Retailer’s Optimal Strategy Of Gift Card Under Nonlinear Utility Function

Accelerated competition in the commodity market and the development of e-commerce industry makes the marketing concept evolving, the promotional tools is becoming increasingly update and deepened. The gift card becomes the favor of promotion by domestic and foreign businessmen. The gift card has a variety of forms, such as single gift card and two gift cards. But, the theoretical study on the different forms of gift card is less. How to design an effective and optimal gift card strategy has become an urgent problem in the academic research and business areas.This article mainly described two kinds of gift card, that is, the single gift card and two gift cards, respectively. Firstly, we build the consumer net utility function and describe the consumers’ purchasing behavior of two kinds of gift card by the consumer net utility function. Then, we build the retailer’s expected profit functions to deeply study practical application and analyze the gift card polices. Finally, we get the optimal strategy through comparing the strategies of single gift card and two gift cards. We have the following conclusions:First, the commodity average profit margin and unit increasing purchase’s marginal utility are the key factors whether retailer carry out gift card. The higher the commodity average profit, the greater unit increasing purchase’s marginal utility, the gift card promotion is obviously optimal.Then, the two gift cards’ optimal profit is always higher than single gift card, single gift card’s optimal profit is always higher than no gift card promotion. However, only when the commodity average profit margin is higher, two gift cards’ advantage is significantly better than sing gift card. Therefore, the supermarket or the large shopping mall is more suitable to carry out two gift cards.Finally, the different the commodity average profit margin of two gift cards, the different the gift card threshold and gift card value.