Examples of Demarketing and why it contributes towards designing a winning "customer-driven strategy"

In Topic 1, we learnt about the marketing concept called "demarketing" (Reference: Page 33, Principles of Marketing by Philip Kotler, 13th Edition).

Demarketing was briefly mentioned under "Step 2" of the "5 Steps of Marketing".

If you recall, "Step 2" is about marketing management.  What is marketing management?  It is the art and science of choosing target markets and building profitable relationships with them.  Good marketing management leads to the company's success in designing a winning customer-driven marketing strategy.

To design a winning marketing strategy, the marketing manager must answer these two questions:

1. What customers will we serve (what's our target market)
2. How can we serve these customers best (what's our value proposition)

Some people think of marketing management as finding as many customers as possible and increasing demand.  But marketing managers know that they cannot serve all customers in every way. By trying to serve all customers, they may not serve all customers well.  Instead, the companies can decide it only wants to serve the affluent.  E.g. Prada.
 
Some marketers may even seek fewer customers and reduced demand.  In the United States for example, Yosemite National Park is overcrowded in the summer and this will cause inevitably result in the drop in customer satisfaction of visitors to the popular tourist attraction.  Hence, it might be better for the management of Yosemite National Park to find ways to reduce the demand temporarily during this period.  The process of reducing the demand is known as "demarketing".

General demarketing seeks to discourage demand and consists of such steps as raising prices and reducing promotion and service. E.g. Many airlines price their tickets higher during peak periods such as the December holidays which then divert the customers who are more price-conscious to choose their holidays during the off-peak periods.

Selective demarketing consists of trying to reduce the demand coming from those parts of the market that are less profitable or less in need of the service.  E.g.  some insurance companies screen their customers to filter out those who may be more likely to file a claim due to their health conditions or medical history.

Do remember, demarketing does not aim to destroy demand, but only to reduce its level.