Savvy consumers attribute a product's market performance to its intrinsic quality as well as the seller's marketing push. This paper studies how sellers should optimize their marketing decisions in response. We find that a seller can benefit from strategically "de-marketing" its product, meaning visibly toning down its marketing efforts. Demarketing lowers expected sales ex ante but improves product quality image ex post, as consumers attribute good sales to superior quality and lackluster sales to insufficient marketing. We derive predictions of when demarketing can be a recommendable business strategy. A series of experiments confirm these predictions.
- demarketing; new product adoption; quality inferences; observational
Available at: http://works.bepress.com/jmiklosthal/10/