Factors or Reasons for demarketing can be one or more of the following:
1. There are not enough resources, especially in case of natural resources, and hence must be preserved
2. The company cannot supply large quantities to match the demand
3. The cost of selling in a particular region is unusually high
4. Poor distribution channel/ no distribution channel available
5. The cost of promotion is unusually high
The last three can lead to reduced profit margin for the company; hence it would be in the company’s interest to avoid selling in such scenarios.
Some of the common demarketing strategies are
1. Increased prices
Increase in price can lead to reduction in demand.
2. Decreased advertising/ promotional spend
Reduced promotion can lower the demand for product offering
3. Product redesigning
Redesigning and changing the value proposition of the product can lead to demand reduction
4. Providing lesser margins (to retailers etc.)
A product goes through the supply chain where different stakeholders are involved. If the margin and value for some of the stakeholders is controlled then the demand can reduce.
IPCL-Indian Petrochemicals Corporation Limited uses the demarketing strategy to encourage people to use oil judiciously by the tagline “Save Oil, Save India”.
Hence, this concludes the definition of Demarketing along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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