I’ve taken my idea of Demarketing from my eBook “So What’s wrong with Marketing” and turned it into a case study for Business Students. Even if people reject the premise that we need Demarketing I think the exercise of thinking it through will enrich one’s view of marketing in a sustainable world. Anyone interested in using it let me know.
The Demarketing Challenge
Background
In my eBook “So what’s wrong with Marketing” I put forward the idea of ‘Demarketing’, the re-purposing of marketing to reduce consumption.
“Marketing was developed for a world of economic growth. Its purpose, however you dress it up, was (still is) to make people ‘consume’ more. That’s why marketers refer to people as ‘consumers’. The problem, it would appear, is that we can’t just keep on consuming, wasting and depleting resources at the expense of our planet. There is no ‘Planet B’. So that presents something of a difficulty for marketing in the future – can it, should it, survive in a world where we need to persuade people not to buy what they don’t need or can’t recycle? Instead of marketing, should we not think about ‘demarketing’?”
Summarised like this demarketing makes absolute sense. We cannot just continue to invest $ trillions to persuade people to buy more stuff than they need and more than we can cost-effectively recycle or, in whatever way, re-engineer to be sustainable. And yet governments around the world (of varying political persuasion) for what they would say are sound economic models continue to strive for GDP growth to lift people out of poverty and improve the quality of life. Can the idea of buying less co-exist with the imperative to increase economic output? At a micro level can a company’s board of directors persuade their shareholders to support them if they wish to invest in suppressing demand? Investors move their money to wherever gives them the highest returns. Perhaps it might work if all companies faced legislation that required them to fully cost their products to take account of all their environmental and societal impact (no business currently directly bears the cost of the full life-cycle and total impact of their products or services on e.g. waste disposal, health, infrastructure, they just pay tax in a largely one-size-fits-all fiscal system and many avoid even doing that if they can). But it would be hard for a government to be re-elected on a manifesto that includes proposed legislation limiting what people can buy and raising prices. Demarketing might sound like the right thing to do, but how to do it is the challenge.
Nonetheless there are signs of positive movement albeit more in the name of CSR and sustainability rather than specifically this idea of actively demarketing. Blackrock, the behemoth of private equity, now insist all its investment portfolio have coherent CSR and sustainability programmes. There are a growing number of ethical funds like FirstPlanet, dedicated to investing in businesses that can deliver financial returns and build a better world. More and more big businesses like Ikea, Unilever, even Amazon have moved CSR and sustainability from something they should do ‘as well’ to being central to their core purpose. All for the good, but there aren’t many like Patagonia who spend money on ads asking people not buy their products unless they really need them and who offer free repairs to make previous purchases last longer (they will even repair competitive brands if you ask nicely).
Demarketing is a tough idea to get your mind around and some would argue is not needed. Oxford were early champions of the Circular Economy and this has now taken root in many top academic institutions. The industrial revolution (and the later technology revolutions) were based on a linear economic model – find/process materials, turn them into products or services, get people to buy them, use them and then throw them away to buy something new using the money you earn to help find/process materials, turn them into products or services, get people to buy them, use them and then throw them away to buy something new. While it was mostly Europe and America doing this we could cope with the energy demands and the waste. But with America and Europe, bar the odd recession, relentlessly consuming more and China, India, the rest of Asia catching up and set to overtake them, plus South America (maybe even Africa one day) following suit this linear economic model has become unsustainable, an existential threat. It’s obvious, we need to make a linear model circular through recycling and repurposing. If we focus on this perhaps we can go on just consuming more and more and more. On the other hand, maybe events will overtake us……..
