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Chapter 4: Q22PA (page 159)

A recent study by Web Mystery Shoppers International indicates that holiday gift cards are becoming increasingly popular at online retailers. Two years ago, online shoppers had to really hunt at most e-retailer’s sites to purchase a gift certificate, but today it is easier to purchase gift cards online than at traditional retail outlets. Do you think online gift cards are merely a fad? Explain carefully.

Short Answer

Expert verified

Online gift cards cannot be observed as merely to be a fad.

Step by step solution

01

Describing holiday gift cards, and online marketing 

Electronic retailing symbolizes the sale of goods and services via the Internet. In these circumstances, online retailers do interact with holiday gift cards at a specific time of the year. That is serialized market need for products, here it is, gift cards.

The gift card industry had a huge impact on the global market as it is a multi-billion dollar industry and is assumed to grow bigger. One significant characteristic of the enterprise and the market represents holiday gift cards which are a kind of one-stop-shop online. Especially, when people are not in the position to go live shopping and visit shopping malls, the gift card market, in general, has a lot more potential to spread and make more competitive.

The gift certificates for specific products were excessively practical in the past. Today it is not even acknowledged as an indication of quality because it can be purchased for a specified amount of money. Online certificates are found across the board and cherished on the online market.

02

Determining if online gift cards are merely a fad

When examining an online gift cards market and approximating findings, we must determine the definition of a fad in a demanding business operated by online retailers of holiday gift cards. When talking about a product as merely a fad, we can say that it is a kind of style or activity that suddenly becomes popular for something. It is believed that a product doesn't stay popular for a very long time, hence a lot of people don't consider its quality and don't understand the complex market.

Gift certificates act as a natural excitement therapy for consumers. It motivates to purchase specific goods. Hence, gift certificates will lead a consumer to purchase a greater quantity of an inferior good than the normal cash gift of the same value. These days, many online retailers can provide full legal and legit proof or certificate for their products. Because of that, it is very difficult for the consumers to differentiate between various qualities and legit or bad and false certificates.

Hence, we can say Online gift cards cannot be observed as merely to be a fad.

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Most popular questions from this chapter

Consider an employee who does not receive employer-based health insurance and must divide her \(1,000per week in after-tax income between health insurance and “other goods.” Draw this worker’s opportunity set if the price of health insurance is\)200per week and the price of “other goods” is\(100per week. On the same graph, illustrate how the opportunity set would change if the employer agreed to give this employee\)200worth of health insurance per week (under current tax laws, this form of compensation is non taxable). Would this employee be better or worse off if, instead of the health insurance, the employer gave her a$200per week raise that was taxable at a rate of25percent? Explain.

Apply the income–leisure choice framework to illustrate the opportunities, incentives, and choices of workers and managers.

Question: The Einstein Bagel Corp. offers a frequent buyer program whereby a consumer receives a stamp each time she purchases one dozen bagels for \(6. After a consumer accrues 10 stamps, she receives one dozen bagels free. This offer is an unlimited offer, valid throughout the year. The manager knows her products are normal goods. Given this information, construct the budget set for a consumer who has \)200 to spend on bagels and other goods throughout the year. Does Einstein’s frequent buyer program have the same effect on the consumption of its bagels that would occur if it simply lowered the price of one dozen bagels by 3 percent? Explain.

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