Citation
(2014), "Executive summary of “Functional vs relational benefits: what matters most in affinity marketing?”", Journal of Services Marketing, Vol. 28 No. 4. https://doi.org/10.1108/JSM-06-2014-0196
Publisher
:Emerald Group Publishing Limited
Executive summary of “Functional vs relational benefits: what matters most in affinity marketing?”
Article Type: Executive summary and implications for managers and executives From: Journal of Services Marketing, Volume 28, Issue 4
This summary has been provided to allow managers and executives a rapid appreciation of the content of the article. Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benefit of the material present.
By choosing to use the University of Liverpool credit card for your everyday shopping, the card issuer, will make contributions to the Benefactors’ Fund. This distinctive credit card features the artwork of alumni Michael Pace-Sigge and immediately announces your connection with the university.
So says the advertising to promote a particular credit card–so-called “affinity marketing” of a product which people (in this case Liverpool University students) are happy to use because of the emotional link they have with an organization or institution. Many other educational, sporting and professional organizations have cards which demonstrate their “affinity” with their particular group. The benefit for the bank is that their co-branding results in the transference of trust from the organization to the bank.
Affinity marketing is a long-standing successful strategy for building and maintaining customer relationships. But what matters most to the people using or choosing affinity credit cards? Do they attach greater importance to financial benefits they might get to the kudos of having a card with a design or logo they relate to emotionally? In other words, why do consumers respond to programs such as affinity credit cards?
Affinity credit card benefits are primarily functional in nature. However, consumers seek and assess products based on both their functional and relational benefits. An organization’s relational approach seeks to understand customers’ motivations for engaging in and maintaining a long-term relationship with the service provider, i.e. benefits customers might receive from the long-term relationship beyond the core service performance.
In “Functional vs relational benefits: what matters most in affinity marketing?”, Dr Christos Koritos et al. classify and compare the importance of the benefits consumers derive from affinity credit card programs and find that, overall, the relational benefits outperform the functional ones. However, this finding depends on the number of additional credit cards held by affinity credit card holders. Banks were the first to recognize the business opportunity in partnering with an organization that customers admire. They realized that affinity marketing is one of the few – and perhaps most successful – strategies that can increase and retain their customer base.
Affinity credit cards represent a typical relationship marketing context in which customers seek both relational and functional benefits. For example, supporters of a major athletic club (AC) may become subscribers of an affinity credit card because, in addition to the core service benefits such as a lower APR and higher credit limit, they perceive at least two types of relational benefits: social (e.g. identification with their favorite AC through the AC’s logo on the credit card) and special treatment (e.g. priority when reserving tickets for the guest games).
According to the study’s findings, satisfaction with the affinity credit card plays a prominent role in relationship building between the card holder and the affinity credit card issuer (the bank). Although relationship marketing clearly places satisfaction at the center of relationship development, the study examines whether this holds true within the affinity marketing context, in which consumers see their relationship with the bank and its products as a means for bolstering their relationship with their favorite affinity organization, rather than as a standalone bank/card-holder relationship.
Prior research suggests that customers primarily seek functional benefits and, to a lesser degree, relational benefits from service exchanges. However, this study suggests that, within an affinity marketing context, the role of functional benefits is not significant for the majority of affinity card holders. Instead, social benefits have the strongest influence on customer satisfaction. In all likelihood, this is because social benefits are the means through which affinity credit card holders strengthen their relationship with their favorite affinity organization.
The study results point to several straightforward implications. First, unless customers use affinity products as their primary source for fulfilling their extrinsic/functional motivations, efforts should concentrate on fulfilling the customers’ need to identify with their affinity organization. Thus, communication should emphasize that high consumption levels of the affinity product directly contribute to the welfare of their affinity organization.
Given the importance of the functional benefits that the affinity-related product or service provides to those seeking to satisfy both extrinsic and intrinsic motivations, the development of additional functional benefits targeted toward these customers (e.g. longer capital repayment periods, discount coupons) would, in all likelihood, lead to increases in the use of the affinity-related product or service (e.g. a credit card).
Customers who use products or services in addition to the affinity-related product or service seem to use the affinity-related product or service primarily for the social benefits it affords. As such, offering this group a mix of incentives obtained through the use of the affinity-related product or service (e.g. creating opportunities to bring customers closer to the affinity organization, developing exchange opportunities with other affinity organizations supporters) and using communications that echo their social motivations could lead to increases in the use of the affinity-related product or service.
To read the full article enter 10.1108/JSM-10-2012-0213 into your search engine.
(A précis of the article “Functional vs relational benefits: what matters most in affinity marketing?”. Supplied by Marketing Consultants for Emerald.)