Question

Because customers often fail to redeem them, marketers like to use:

a) Coupons
b) Loyalty points
c) Gift cards
d) Cash rebates

Answer 1

Marketers often prefer to use gift cards because many customers fail to redeem them, which can be more financially advantageous for the company compared to coupons, loyalty points, or cash rebates.

Step-by-step explanation:

Marketers often prefer to use gift cards as a promotional tool because customers frequently fail to redeem them. This leads to what is known as 'breakage' in the retail industry, which occurs when a business profits from unredeemed gift cards. Unlike other promotional tools such as coupons, loyalty points, or cash rebates, gift cards often go unused either because the recipient forgets about them, loses them, or doesn't find something they want to purchase. This unredeemed value is essentially free money for the company. In comparison, coupons and cash rebates are more likely to be used since they offer immediate savings, while loyalty points tend to encourage repeated business without the same level of direct financial loss as an unredeemed gift card can provide.