Selective demarketing: When customers destroy value.

Abstract

Selective demarketing is a strategic option for firms to manage customers who are or are likely to be a poor fit with its offering. Research has investigated related areas such as customer profitability and relationship dissolution but, as yet, studies have not offered a robust conceptualisation of selective demarketing. Based on research into value co-destruction, this study argues that these customers effectively destroy value by misusing or misunderstanding how to integrate their operant resources with those of the firm. As firms exist within a wider service system, this failure to integrate resonates throughout the system. To demarket selectively, firms use higher order operant resources to disengage and discourage these customers. This study offers a novel conceptualisation of selective demarketing and extends research on value destruction through adopting a firm and systems perspective.