CardSwap: Converting Unwanted Gift Cards into Cash
(8 pages of text)
CardSwap was an online service that provided consumers with the opportunity to convert unwanted gift cards into hard cash. The co-founder felt convinced that his small Canadian company created great value for its customers. After all, there were around a billion dollars of unwanted gift cards entering circulation every year. People who owned these unwanted gift cards would surely want to use the CardSwap service. CardSwap could offer a strong value proposition to consumers while ensuring a healthy return through commissions on every transaction. Problems remained, however, as CardSwap was a relatively small company and had no access to the multi-million-dollar advertising budgets that might be needed to get a message out to consumers through an extensive multi-media strategy. How much should the company be willing to spend to acquire a customer? How best could this new company use its limited resources to communicate to customers the benefits of CardSwap?
This case is aimed at students new to marketing who are being introduced to the concept of value. It illustrates that value comes from what customers are willing to pay for and that value to customers cannot be judged independently of the psychological and social pressures that customers face. Because customers don’t feel comfortable giving cash they value the opportunity to give a gift card — something that a traditional economic perspective suggests is less useful than cash. The fact that gift cards are constrained in how they can be used leads to some gift cards being not highly valued by the recipients and allows value to be created in swapping — trading cards in for a percentage of their face value. This case also looks at an entrepreneurial venture with the aim of understanding where the value of a venture comes from. The perspective used is a key marketing concept — that the value of a firm comes from the value it creates for its customers. The teaching note is written with the intention of the case being used in an introductory marketing class. Suggested courses include introduction to marketing, entrepreneurial marketing, retailing, and marketing communications.The aims are to investigate:
What is value, i.e. why do consumers happily pay cash and receive a gift card that is less flexible in return?
How can a new venture create value for its customers, i.e. where does the value of a firm come from?
If the venture represents value for customers, how do you communicate that value to the customer given tight constraints on marketing budgets?
Canada, Small, 2011
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