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

New Coke: now you see it, now you don't

Image from Time Magazine

A good example of ostensible demarketing was the decision by Coca-Cola in 1985 to replace their staple product line with something called New Coke: the mistake, according to Ringold (1988) and others was not the launching of New Coke (the company spent $4 million on market research), but the decision to take the long-established original product off the market.

As numerous other studies have reported (see for example Oliver 1986), Coca Cola's decision to withdraw Classic Coke, produced a very different outcome to the public relations disaster described in many entry-level marketing textbooks.  Prior to the “debacle” (Clifford 2009), when the company was forced to reintroduce Classic Coke in the US, Coca Cola had lost its market leadership and continued to suffer declining market share.  Within 6 months of the attempted demarketing these trends had reversed, Coca Cola regaining the lead from Pepsi and continuing to show growth in sales and market share into the late 1980s (Ringold 1988).   

Whether intended or not, the company's removal of a long-established brand appeared to trigger a collective bout of national grief at the passing of a loved-one, followed by a Proustian remembrance of its core qualities on the re-introduction.  The extent to which an initial demarketing decision led to a reversal of a long-standing decline led to speculation that the whole exercise was indeed (in Kotler and Levy's terms) creating the appearance of a strategic marketing withdrawal with the express intention of boosting a declining brand (Haig 2011:13).  This charge was disingenuously rejected by the company, which shrugged off a threatened consumer boycott as “a humbling experiment” (Clifford 2009).  It was an example, as Ringold (1988) observed,  demonstrating the classic features of psychological reactance.

There are many examples where demarketing a product, or having an advertisement banned, has benefited the brand, but hardly any where the marketing people have publicly admitted that this was their intention all along.  This is unsurprising, as owning up to any kind of manipulation of public and media alike could easily rebound.  More common is the reaction of Coca Cola to accusations that they had deceived the public in 1985: their claim “We are not smart enough for that” (Clifford 2009) neatly dodged the ethical questions and positioned the company as being the consumer's friend.  

References

Clifford, Stephanie (2009), “Coca-Cola Deleting ‘Classic’ From Coke Label”,

Haig, Matt (2011), Brand failures: the truth about the 100 biggest branding mistakes of all time, London: Kogan Page Publishers

Kotler, Philip and Sidney Levy (1971), “Demarketing, yes, demarketing”, Harvard Business Review, November-December, pp. 74-80

Oliver, Thomas (1986), The Real Coke, the Real Story, New York: Random House

Ringold, Debra Jones (1988), “Consumer response to product withdrawal: the reformulation of Coca-Cola”, Psychology and Marketing, 5(3), pp. 189-210

Psychological reactance

Ostensible demarketing happens when professionals attempt to restrict or prevent the way a product, service or brand is offered: whether by accident or design, the threat of withdrawal paradoxically increases its desirability.  

This phenomenon was identified by nearly 50 years ago by Jack Brehm who called it “psychological reactance”.  Brehm (1966) argued that when the freedom to act in a particular way was taken away, or when it was suggested that this freedom was about to be withdrawn, consumers would invariably persuade themselves that the item in question was better than they had previously thought.

Since  Brehm's classic study was published the theory has been tested on a range of products (for example Mazis et al 1973), and has provided plausible explanations for numerous marketing phenomena where consumers appear not to have acted in the manner predicted by economists.

The claim about theatre owners is often attributed to
Samuel Johnson, but I haven't been able to find the  reference.
Picture from Wikimedia

The terms ostensible demarketing and psychological reactance both sound like grandiose theories of consumer behaviour, but in fact state something which is well known to ordinary people.  We often call it reverse psychology, and parents will tell you how they persuade their children to do things by arguing the exact opposite.  You will also find that a good strategy for selling something is to let it be known that it isn't for sale.  And, as theatre owners discovered in 17th century Britain, a powerful way of selling tickets was to get the word out that the show was sold out.

Ostensible demarketing seems to have been coined by Kotler and Levy in a Harvard Business Review article from 1971.  Their definition talks of creating the appearance of demarketing as a way of boosting demand.  This definition is problematic: although there are lots of examples of marketing people running successful campaigns where products have been withdrawn or advertising banned, it is hard to find marketers owning up to this sort of deception.  Hardly surprising, really: who is honest enough to admit to dishonesty?




References

• Brehm, J.W. (1966), A theory of psychological reactance, New York: Academic Press
• Kotler, Philip and Sidney Levy (1971), “Demarketing, yes, demarketing”, Harvard Business Review, November-December, pp. 74-80
• Mazis, Michael B., Robert B. Settle and Dennis C. Leslie (1973), “Elimination of phosphate detergents and psychological reactance”, Journal of Marketing Research, 10, pp.390-395