Demarcating

 

                       Demarcating

                    MBA / BBA MARKETING MANAGEMENT 

                          QUESTION PAPER OCTOBER 2019  

                                        PUNE UNIVERSITY

Definiftion

o   Demarketing can be explained as the efforts made by a company to reduce consumption of a product.

o   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.

o   The use of advertising to decrease demand for a product that is in short supply.

o   Advertising that urges the public to limit the consumption of a product, as at a time of shortage. Companies can lessen input cost to the product so that the consumer may not buy from them and choose other alternative product since the quality is lessen. Companies can then allot the saved money to other products they offer to gain more sales

o   Marketers attempt to reduce the demand for a product when the demand for the product is greater than the manufacturer's ability to produce it

o   Demarketing may be considered “unselling” or “marketing in reverse”, which includes general and selective demarcating

o   Although the concept of demarketing lacks a precise theoretical definition, it refers to an attempt by the firm to "DISCORAGE /STOP" all or some of its customers from making purchases either temporarily or permanently. 

 

Steps needed to craft a winning demarketing strategy

a.       Understanding the marketing objectives of the firm by setting clear goals

b.      Understanding consumer behavior in detail

c.       Combining the marketing objectives and insights on customer behavior, a demarketing strategy is then crafted and implemented

d.      Unlike marketing strategies, demarketing strategies are challenging and need to be crafted with precision- so that they do not backfire. However, their complex nature does not deter marketers from implementing them and be successful in turning away the wrong consumer while attracting the target consumer simultaneously.

 

There are some firms which opt for Demarketing too. It might sound strange, but the fact is that demarketing too has increasingly been adopted to decrease demand for a particular product.

 Examples Demarcating

 1.      five-star hotels that aspire to maintain exclusivity. Right from having two wheeler parking lots at a distance to having impeccably dressed guest associates to the high priced menu; maximum efforts are made to discourage the common man from using their services and thus maintain their exclusivity.

2.    2,   efforts made by the TATA group to discourage consumers from buying Tata Nano. Since the demand for Tata Nano far outweighed the supply, Tata Group completely stopped the promotion of Tata Nano and rather started promoting other products by the Tata group.

3.      3.customers were discouraged by Maruti from buying the Maruti Xtillo and rather opt for Maruti A-Star – which was recently launched. 

Types of demarketing 

1. General demarketing

General demarketing is done when a company wants to demarket its product for   all. It is always done when a firm wants to reduce the entire demand for consumption for the product.

Alcohol and cigarette for the entire population.

2. Selective demarketing

 Examples of selective marketing can be an elite real estate builder demarketing its project to maintain exclusivity and the snob value associated with its project.

3. Ostensible demarketing

Creating the artificial shortage to stimulate the appetite of consumers. 

A limited supply of goods is created so that consumers start stocking these 

“hard to get” products.

A very good example of ostensible demarketing occurred with BMW in 1997 when it restricted its supply in the entire UK market.

Kinds of demarketing strategies

1. Bait and switch marketing

This kind of marketing strategy is when firms market one product in such a way that consumers end up buying another more profitable product by the same firm.  

2. Price discriminating demarketing

When firms implement price discriminating strategy, they deliberately create transaction cost that aims to discourage consumers to seek the lowest price. 

3. Stock outage demarketing

In this kind of demarketing strategy, firms create an artificial shortage of their product. 

4. Differentiation marketing

This kind of demarketing addresses the 4 Ps of marketing. The 4 P’s of marketing are Product, Price, Place and Promotion  

Some businesses increase the price of their product and thus start discouraging cost-conscious consumers from purchasing the product

Product -remove any warranty or accessories they were earlier providing with their product. 

To address Place, firms sometimes limit the availability of their products at certain places 

The last P, promotion, is addressed by cutting down on promotions of the product.

5. Crowding cost demarketing

This kind of strategy is used when a large crowd is expected on a particular day. 

On discount days, like Black Friday, a huge crowd of consumers descends on stores and this crowd acts as a deterrent for some consumers who prefer paying a higher price to stay away from the crowd.