Marketing is a luxury tool. However, it often works to the detriment of the business, when the requests exceed the expected volumes, and their offer does not satisfy. In this case, demarketing can be an excellent solution. And I will talk about him in this article.
Demarketing is a strategy aimed at reducing demand among buyers. Moreover, it is used not to the detriment, but to the benefit of business. This approach is justified when the number of goods or services offered does not satisfy the volume of customer requests.
That is, the main essence of demarketing is a decrease in demand.
What tasks does it solve?
Demarketing is mainly used to solve the following tasks:
- Decrease in sales volumes. That is, in situations where the demand is so great that it exceeds the supply. If this is not corrected, then the customers who did not receive the goods will leave dissatisfied with the competitors. In addition, it is possible to spoil the company’s image, sometimes this even threatens with the loss of business.
- Adjusting the target audience. For example, if at the start of your activity or as a result of a successful advertising campaign you hit the wrong audience, you can adjust it with the help of demarketing.
- Reverse effect. There are also cases when companies, announcing high demand, increase sales in this way. For example, when the website says “limited offer”, “N units left” or simply indicates that the product is popular.
- State regulation. The state can also use demarketing to inform citizens and reduce demand for a certain group of goods. And that is why bans, reduction of the number of products on the market, sometimes even propaganda can be applied. A prime example is the use of creepy photos on cigarette packs that you’ve probably seen.
Smoking harms your health. Source: Gazeta.ru
At the same time, demarketing should still be used carefully. It often happens that instead of a decrease in sales volumes, the opposite effect can occur. The bottom line is that it will cause many times more damage to the business. Therefore, before using demarketing in practice, it is necessary to carefully weigh all the pros and cons.
The community is now in Telegram
Subscribe and stay up to date with the latest IT news
The main types
There are three types of demarketing in total, depending on the approach and the desired result:
- Active – This means a decrease in the demand for goods. Used in commerce, the main tool is a change in pricing policy or positioning.
- Passive – Decrease in the rate of consumption of a category or a specific product. It is used by government entities, and for this they can launch various campaigns and promotions, introduce restrictions, etc.
- Absolute – Complete removal of the product from the market. It is relevant when the enterprise discovers a marriage or the product causes certain harm to consumers and the environment.
By the way, this does not include those companies that create artificial demand for their products with the help of demarketing.
Differences from countermarketing
Demarketing, as we remember, implies a decrease in demand for our own products. At the same time, countermarketing is a strategy to reduce demand for COMPETITORS’ products. That is, in the first case, we ensure the outflow of customers, and in the second – we lure them to competing companies by discrediting or anti-advertising.
An example of countermarketing is how Burger King placed banners with discrediting ads next to competitors’ outlets. I recommend not to repeat such techniques, because according to the federal law “On advertising” such actions are punishable by large fines. And Burger King (like other large companies fighting for a “place under the sun”) includes an item in the budget for the payment of such fines.
Image source: vc.ru
Depending on what kind of result you want to achieve, you can resort to several demarketing strategies:
- General – This is an artificial decrease in demand for the entire target audience, without any exceptions. It is used to reduce sales turnover and reduce the number of customers.
- Selective – this is targeting a specific target audience that does not bring a significant part of the income. Let’s say that a new establishment, which was too advertised in social networks, was rushed into indiscriminately. And at first it was clearly calculated for a certain niche. That is, with the help of demarketing tools, an unnecessary part of visitors is weeded out.
- It seems – In a similar situation, demarketing acts more like a tool for creating hyped demand. As a result, the brand is positioned as premium, elitist, expensive, that is, it is not intended for everyone and sells products at inflated prices.
Depending on the chosen strategy, you can use different tools for churning or attracting customers. We will consider them in more detail below.
Different tools can be used to make demarketing work. Here we will talk about what is needed in commercial activities.
- An increase in the price of goods or services. Such an action can lead to the outflow of a large part of the audience, while it will leave more paying and located to your brand.
- Change in product or brand positioning. In this way, you will raise the elitism and positioning of the brand to a higher level. The result – the company will focus on the audience that brings more profit, and the costs will be more efficiently paid off. The level of demand, of course, will decrease, but the profit will probably remain at the same level.
- Stopping the advertising campaign and reducing advertising costs. If new promotions are broadcast through popular or large-scale communication channels, this can lead to the influx of a large audience whose requests are difficult to satisfy. The only way to stop this is to stop the ad campaign.
- Switching to communication channels in which the desired target audience is concentrated. Sometimes it is possible without such drastic actions as stopping the advertising campaign. You can simply abandon the selected communication channels and switch to narrower ones, in which, however, your target audience definitely lives. For example, if you used regional channels, switch to the corresponding local, city channels.
- Rejection of promotions, special offers or free services. All these tools can be used at the start of the company’s activity or when demand drops, to attract attention. But at its peak, it does more damage.
- Narrowing the target audience. It’s like in those institutions where they are allowed only after strict face control. That is, you directly refuse to serve people, to provide them with certain goods or services, if they do not meet your specified requirements. Act delicately, and those you are waiting for will be drawn to you.
- Rectilinear failure. Sometimes it is easier to tell everyone that the chosen product or service cannot be provided due to excessive demand. If you’re afraid of losing people, offer them something else.
- Developing an alternative product or direction to switch attention. Most often, according to the law of meanness, high demand is formed for products and services that bring the least profit. If this is indeed the case, try to switch the attention of the audience to another option from an alternative line or direction. This tool works perfectly in combination with the previous one – when you directly say that you cannot provide a specific product, but it is the same from another line.
- Forming a negative opinion on the product. This is a good tool used by government agencies or in the same countermarketing by competitors. In commerce, its effectiveness is somewhat doubtful – the demand for products will fall, and then it will be necessary to increase it again. Then the created negativity will not work for good.
Demarketing is a serious step that leads to ambiguous long-term consequences. For example, you narrow down the target audience, but what will happen after the same six months? After all, the market changes sometimes too sharply. Carefully analyze what you will not only gain, but also lose after using these tools. Only in this way will you understand whether this approach will suit you or if it is better to find a softer solution.