Download This PaperStrategic Demarketing
52 Pages Posted: 18 May 2010 Last revised: 21 Jul 2011
Date Written: June 29, 2011
Abstract
This paper shows that a seller can benefit from strategically “demarketing” its product, meaning visibly suppressing marketing efforts to reduce demand. Demarketing lowers expected sales ex ante but improves product quality image ex post, as the market attributes good sales to superior quality and lackluster sales to insufficient marketing. We derive conditions for demarketing to be a relevant business strategy.
Keywords: demarketing, observational learning, quality inference
JEL Classification: D8, L15, M3
Suggested Citation: Suggested Citation
Miklós-Thal, Jeanine and Zhang, Juanjuan, Strategic Demarketing (June 29, 2011). MIT Sloan Research Paper No. 4814-10, Available at SSRN: https://ssrn.com/abstract=1611368 or http://dx.doi.org/10.2139/ssrn.1611368
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