The Impact Of The Gift Cards’ Properties On The Effectiveness Of The Gift Cards Promotion And Operation Performance

A great variety of promotions are employed to expand market share and increase profits for the intense competition in the market. While price discount and other traditional monetary promotions will bring short-term sales growth, but the research shows that in the long run will reduce the products’ brand value and consumers’ willingness to pay. Nonmonetary promotions such as gift cards not only won’t disrupt the price system and reduce brand effect, but will increase the likelihood of consumers to buy again and choose a more expensive brand portfolio. Although there are some research about the gift cards promotion, but not from the perspective of consumer behavior. This paper will study the impact of the gift cards’ properties on the consumers’ perception and purchase intention. And when net utility function is linear, the impact of the gift cards’ properties on the operation performance.Firstly, two experiments were designed to investigate the purchase threshold, gift card face value and time restriction on the consumers’ perception and purchase intention. This part of the study aims to discovery the impact on consumers’ behavior from internal cognitive perspective. The experiment results show that:(1) There is a negative relationship between the purchase amount threshold and the effectiveness of the gift cards promotion.(2) There is a positive relationship between the gift card face value and the effectiveness of the gift cards promotion.(3)Purchase amount threshold and gift card face value not only affect the consumers’ decision-making, but influence each other and jointly determine consumer behavior.(4) The formats of gift card significantly affect consumers’ perception and purchase intension, more clear formats can improve the effect of promotion.Then combined with the consumer behavior, we analysis the impact of the gift cards promotion on the expected revenue of company quantitatively. Firstly, we characterize consumer utility function(nonlinear function of diminishing marginal utility) to measure the effectiveness gained by purchasing and the effectiveness when the purchase amount is greater than the amount plans to buy. Then we constructed objective function of the expected profit maximization. When purchase amount threshold is constant, we get the optimal gift card face value and maximization profit through optimizing solution. When gift card face value is constant, we also get the optimal purchase amount threshold and maximization profit through optimizing solution. Finally, we can find that: when purchase amount threshold is constant, the optimal face value increases with the threshold increasing and the optimal expected profits increase to the maximum, then decreases with the threshold increasing. When gift card face value is constant, the optimal threshold increases with the face value increasing and the optimal expected profits increase to the maximum, then decreases with the face value increasing.