Cause Marketing

When you buy a Target gift card worth $20 or more through December 4, the stylish discount retailer will donate $1 to St Jude Children’s Research Hospital up to $750,000. Since gift cards are basically stored-value cards and discount retailing has pretty thin margins, how could Target possibly afford to shed $1 out of every $20, even if it’s promotionally-appropriate given Target’s pledge to give 5% of income to charity? There are a couple of answers. First of all, this is a limited time offer, valid only November 28, 2010 through December 4, 2010, which is fitting since fully 35 percent of all gift cards are sold in November and December. But all that means is that Target is limiting its exposure, not that it’s necessarily making a sound business decision. The true answer has to do with the psychology of gift cards, which most of us treat like found money. If you go to Target and the Garmin Nuvi GPS you've had your eye is $99 and you’ve got $80 in Target gift cards, the extra $19...

Soldiering Through the First Quarter Blues It’s the day after Christmas in the States and the malls and stores are full again, this time with people returning gifts, but also people spending the gift cards they got yesterday. Gift cards, or stored value cards, are a growing Christmas gift trend in North America. Before the holiday, the National Retail Foundation projected gift card sales would balloon to $24.81 billion in 2006, a $6 billion increase over 2005’s $18.48 billion. Consumers like gift cards because they maximize their choices. Retailers love them because “ Unused Gift Cards Give Retailers $8 Billion Boon ,” to quote a recent headline from the E-Commerce Times. That is, one-third of the value on those gift cards is never redeemed and falls to the retailers' bottom line. Nice, eh? So it’s something of a curiosity that Home Depot ran this cause-related marketing ad in a flyer that came with the local newspaper on Saturday, December 24. Here’s the offer. Use a Home Depot gi...