Positioning Demarketing Strategy

Abstract

IN contemporary management, growth is implicitly a central element of successful marketing practice. This philosophy has developed in a marketing environment in which it was assumed that there would always be more consumption potential that could be serviced by marketing organizations. However, the continued growth of consumption in the early 1970s, together with more recent inflationary pressures and materials shortages, have tested the marketing system's ability to fully meet its objective of achieving customer satisfaction and long-term profitability. The development of a marketing orientation specific to this new marketing environment is the basis of the concept of demarketing.1 This concept maintains that the marketer's task is to shape demand to conform with long-term objectives rather than blindly engineer increases in sales without regard to such objectives. Interest in demarketing has rapidly increased internationally as companies worldwide have faced the decision problems associated with raw material or product shortages.2 These problems includethe nature and level of advertising that can be justified, the role of the salesman, the clients who are to be dropped, the desire to alter product pricing to equate supplies and demand, the allocation of limited supplies of products to distributors, and bases for product substitution. Business concern with these problems has been accentuated by the speed with which the situation developed and the wide range of company activities affected by these changes.' Decision making in times of severe change presents substantial problems to marketers. Specifically, two questions need to be answered: What is the relevant marketing orientation for developing strategy? What strategy alternatives are available for marketing mix elements? This article attempts to provide answers to these questions and to apply them to help marketing managers position demarketing strategy relative to overall marketing strategy.