Demarketing is a type of marketing aimed at reducing demand among the entire target audience or certain of its groups. Wait a minute, but why reduce demand - you need to rejoice that things are going uphill! However, not all so simple. In some cases, do not do without demarketing, read our article.
- Why demand exceeds supply?
- How does this threaten the entrepreneur?
- Types of demarketing
- Demarketing strategies
- 1. General demarketing
- 2. Selective demarketing
- 3. Seeming demarketing
- How to reduce demand using demarketing?
- 1. Increase product price
- 2. Collapse advertising campaign
- 3. Positioning the company as an elitist, not for everyone
- 4. Refusal from unprofitable customers who do not make much profit, and the brain eats regularly
- 5. Straight-line refusal to service a part of Central Asia
- 6. Creating an alternative direction to which the attention of customers will switch.
- 7. Formation of a negative opinion about the product, which is too high demand
- Demarketing and countermarketing: what is the difference?
- How to protect yourself from damages
Demarketing, ashes and hopelessness
The word "demarketing" is a bit scary. Declining demand, falling profits, ruin, and poverty — I had some of these associations until I started working on this article. It turns out that not everything is so bad: the task of de-marketing is to really reduce demand, but for the good of the entrepreneur himself.
Imagine a young businessman who made and began to sell a new product - for example, unusual souvenirs. Launched advertising on all fronts and suddenly encountered unprecedented demand. He thought that they would buy the first batch - and it’s good, he will make more products for the rescue and will be gradually unwound. But suddenly demand exceeded supply, and the businessman realized that he simply could not cope with such turnovers. There is no possibility to expand production, and he is not morally ready for this. So, it is necessary to slow down - even if artificially. Demarketing in this case acts as a reason in the hand of the driver, with whom he restrains an over-agile horse.
Another example. Here is an elite bar with craft beer, where its target audience gathers: bohemians, hipsters, highly spiritual virgins who lead intellectual conversations under a glass of dark hop. Suddenly, drunk personalities burst in from the cold and tear this warm lamp atmosphere to shreds.
Good work? Not. If you let the bar in a row, you can lose regular visitors and do not get anything in return. So, it is necessary to exclude similar elements from your target audience.
The article will be useful to you if:
- demand for your products exceeded supply;
- you can not cope with the speed and want to hold the horses a little;
- spend too much on advertising;
- want to adjust the target.
Why demand exceeds supply?
Most often this arises from inexperience: young entrepreneurs incorrectly predict demand, turnover and profits and suggest lower sales than it actually turns out. However, an experienced businessman may also fall into this trap: for example, when launching a new line or product position.
Also, a sharp jump in demand is possible with active advertising on all fronts. Context, targeting, offline advertising - the entrepreneur wanted to do better, but received unprecedented buying activity. Not everyone can cope with the increased demand, and the best way out of the situation may be demarketing. This measure can be temporary - until the situation stabilizes and you find a way out.
How does this threaten the entrepreneur?
Nothing good Rumors spread quickly, and competitors will not miss the opportunity to take advantage of your miscalculation:
- You can lose customers: many simply will not get the goods, it will be bought up. Disappointed customers will go to competitors.
- You can lose your reputation and secure the title of the one who did not cope with the business.
- You can lose the business itself: rashly increase the speed, increase production capacity, get into loans and ... do not pull.
Types of demarketing
Share three types of demarketing. In business, most often used activeaimed at reducing demand. The one about which this article is written. Passive demarketing is mainly used by the state to talk about the dangers of the product to consumers. Most often in a bad light are tobacco and alcohol, harmful products - palm oil, monosodium glutamate, etc. There are still absolute demarketing - complete withdrawal of goods from the sale, if it is outdated, not in demand, or turned out to be of poor quality.
1. General demarketing
When demand is artificially reduced for all customers, but not for selective Central Asia.
Example: the company raises prices on absolutely everything, and customers have no choice: if you want to buy, and if you want, look for where it is cheaper.
The bottom line: take not quantity, but quality.
Methods: increase the value of the goods, the rejection of advertising.
Total: reducing the number of customers, reducing turnover.
2. Selective demarketing
Demand is reduced only for a specific target audience. This may be an insolvent audience or unwanted customers.
Example: the same bar that wants to keep the warm lamp atmosphere and get rid of the Gopnik from the area.
The bottom line: we eliminate unnecessary, leave profitable.
Methods: price increase, brand positioning is purely for a particular target audience.
Total: there are only desired clients who bring real profit without special expenses.
3. Seeming demarketing
Used mainly in the sales of expensive goods and services: jewelry, premium cars, expensive trips. Even if demand does not exceed supply, the price of the goods is greatly overestimated, it is being revalued.
Example: Travel agency Hurlingham offers the most expensive ticket in the world - it costs $ 1.5 million for two. The tour lasts two years, travelers visit the world's most famous sights, living in luxury hotels and moving around the world in luxury liners and airplanes. For every product there is a merchant: there are people who are ready to pay a tidy sum for it
The bottom line: we have only for VIP.
Methods: increase the price, creating the image of the goods for the elite.
Total: market-unfavorable market segments are eliminated.
How to reduce demand using demarketing?
Here we come to the specifics. Separate several methods of demarketing.
