping promotions to filter out non-paying customers.
- Creating elitism: Maintaining the exclusivity of products to enhance their value.
- Narrowing target audience: Focusing on a narrow segment of clients to increase revenues.
Before applying demarketing, it is important to carefully analyze which audience segments are the most profitable and what might be lost as a result of the changes.