Accidentally on purpose: strategic ostensible demarketing

When BMW announced in 1997 that it was having to restrict supply to the UK market, this was an example of strategic ostensible demarketing.  

• It was ostensible because it is clear that no rationing of these luxury cars happened: the company's sales kept rising from 60,000 cars back then to 180,000 in 2012.
• It was strategic because it was a decision made and announced by BMW itself.
• It was demarketing because the threat of restricting supply seems to have been made in order to boost sales.

Graphic from psdpond.com

BMW, like Coca-Cola, Heinz, supermarkets and the music industry were happy to profit from the theory of psychological reactance, which predicts that when you take something away from people they only desire it more. This may be an accidental outcome (we could call this serendipitous marketing, and was what Coca-Cola claimed had happened), or it may be a clear choice (Kotler and Levy defined ostensible demarketing as "giving the appearance of demarketing" 1977).  

It is almost impossible to find examples that conform to Kotler and Levy's definition: to do so the company must have admitted that their intention all along was to deceive the public. Coca-Cola, with sales and market share rising following demarketing, shrugged it off saying "We are not smart enough for that" (Clifford 2009). BMW said nothing but kept importing the cars and counting the money.


References

Clifford, Stephanie (2009), “Coca-Cola Deleting ‘Classic’ From Coke Label”,
Kotler, Philip and Sidney Levy (1971), “Demarketing, yes, demarketing”Harvard Business Review, November-December, pp. 74-80

Sold out: BMW rations cars to protect the brand

In 1997, BMW in the UK was having a mixed year. Although its sales were up 20% on the previous year, the company was worried, and announced to the press that demand was outstripping supply (Smith and Nuki 1997).   Moreover, it was concerned about the effect its success was having on BMW, telling the Sunday Times “Exclusivity is an extremely important feature of the BMW brand," and warning that "If we sold 100,000 cars next year... we would do it at the expense of some of the values which make BMW what it is" (Nuki and Hamzic 1997).

These claims were backed up by the Sunday Times's own motoring correspondent, a certain Jeremy Clarkson, and interviews with prospective BMW owners - all of whom confirmed that the brand was losing its exclusive cachet.

As a result BMW announced that it would henceforth be restricting sales to 60,000 a year.  The rationale was sound enough: if you have an exclusive product, you need to restrict supply to keep it that way. At this point, though, psychological reactance kicked in: this theory predicts that when consumers learn that their ability to enjoy something is under threat they react by discovering just how much they value it.  

BMW was duly rewarded by an increase in sales of over 12% in the following year (Burt 1999), achieved in a shrinking market and with the added bonus of a strong pound significantly increasing the profit per vehicle sold (Duckers 1999).  Fast forward to 2012:  BMW sold nearly 180,000 cars in Britain (Russell 2013). This figure, though, includes 51,000 BMW Minis, a category which didn't exist in 1999. 

References

• Burt, Tim (1999), “Britain: BMW 's Rover offshoot suffers near-20% decline”, Financial Times 8 July
• Duckers, John (1999), “The Birmingham Post: Call For Car Firms To Drive Down Prices As Sales Fall”, The Birmingham Post, 7 December 7
• Nuki, Paul and Edin Hamzic (1997), “BMW rations cars to keep its cachet”, The Sunday Times, 9 November
• Russell, Jonathan (2013), Britain in the driving seat as car sales leap to four–year record, The Daily Telegraph, 8 JanuarySmith, David and Paul Nuki (1997), “Boom is official as the Porsche yuppie rides again”, The Sunday Times, 17 August