Strategic Demarketing

52 Pages Posted: 18 May 2010 Last revised: 8 Jan 2018

See all articles by Jeanine Miklós-Thal

Jeanine Miklós-Thal

University of Rochester - Simon Business School

Juanjuan Zhang

Massachusetts Institute of Technology (MIT) - Sloan School of Management

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

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

Jeanine Miklós-Thal

University of Rochester - Simon Business School ( email )

Rochester, NY 14627
United States

Juanjuan Zhang (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

Cambridge, MA 02142
United States

HOME PAGE: http://jjzhang.scripts.mit.edu

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