cha-ching

Not fully satisfied with my conjectures based upon the second test, I decided to conduct a third test. I based this test on the first phase of testing, but this time, the price point was lower. The scenario was identical, but customer was purchasing a $200 12MB Canon digital camera instead of a $1,000 television. The three purchasing options were essentially the same: a 15% discount ($30 savings), a $40 gift card, or a free gift valued at $40. The point of this third test was to determine if the anchor effect translated to a similar scenario that involved a lower price point. The results of this third test did not produce striking results, but it can be inferred that the anchoring effect is not as strong when the money involved in the transaction is lower. In this test, 66% chose the discount, 22% chose the gift card, and only 12% chose the free gift. There was not an overwhelmingly high percentage that chose the discount as was true without option three, but there definitely is a wider gap between the number of people who chose option 1 versus option 2 compared to the first test that I conducted.

From a marketing point of view, the best promotion for a company would be to implement a gift card as a marketing technique as opposed to a percentage discount. The gift card presents the highest likelihood of future sales from a customer and, even though not chosen as frequently as the discount option in my study, the gift card was very appealing to the test subjects.

Upon searching, electronics sites I did not find the “gift card” option as a sales promotion (maybe they should hire me), but I did find package deals. Of the respondents in the first test who chose to accept the free gift, the vast majority chose the Blue-ray player because it “went well with the television.” In fact, many sites offered special discounts when blue-ray players were purchased in conjunction with the television, which basically equates to the “free gift” option without the choice.

The main problem with gift cards is also the best aspect of gift cards by a store’s standpoint. What should you do with a gift card that you do not want, especially when there is not enough money on the card to buy things that you want? The answer came to me when searching for statistics on unused gift cards – trust me they are astronomical and a great money-maker for stores (so try to limit gift cards to stores where you know for certain that the recipient often shops at) and I stumbled across a blog called http://frugaldad.com/ -- you can sell them online. Of course, eBay has always been a platform for a plethora of unwanted items, but there is a website that allows people to list their gift cards at a reduced price. Honestly, it’s a win-win situation for everyone. The website does not charge fees, but makes money through traffic, the seller gets money for a gift card that they would otherwise never use, and the buyer gets, in essence, a coupon.

As excited as I was to find this website, the podcast that I stumbled upon via the same original website was even better and quite amusing I might add. The report began by discussing the traditional wedding gift giving practice in Israel. Only 5% of presents are wrapped gifts and the rest are cash, checks, and gift cards, but recently a new trend has entered into the bridal gift-giving scene – the ATM. For a mere $150, a couple can rent an ATM machine and wedding gifts can transfer monetary gifts directly from their bank account to the bride and groom’s (which makes writing thank you notes a bit easier – no more note taking needed). By having an ATM, there is no hassle of finding that perfectly minted $100 bill to give, and the newlyweds are saved from the onus of cashing checks and making deposits. Everything is digital and they can simply take out any cash needed from their honeymoon destination. Right now the ATM rental phenomenon is only happening in Israel, but I suspect that the bridezillas here in the U.S. will be clamoring for their ATMs before we know it.