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

Give us this day our daily bread

One afternoon, way back in 1979, I got home to find my neighbour in a dilemma. She had been to the supermarket and bought 6 loaves of bread - the news that day had warned that there was likely to be a strike across the baking industry and like countless others she rushed to the shops to stock up before the shortages happened. Unfortunately, when she got home she found that there was no room in the freezer: it was still chock-a-bloc with bread she had bought before the previous strike a few weeks earlier.

Supermarkets were learning at the time that the threat of a shortage would trigger panic buying (Hassall 1999): this is called psychological reactance, a theory which describes how when consumers are denied something they previously enjoyed, they desire it still more. The wider, more commonly known phenomenon is that of panic buying, and 'ostensible demarketing' in this case at least, describes how retailers restrict supply through rationing in order to boost demand.  

The phenomenon of profiting from an ostensible demarketing campaign is not limited to Britain of course: Gerstner et al (1987) showed how US supermarkets had profited from rationing products and from stock outage. Supermarkets in the UK were later to find that in a similar way, rationing bread during a price war boosted demand to record levels (Jury and Gregoriadis 1999). In just the same way that the threat of fuel shortages in Britain more than a decade later (threatened strikes by tanker drivers in this case) caused demand to rocket and supplies quickly to become exhausted (Milmo 2012).  

The problem with ostensible demarketing is one of motivation. There are many examples of companies benefiting from demarketing, but few where they would admit to deliberately deceiving the public. Coca-Cola, for example, rejected conspiracy theories when it bounced back after withdrawing its core product from the US market: "We are not that smart", they claimed (Clifford 2009). Supermarkets and fuel stations profited from shortages, but they surely didn't cause them.


References

Clifford, Stephanie (2009), “Coca-Cola Deleting ‘Classic’ From Coke Label”, New York Times, 31 January
Gerstner, Eitan, James Hess and Wujin Chu (1993), “Demarketing as a differentiation strategy”, Marketing Letters, 4:1, pp. 49-57
Jury, Louise and Linus Gregoriadis (1999), “7p loaf marks greatest price war since sliced bread”, The Independent, 5 February
Milmo, Dan (2012), “Petrol tanker strike averted as drivers accept deal”, The Guardian, 11 May