Research On Enterprises' Gift-card Promotion Strategy Of Two Products With Vertical Differences

In order to cope with increasingly fierce competition and diverse demands,price promotion has become the most significant tool in enterprise's sale improvement.Among various forms of promotion,gift-card is a hot topic in both industry and academia due to its unique characteristic of intertemporal consumption.Current studies about gift-card promotion are mainly qualitative analyses,and there is still lack of quantitative analysis to explore enterprse's promotion strategy.The subject of this research is retailer's optimal gift-card promotion strategy,which focuses on the situation with vertical products' differences and breaks the assumption of ‘pakage products' in existing studies.Retailer's promotion strategy is analyzed under the condition of both constant and variable consumer preference.Firstly,this research elaborates consumers' purchase decisions under the assumption of products' vertical differences.On this basis,demand and profit functions are constructed,and retailer's optimal promotion strategy is obtained by maximizing profit function.Finally,key factors that affect retailer's decision are summarized,along with management suggestions.The major conclusions of this research are as following.Under the assumption of constant consumer preference,it is always benefitial for retailer to carry out gift-card promotion.Two major factors that affect retailer's profit are products' average profit margin during redemption period and the distribution of consumers' preferences.Under the assumption of variable consumer preference,gift-card promotion is beneficial when the threshold equals the lower product's price.In this study's condition,retailer's profit is the highest when the threshold equals the higher product's price.However,there are some factors might reduce its superiority,including products' quality gaps,consumer preference coefficient,and upper limit of consumers' budgets.This research supports the benefit of retailer carrying out gift-card promotion,and indicates that a deep understanding of products,target consumers and competitive market are essencial for retailers to draw up an optimal strategy.