Affinity Marketing is a targeted way of marketing

Marketing

Marketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...

 products and services. By linking complementary brands, it can develop them into lasting partnerships and strategic alliance

Strategic alliance

A Strategic Alliance is a relationship between two or more parties to pursue a set of agreed upon goals or to meet a critical business need while remaining independent organizations...

s.

Development of Affinity Marketing

Modern affinity marketing traces its roots to the late 1970s when credit card interest

Credit card interest

Credit card interest is the principal way in which credit card issuers generate revenue. A card issuer is a bank or credit union that gives a consumer a card or account number that can be used with various payees to make payments and borrow money from the bank simultaneously...

 rates were skyrocketing. America's largest consumer association at the time, the not-for-profit American Automobile Association (AAA), partnered with MasterCard to offer AAA members a branded credit card with lower rates and special privileges. AAA boosted its members' loyalty (affinity) and received revenue shares from MasterCard. The AAA program expanded to include other card issuers and remains one of the associations membership offerings today.

The concept boomed in the 1990s when credit card

Credit card

A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services...

 companies partnered with charities and sports teams to provide consumers

Consumer

Consumer is a broad label for any individuals or households that use goods generated within the economy. The concept of a consumer occurs in different contexts, so that the usage and significance of the term may vary.-Economics and marketing:...

 with a branded credit cards. The organizations benefit from increased brand loyalty

Brand loyalty

The American Marketing Association defines brand loyalty as:# The situation in which a consumer generally buys the same manufacturer-originated product or service repeatedly over time rather than buying from multiple suppliers within the category .# The degree to which a consumer consistently...

 and brand awareness

Brand awareness

Brand awareness is a marketing concept that enables marketers to quantify levels and trends in consumer knowledge and awareness of a brand's existence...

 and a boost to revenues; typically through a combination of fixed commission

Commission (remuneration)

The payment of commission as remuneration for services rendered or products sold is a common way to reward sales people. Payments often will be calculated on the basis of a percentage of the goods sold...

 for each new card and a share of transaction volume on the cards. The credit card company meanwhile benefits from increased revenue, generated by more customer accounts and card usage.

Affinity marketing has since been evolving far beyond its original remit; most commonly in direct marketing

Direct marketing

Direct marketing is a channel-agnostic form of advertising that allows businesses and nonprofits to communicate straight to the customer, with advertising techniques such as mobile messaging, email, interactive consumer websites, online display ads, fliers, catalog distribution, promotional...

, in what is termed as a second affinity boom through the use of data and customer contact lists. Within this context for example, a famous car repair chain recently partnered with a well-known insurance company and was able to mail the insurance company’s database

Database

A database is an organized collection of data for one or more purposes, usually in digital form. The data are typically organized to model relevant aspects of reality , in a way that supports processes requiring this information...

 to offer a unique benefit, in this instance 25% off a car service. This gave the insurance company’s customers access to a competitive deal unavailable to the mass market

Mass market

The mass market is a general business term describing the largest group of consumers for a specified industry product. It is the opposite extreme of the term niche market.-General:...

, whilst the car repair chain benefited from access to hundreds of thousands of car owners they would otherwise not have been able to mail.

Parties within an Affinity Partnership

Affinity Partnerships consist of two parties. The first party known as the ‘affinity group’; seeks to add value to its existing customers, members or donors by promoting products and services they don’t currently sell, for example financial services

Financial services

Financial services refer to services provided by the finance industry. The finance industry encompasses a broad range of organizations that deal with the management of money. Among these organizations are credit unions, banks, credit card companies, insurance companies, consumer finance companies,...

. The second party known as the ‘product supplier’; seeks to acquire new customers by using the strength of another organization’s relationship with its customers, through which to distribute its product or service.

The aim of a brand wishing to add value is to generate new income and build upon existing customer relationships.

Meanwhile, the aim of the product or service supplier is to build and develop new customer relationships through the existing distribution channels of a third party affinity partner.

Example of a typical Affinity Partnership

The supermarket

Supermarket

A supermarket, a form of grocery store, is a self-service store offering a wide variety of food and household merchandise, organized into departments...

 adds value to its existing customers by offering bank accounts or insurance policies bearing the supermarket brand; this is also known as ‘white labelling’. For the supermarket, this would build on existing relationships between the customer and supermarket while developing a sustainable income stream. For the organisation(s) providing bank accounts and insurance policies, this would develop new relationships and income streams with previously unknown customers.