DeMarketing: What It Is, Types, Strategies, and Real-World Examples

Marketing is usually about increasing demand, right? More customers, more sales, more revenue. But what if a company deliberately tried to reduce demand for its own product?

That is exactly what demarketing is.

DeMarketing is a strategy designed to intentionally reduce or redirect demand for a product or service, either temporarily or permanently. The concept was first introduced by Philip Kotler and Sidney Levy in their 1971 Harvard Business Review article.

It sounds counterintuitive, but there are many valid reasons why a company might want fewer customers or less demand. Sometimes demand exceeds supply. Sometimes a product is harmful to society. And sometimes, reducing demand for one product helps a company focus on more profitable offerings.

As Kotler defined it: "DeMarketing is the process of reducing the demand for a product or service."

DeMarketing is not a one-size-fits-all strategy. There are three distinct types, each serving a different purpose:

1. General DeMarketing

General demarketing aims to reduce overall demand across the entire market. This is typically used when demand significantly exceeds supply and the company cannot (or does not want to) increase production.

For example, during water shortages, governments run campaigns encouraging people to conserve water. The goal is to reduce consumption across the board, not just among specific groups.

2. Selective DeMarketing

Selective demarketing targets specific customer segments rather than the entire market. A company might discourage certain types of customers while maintaining or increasing demand among preferred segments.

For example, a luxury brand might deliberately price its products high to discourage price-sensitive customers while attracting wealthy consumers who associate high prices with exclusivity.

3. Ostensible DeMarketing

Ostensible demarketing is perhaps the most clever type. It involves appearing to discourage demand while actually increasing it. By creating an impression of scarcity or exclusivity, the product becomes more desirable.

Think of limited-edition product releases or "members only" clubs. The message is "this is not for everyone," which ironically makes everyone want it more.

There are several legitimate reasons why businesses and organizations engage in demarketing:

• Supply shortages: When demand exceeds production capacity, demarketing helps manage customer expectations
• Resource conservation: Governments use demarketing to encourage conservation of water, electricity, and other resources
• Public health: Anti-smoking and anti-alcohol campaigns are classic examples of demarketing for societal benefit
• Brand positioning: Luxury brands use demarketing to maintain exclusivity and premium pricing
• Profitability: Companies may discourage low-margin customers to focus on high-value segments
• Environmental concerns: Reducing demand for environmentally harmful products or practices
• Overcrowding: Tourist destinations may discourage visitors during peak seasons to preserve the experience

DeMarketing is more common than you might think. Here are some well-known examples:

Anti-Smoking Campaigns: Governments worldwide spend billions on campaigns discouraging tobacco use. Warning labels, graphic images on packaging, and advertising bans are all forms of demarketing.

Water Conservation: During droughts, governments and water utilities run campaigns urging consumers to reduce water usage, including restrictions on lawn watering and car washing.

Disney Theme Parks: Disney has raised ticket prices multiple times to manage overcrowding at its parks. Higher prices reduce demand during peak seasons while increasing revenue per visitor.

Luxury Brands: Companies like Rolex, Hermes, and Ferrari deliberately limit production to maintain exclusivity. Hermes' Birkin bag has a waiting list that can stretch for years, creating intense desirability through artificial scarcity.

Energy Conservation: Utility companies encourage customers to use less electricity during peak hours through higher pricing tiers and public awareness campaigns.

Reduces Costs and Increases Profits

By reducing demand to manageable levels, companies can lower production costs, reduce customer service burden, and focus resources on their most profitable segments. Sometimes serving fewer customers more effectively is more profitable than trying to serve everyone.

For example, when a company raises prices as a demarketing tactic, it loses some price-sensitive customers but earns more revenue per remaining customer. If the math works out, overall profitability increases.

Controls Market Position

DeMarketing helps companies maintain their desired market position. Luxury brands, in particular, use demarketing to prevent their products from becoming too accessible, which would dilute their brand value.

As Coco Chanel once said: "Luxury is not the opposite of poverty. Luxury is the opposite of vulgarity." DeMarketing helps luxury brands maintain this distinction.

1. Price Increases

Raising prices is the most straightforward demarketing tactic. Higher prices naturally reduce demand by making the product less accessible. This is commonly used by luxury brands and during supply shortages.

2. Reducing Advertising

Cutting back on advertising or promotional activities reduces awareness and interest in the product. Some companies stop advertising altogether for certain product lines they want to phase out.

3. Redirecting Attention to Other Products

Instead of discouraging consumption entirely, companies can redirect customers toward alternative products. This is useful when one product is in short supply but the company has other offerings available.

For example, during a supply chain disruption affecting a popular product, a company might promote substitute products that are readily available.

• Clearly define your objective: Are you trying to reduce overall demand, target specific segments, or create exclusivity?
• Communicate transparently: If demand exceeds supply, be honest with customers about the situation
• Monitor the impact: Track sales, customer satisfaction, and brand perception to ensure your demarketing efforts are achieving the desired results
• Balance carefully: Too much demarketing can damage your brand. Too little will not solve the problem
• Consider long-term effects: Demarketing should be a strategic tool, not a permanent solution (unless serving a public health purpose)

DeMarketing challenges the conventional wisdom that more demand is always better. Sometimes, strategically reducing demand is the smartest business move a company can make.

Whether it is a government discouraging tobacco use, a luxury brand maintaining exclusivity, or a utility company managing energy consumption, demarketing is a powerful and often underappreciated tool in the marketing toolkit. The key is knowing when and how to use it wisely.