Merchandise awards offer greater motivational impact for the investment dollar. Cash costs more...it is fully taxable and there is no breakage.
Merchandise is memorable. Cash is easily absorbed into the family budget and forgotten.
It takes 3-5 times the value in cash to equal the motivational value of merchandise.
Merchandise is easily promoted to incentive program participants, cash is not.
Merchandise awards promote individual achievements to reach the desired program goal.
Cash awards promote higher income expectations.
When a non-cash award is something a program participant would not purchase on his or her own, the participant can justify the award, and being able to justify the award means it has greater power to be motivational.
Recipients are free to display and discuss the award in the workplace to fellow employees and others.