Suzy’s Zoo 48514 percent of the market among themselves
(see Exhibit 2).
Ninety percent of all card purchasers are
women. Unit sales growth in greeting cards
has been 1 percent to 3 percent per year.
However, this is a maturing market that
recently has been threatening to stop grow-
ing for the first time since 1945.
The effect of this division is that two lev-
els of competition operate. The two big card
companies are competing against each other
on one level, and all the rest of the card com-
panies are competing with each other on
another level—but the small companies are
not really competing against the big compa-
nies.
The late 1980s saw vicious price wars in
the greeting card industry. Retailers perceived
greeting card companies as all alike; every big
card manufacturer’s profitability suffered in a
discounting frenzy. Greeting card companies,
therefore, had to develop new strategies to
maintain their share, or get a large piece of a
pie that is not growing.
Explosive growth in electronic technology,
and burgeoning consumer use of the Internet
gave birth to the electronic greeting card, or
e-card, in the late 1990s.The development of
this entirely new medium for card sending
served to further expand the industry, pro-
ducing new e-card publishers as well as e-
greeting product offerings by traditional
publishers.
The greeting card market is made evenmore competitive because barriers to entry
are very low. This means that it does not take
too much to get into the greeting card busi-
ness. Anyone with an idea, some talent, and
a little start-up money can give it a try. This
makes for high turnover, as companies enter
the market, fail, exit the market, and are re-
placed by other newcomers. It should be
noted that this information pertains to entry
into that 14 percent share of the market
where the smaller card companies compete;
barriers to entry into the arena where the two
large card companies compete are very high.
In an effort to maintain their market share
or boost sales in this static environment, the
two big competitors have come up with a
variety of strategies. Hallmark is trying to
persuade today’s too-busy-to-write
Americans to let greeting cards express their
sentiments for them. Midway between
Father’s Day (in June) and Halloween
(October 31) is the worst time of year for
American publishers of greeting cards.
Retailers sell fewer cards at this time than at
any other time of the year.
Trying to boost sales during this dry spell
gave birth to the “nonoccasion” card.
Hallmark has produced a series of 500
nonoccasion cards for adults and has a line of
adult-to-child cards, “To Kids with Love,” to
help children ages 7 to 14 and their parents
cope with growing up. Nonoccasion cards
now account for more than 10 percent of the
7 billion greeting cards sold in America each
year.
American Greetings has on staff a psy-
chiatrist and various other experts to help
come up with new products. The psychiatrist
is good at identifying stressful situations in
which people have a “psychological need for
a card.” To further enhance its competitive
position and increase declining earnings,
American Greetings instituted a cost-cutting
program and improved its customer service.
Unprofitable subsidiaries and excess costs
were trimmed. Just-in-time (JIT) processes
in manufacturing and card development al-
lowed American Greetings to reduce inven-
tories and decrease the time it takes to bringAll others 14%Hallmark 50%
American Greetings 36%EXHIBIT 2 Greeting Card Industry: Market
Share Comparison