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Difference between Demarketing and Remarketing
What is Demarketing?
Demarketing is a process in which a company develops strategies to reduce the consumption of a product. While traditional marketing often encourages customers to purchase more products, demarketing aims to limit a product's reach.
Companies can use it in a variety of situations to control product use, price, or demand. They may use these strategies for many reasons, including to conserve resources or increase demand.
Some of the different types of demarketing strategies are as follows −
General Demarketing
A company may adopt a general demarketing strategy when they want to reduce the consumption of a product for all users. This can help them conserve resources during shortages. It can also limit the reach of an old or less effective product.
For example, a mobile phone maker may apply demarketing principles to limit the purchase of an older model, encouraging customers to purchase a new model.
Selective Demarketing
Selective demarketing happens when a company uses demarketing strategies to limit consumption by a specific set of customers. They may do this to increase access for other groups of customers, including loyal customers or those who meet their ideal customer profile.
Ostensible Demarketing
Ostensible demarketing happens when a company creates a shortage to increase the demand for a product. Restricting the supply of certain products can create a demand for customers to find or collect hard-to-find items. This can allow companies to hike prices for products that are in demand.
Examples of Demarketing
Example 1 − Healthcare
To limit patient participation, health care administrators can make it mandatory that patients have a referral before seeing a specialist.
Example 2 − Paper products
Promoting the use of paperless products is an example of general demarketing.
Example 3 − Subscription packages
To encourage customers to purchase long-term subscriptions, companies can demarket individual purchases.
Example 4 − Luxury vehicles
To create the impression of exclusivity and increase demand, car companies may only manufacture a limited amount of certain high-cost vehicles.
Example 5 − High-cost real estate
Real estate professionals may develop high-cost, luxury real estate options to appeal to wealthy renters or homeowners.
Benefits of Demarketing
Some potential benefits of a demarketing strategy that a company may choose for are as follows −
Reduced costs and increased profit
If a company is no longer profiting from a particular product, demarketing can allow them to reduce costs by limiting production. By demarketing certain products, companies can focus on the production of more profitable products.
Conserved resources
If a company is unable procure sufficient materials to manufacture a product, demarketing can help reduce the demand till supply of materials replenishes. Limiting the demand for certain products can allow a company to focus on products that are easier to manufacture as material sources rebound.
Appealing to the target customer base
Demarketing can allow companies to conserve resources by only selling products to their ideal customer base. This can also allow them to protect their brand identity.
For example, Rolls Royce sells its cars to only HNI customer base.
Control of market location
Demarketing can also allow a company to limit the demand for a product in certain locations. Some reasons they may do this include high costs of marketing to that area or challenging distribution channels. Similar to how demarketing can allow companies to sell products to their ideal customers, it can also allow them to sell to the locations that can make the most profit.
Exclusivity
A company may use demarketing principles to limit access to a product, making the product appear to be exclusive. By creating an artificial shortage, a company can motivate customers to pay more for products or purchase more to avoid running out. They can also make their products seem highly desirable.
For example, a perfume brand does this by launching special edition perfumes that are priced more than their standard perfume prices. Then they create a shortage so that customers stock up the perfume.
What is Remarketing?
Remarketing, also known as retargeting, is a very common and popular form of digital marketing in which marketers serve ads to users who have visited their website, or a specific web page, and who have or have not taken a specific action. It is an effective way to target people who have already shown some interest in your business or brand.
Because you are targeting past visitors or existing customers, it is called “re”-marketing. Think of it as a second chance to convert, up-sell, or retain customers with online ads or campaigns. You can do remarketing in different ways and with different ad platforms, like Outbrain, Google ads, or Facebook ads.
Whichever way you use it, remarketing is an absolute MUST in every marketer’s playbook.
Example of Remarketing
A person visits a website that sells shirts. He adds a pair of shirts to his cart but doesn’t purchase them. Later, he visits another website, which perhaps is a news site. He sees an ad by the previous website, featuring similar products that he browsed through. This is remarketing campaign via an ad network that works with this news site.
The aim of the retargeting ad is to remind the buyer that those were the items s/he was interested in, and maybe by seeing the ad, s/he will be convinced to click and make the purchase that she didn’t make previously.
How Remarketing Works?
When a business creates a campaign with a particular ad network, the network provides the business with a small piece of code, called a pixel tag, to add to their website. Every time a new user visits the site, the code will drop an anonymous browser cookie and the user will be added to the company’s retargeting list. When the same user visits another site that hosts display or native ads from the ad network provider, the system serves the previous company’s ad to this particular user. This will occur as long as there is an active campaign running.
Google’s move to shut down the use of third-party cookies will impact the ability of marketers to remarket. That’s why it is important to advertise on platforms based on the use of first-party data that allows tracking. Although the move to a cookie less world has been somewhat delayed, it is still important to start planning now for tools and tactics that will allow you to remarket in the future.
Benefits of Remarketing
Following are some of the benefits of Remarketing −
Capitalizes on lost website traffic.
Targets people who have already visited your site and shown interest in your offering.
Targets audiences who are more likely to convert.
Keeps your brand at top of mind by strategically showing ads to interested audiences.
Affordable marketing tactics available on a range of platforms and channels.
Remarketing is suitable for every industry and vertical.
Comes in many ad formats, including display ad, search RLSA, dynamic carousel and more
For e-commerce - dynamic retargeting enables marketers to serve personalized ads for different users based on products or services they viewed on a particular website.
Conclusion
Remarketing is an effective and cost-efficient way to attract customers. This is mainly because companies are targeting people who have already shown interest in what it has to offer. With the right targeting and budgeting, companies can achieve good results with KPIs.
Remarketing typically works on a cost-per-click (CPC) model, as well as CPM (cost per impression) and CPA (cost per acquisition). This gives a company the control to manage its spend and adjust its bids according to the specific remarketing list or campaign.
To conclude, demarketing can simply be defined as dropping customers who are unprofitable and are expected to remain that way, whereas remarketing is repositioning unprofitable accounts so that they become profitable.
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