The old
adage you've got to spend money to make money is no where more true than with
gift cards. Look around all I've seen advertised on television and in the
newspapers this holiday season has been for the purchase of gift cards. It's as
if Walmart, BestBuy and Target don't have any merchandise to sell.
Advertising
today is very expensive. People in marketing know that to advertise for 1
specific product nationally or locally can cost thousands if not millions of
dollars. Is it worth it to sell 1 product. For those interested in that product
they might venture into the store and while there, they may purchase other
items, but what about those not interested in that product? All that money
spent and no direct result seems like a waste. What the marketing departments
in these companies have decided to do is push gift cards. In today's fast paced
life style, window shopping or browsing is a luxury that most people don't have
or don't want to do, with their limited free time. Gift cards are the
drive-throughs for these retailers. Quickly pick up a card, plunk down some
cash and be on your way. Gift cards have become trendy and very convenient for
the consumers.
This sounds
good for the consumer but why is the retailer pushing the cards. Do they
genuinely want their customers to be happy? Perhaps, but being a synic I can
suggest other reasons. Firstly, gift cards are great for cash flow. The cash
sits in the retailers account and waits for the purchase at a later time.
Secondly some gift cards never get utilised, they might be lost or forgotten.
Thirdly, the average consumer when making a purchase using their gift cards,
spend more than the gift card amount. Fourthly with gift cards you cut down on
returns to the stores. The cashiers spend less time, merchandise isn't
destroyed or abused and inventory amounts reflect real sales which helps in
planning replenishments. Fifthly, these cards can be refilled or exact amounts
can be depleted. With gift certificates any unused portion was generally give
back as cash to the consumer, thus a sale might not really be a full sale.
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