1. Increase product price
In a normal situation, this is guaranteed to lead to the loss of a part of Central Asia and a decrease in profits. In the conditions of high demand, supply and demand will be balanced.
Example: Dmitry Shaposhnikov told the magazine "KhiterBober.ru" about the example of demarketing, which he witnessed while working in the company of the operator, North-Caucasian GSM. The growth in the number of subscribers was too rapid and exceeded the supply. To preserve the quality of communication and the loyalty of existing customers, the company was forced to increase the price of new SIM-cards exactly five times. The number of new subscribers has decreased, and after a few months, when the equipment has been improved, prices have returned to their previous level.
An increase in price can also lead to the elimination of a part of Central Asia, which is not ready to pay so much for the goods. So you will have the most loyal and faithful, who will not give up the product, even if its value increases.
By the way, sometimes the price increase becomes an advertising campaign. It’s not a fact that prices will go up, and if they go up, not by much. The task of the company in this case is to stimulate the client to buy goods as soon as possible, to be in time for improvement.
2. Collapse advertising campaign
Sometimes it’s enough to leave one advertising channel - depending on where the traffic comes from and what kind of target number is your priority. For example, if a beauty salon has so many customers who come on word of mouth or have found out about the salon from an advertisement on TV, there is no point in actively advertising on the Internet. You can keep a page on Instagram, but no more: with contextual and targeted advertising, it's better to wait.
3. Positioning the company as an elitist, not for everyone
The purpose of this behavior is to gently exclude part of Central Asia, which is not so important to you or interferes with the established image. We recall the example of the bar and see how it works in practice:
4. Refusal from unprofitable customers who do not make much profit, and the brain eats regularly
For example, subscribers of cellular operators who connect a cheap tariff and call technical support for any reason. One American company operating in the field of telecommunications, conducted an analysis of customer support calls and found that many customers are constantly seeking help. It means that they do not like our services, the company decided and refused these clients.
But there are still freeloaders - a separate breed of people. Many companies conduct free tastings, test visits to attract potential customers and make them permanent. However, not everyone wants to spend money: they enjoy using paid services, but do not really want to buy goods.
You can fight this: it is enough to reduce the number of free shares and stop feeling like a good fairy. Abandon those who interfere with the work of the company, even if you have to lose part of the profits.
5. Straight-line refusal to service a part of Central Asia
Hard but effective reception. So come to the cinema, putting an age limit on some films.
A milder option - fashionable barbershop, who cultivate the culture of men's clubs and are not designed for visiting girls. No, they, of course, are not expelled - advertising and positioning as a whole are built in such a way that the girls themselves will not go there.
6. Creating an alternative direction to which the attention of customers will switch.
For example, instead of unusual souvenirs for which demand already exceeds supply, advance non-hand-painted painted nesting dolls. The scheme is the same: advertising, stock discounts, word of mouth and other marketing tools.
This is also the case when increased demand arises for a product with low yield. For example, children's toys, household goods - you can buy them everywhere, you cannot make a high mark-up on these goods. Since buyers have paid attention to your brand and want to buy from you, offer them more marginal products: seasonal, gadgets and smartphones, fashionable goods like spinners, which sold well last year. Yes, the demand will still be great, but at least you will get more revenue.
Another option: you opened a repair point for iPhones in a small town, whose residents have little idea what it is and why they need it. You have few customers - it means it makes sense to switch to services that are more useful for residents: repair of inexpensive phones, laptops, other equipment.
7. Formation of a negative opinion about the product, which is too high demand
Another way, but it is a stretch to marketing. Most often, the state does this: do you remember how frightening photos appeared on cigarette packs, and last year tobacco prices rose significantly? The result - many quit smoking, as it became too expensive. However, for business it is a very risky step: you can ruin your reputation forever. But this method can use competitors - this is called countermarketing.
Demarketing and countermarketing: what is the difference?
Many people confuse these concepts. Demarketing, as already mentioned, is a decrease in demand by the entrepreneur himself for his own good. This may be a decrease in turnover, a refusal of advertising, the loss of a part of Central Asia - the main thing is to preserve business, reputation and good name.
Counter-marketing is the deliberate discredit of competitors' goods, which leads to a decrease in demand. The ultimate goal of countermarketing is clear: if you do not drown, then at least harm the competitor and lure some of his clients to him.
We see examples of brand wars at every turn. Fast food restaurants, mobile phone companies, car concerns try to dampen each other's reputation and do not hide it.
How to protect yourself from damages
Demarketing - a risky thing, with the wrong approach there is a chance to lose existing customers. To avoid losses, calculate all items of income and expenses: advertising budget, customer service costs, the ratio of free and paid services, the costs of organizing events, the delivery of goods, sales in each segment of Central Asia and the profit that this Central Asia brings . Ask yourself questions:
- Does demand really exceed supply?
- Which segment of Central Asia is the most profitable, and which is the ballast?
- What will you lose by reducing the target amount?
- What will you get in return?
- What do you lose by removing free services?
- What will you get in return?
- What will you lose by raising the price of the product?
- What benefits will you get from this?
Honest answers and competent detailed business plan will let you know whether you need to pursue a policy of demarketing and what it will lead to. In any case, good luck!