There’s a linearity to the environmental debate too – more people, more consumption, more carbon, more climate change. A great deal of the spotlight is focused on climate change and greenhouse gases. Let’s not argue the science, let’s just go with the consensus, the wisdom of a wise crowd, and accept that we need to limit global warming to no more than 1.5 c-degrees in the next two decades and thereafter reverse it. There are 3 ways to do that – reduce, replace and remove CO2. In this linearity there is no argument against reducing the consumption of carbon fuels, many argue it is the priority. Renewable energy sources may not come on stream (cost-effectively) fast enough, electric cars just push the issue further up the supply chain. There is investment into technology to remove CO2 but nowhere near as much as has gone into alternative energy perhaps because it’s hard to design anything better at removing C02 than trees. But no-one seems to be confident that we can plant enough trees fast enough to compensate for the rise in CO2 emissions, or indeed enough to replace the ones we are cutting down in places like the Amazon. A lot of businesses like Ikea have tree planting initiatives to offset their environmental impact but in the wider context it’s really just a sticking plaster. No, we have to reduce consumption, no argument. Well there is an alternative to this, or at least a different point of attack. We could reduce population growth, like China tried to do (for different reasons), but outside a totalitarian state that would be hard. Or we could reduce consumption of things we don’t need to consume and/or replace consumption with better alternatives, like reducing meat and dairy for plant based foods. Or we could try a combination of all of this?
My argument is – and I hope I’m wrong – reducing wasteful, unnecessary consumption of everything, not just carbon fuels, needs to be in the mix because the alternatives won’t kick in fast enough. There needs to be more Patagonia thinking, we need to stop spending money making the environmental challenge worse, and embrace the challenging idea of demarketing, perhaps not everywhere and not to the same degree for every category, but we need to think about using some new form of marketing to do the opposite of what we have been trained to do, to make people buy less not more.
To take just one example, and apologies to Gillette for singling them out, they forced people to throw away a razor they were perfectly happy with to buy a new razor with more blades (and some little ‘easy-glide’ strip). There are many other things people have been persuaded to throw away in order to buy things they did not really need but that is a choice people can make. Gillette gave us no choice, they took the replacement blades for our razor off the market and their marketing team invested millions of dollars to force us to buy a new razor needing a new type of blade not all of us wanted or needed. Surely that kind of marketing is just plain irresponsible? We are being told to avoid travel where we can for the sake of the environment. With just a little demarketing to reduce unnecessary consumption and wastage we could happily enjoy more guilt-free travel.
Can it be done? Can we square the circle between demarketing and government-led economic growth, between responsible consumption and shareholder returns? Honestly, no-one knows but it might be possible, if only to an extent sufficient to make an impact. It deserves the effort to try, if only as an insurance policy in the event of the other planet-saving initiatives failing to deliver in time. And it can be as creatively and intellectually satisfying as conventional marketing, perhaps more so. Selling more Gillette razors, or beer, or cosmetics, or fashion clothing or washing powder or burgers or biscuits or electronics etc etc is not actually that hard once you know the rules and tactics. Demarketing will be very hard and demanding of the best ‘marketing’ minds.
Exercise
Select a B2C company you are familiar with, preferably one with a reputation for high marketing investment.
You are to prepare a presentation for the board to persuade them to embrace and commit resources to a demarketing strategy. You don’t have to develop the strategy, you just have to persuade them of 3 things:-
- There is a case for demarketing (building on the macro rationale make it specific to this business and category)
- It can enhance enterprise value and shareholder returns in the long term
- You have some feasible ideas for options to explore
Success would mean they would agree to set up a task force to explore your ideas.
Some starter thoughts
- There is evidence that businesses that have really committed to sustainability have out-performed their peer group. Demarketing takes sustainability to the next level.
- Enterprise value and shareholder returns are derived from a sustainable profit stream. The same or lower sales does not have to mean lower profits – you can grow share, or raise margins
- Strong brands can have a much higher valuation even if they have lower sales cf Tesla versus Ford
- Demarketing could result in far more efficient marketing spend “Advertising is the tax you pay for having an unremarkable product”
- “What gets measured gets done” – a business committed to demarketing would choose to create better KPI’s that show the link to future returns. Engagement, loyalty, affinity are all believed to correlate to brand strength and from that to enterprise value and shareholder returns
- Case studies can help your case – Patagonia is the one everyone cites, is this relevant to your business, what others can you find?
- It is hard to imagine what demarketing looks like, some examples of what it could be in terms of customer communications, engagement, events, service etc might help. In what way does ‘good demarketing’ differ from “good marketing” in terms of skills, people, partners, spend?
- It would also help to show how this links to, and builds on, other sustainability/CSR initiatives
- Are there business model changes that could help make demarketing attractive e.g. direct to customer?
- Break the challenge down ito market segmentation. Who/when/where is the opportunity? Reducing consumption can relate to purchase frequency, penetration, usage.
Mark Sherrington
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