Table of Contents
Introduction and Abbreviations
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- Aims of the report
- Abbreviations
Executive Summary
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- Affinity marketing aims to build mutually beneficial relationships
- Credit cards provide the main focal point for affinity schemes
- The number of affinity cards in issue has been in decline
- Charitable groups are major players in the affinity market
- Almost three quarters of adults belong to an affinity group
- Around one in ten consumers own an affinity product
- There is strong support for the concept of affinity marketing
- Supporting a good cause is the most common purchase prompt…
- …but price is also a key factor in the purchase decision
- Multiple credit card holders tend to use the one with the lowest rate
- The 25-34s and C1s represent the key affinity target audience
Background
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- Affinity marketing aims to build mutually beneficial relationships
- It allows organisations to leverage equity from their brand
- Charitable groups have become major players in the affinity market…
- …but other types of organisation are also heavily involved
- Effective affinity marketing schemes benefit all three stakeholders
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- Figure 1: Affinity marketing relationships
- Affinity schemes offer financial providers a range of benefits
- Partner organisations also stand to gain from affinity relationships…
- …while affinity group supporters enjoy a variety of benefits as well
Market Factors
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- Affinity marketing is most common for low-value commodity products
- Fierce competition is likely to limit growth in the affinity card market
- Changes in marketing techniques have created opportunities
- Distribution trends have provided a boost to affinity schemes
- Further growth in Internet sales could create a significant boost
- The quest to increase cross-sales will help affinity schemes
- The need to build trust could provide a boost to affinity schemes
- A rise in social responsibility could also boost the affinity market
- The number of charities has risen during the last few years
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- Figure 2: Registered charities in England and Wales, number and income, 1998-2004
- The income generated by charities has also grown strongly…
- …but there is a limit to the number of suitable affinity partners
- Affinity credit card sales have been hit by cashback schemes
- Bad publicity could hit demand for affinity credit cards
Market Issues and Strategy
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- The choice of affinity partner is clearly a crucial decision
- A range of criteria should be used to select an appropriate partner
- The relationship needs to represent mutual enhancement
- A strong commitment from both parties is particularly crucial
- Joint team working is also an essential requirement
- Ownership of the customer can be a cause for concern
- Organisations need to be careful not to damage their own brand
Retail Banking and Affinity Marketing
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- Credit cards provide the main focal point for affinity schemes
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- Figure 3: Affinity product penetration levels, retail banking products, September 2004
- 35-44-year-olds and ABs are more likely to own an affinity card
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- Figure 4: Credit card penetration, by gender, age and socio-economic group, September 2004
- The number of affinity cards in issue has fallen in the last six years
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- Figure 5: Number of credit cards in issue in the UK, 1995-2003
- Affinity card transaction levels have also been in decline
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- Figure 6: Volume and value of affinity card transactions, 1995-2003
- Affinity cards do still represent an important niche market
- A wide variety of organisations have launched affinity cards
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- Figure 7: Examples of affinity cards, October 2004
- MBNA and HBOS are the leading providers of affinity cards…
- …but other players are also active in the affinity card market
- Product features can differ considerably from scheme to scheme
- Price differentials have narrowed significantly in the last few years
- Some schemes are trying to engender a greater degree of loyalty
- Savings accounts are also a common affinity product offering
- Sporting clubs have been particularly keen to set up savings accounts
- Rates on affinity savings products vary from account to account
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- Figure 8: Examples of affinity savings accounts, October 2004
- Personal loans are another popular affinity product offering
- A number of financial providers offer loans via affinity schemes
- Affinity schemes have enjoyed more limited success with mortgages…
- …but a number of providers do offer affinity mortgages
- The Lambeth has had mixed experiences with affinity mortgages
General Insurance and Affinity Marketing
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- Affinity marketing has had some success with general insurance
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- Figure 9: Affinity product penetration levels, general insurance, September 2004
- Distribution trends have been positive for affinity marketing
- Further development of the online market offers great potential
- A wide range of organisations now promote insurance products
- Motor insurers have long-standing relationships with motoring groups
- Pet insurers have established strong links with many groups
- Travel insurance also offers opportunities for affinity schemes
Life, Pensions and Investments and Affinity Marketing
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- Affinity schemes have had less success with these products
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- Figure 10: Affinity product penetration levels, life, pensions and investments, September 2004
- Product complexity presents a major obstacle in these areas
- This complexity also encourages purchases based on value grounds
- The potential for contaminating a brand can also act as a deterrent
- There are some positive signs for future affinity growth
- A number of groups have forged affinity partnerships in this area
Case Studies
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- The Co-operative Bank
- The Co-operative Bank is a key player in the affinity card market
- A range of marketing techniques are utilised to promote their cards
- The same fixed fee is paid however the business is sourced
- The Bank is also heavily involved in the affinity loans sector
- Its ethical stance makes it easier to promote links with charities
- Working in partnership with the affinity group is critical
- Endsleigh
- Endsleigh’s strategy has focused on targeting career people
- Links have been established with professional groups and trade unions
- Endsleigh is also currently expanding its range of affinity partners
- Marketing is increasingly Web-based rather than via direct mail
- Britannia Building Society
- The Society has a history of working with trade unions
- It has also developed links with a number of football clubs
- The Society has recently teamed up with Reader’s Digest
- Britannia feels the right partnerships provide real business benefits
- Norwich and Peterborough Building Society
- The Society is committed to supporting its local community
- It has established relationships with three ‘local’ football clubs
- Marketing of these products tends to be at a branch-based level
- The partnerships help the Society build relationships with customers
- Importantly, the affinity schemes clearly benefit all three stakeholders
- The National Trust
- Relationships have been forged with several commercial partners
- Norwich Union is the National Trust’s insurance partner
- The charity launched a credit card with HSBC in 1990…
- …but the Trust is now in the process of changing its card provider
- The National Trust feels it has a lot to offer partner organisations
The Consumer – Membership and Ownership
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- Almost three quarters of adults feel they belong to an affinity group
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- Figure 11: Affinity group membership, September 2004
- Charities typically enjoy strong levels of consumer support
- Motoring organisations also boast relatively high membership levels
- Two thirds of AB respondents support at least one charity
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- Figure 12: Affinity group membership, charities, by gender, age and socio-economic group, September 2004
- Part-time workers tend to be strong supporters of charity groups
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- Figure 13: Affinity group membership, charities, by lifestage, Mintel’s Special Groups and working status, September 2004
- Broadsheet readers also have a strong affinity with charities
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- Figure 14: Affinity group membership, charities, by TV region, newspaper readership and commercial TV viewing, September 2004
- A fifth of men have a strong allegiance to sporting clubs
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- Figure 15: Affinity group membership, other groups, by gender, age and socio-economic group, September 2004
- Nearly half of ABC1 third age adults belong to a motoring group
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- Figure 16: Affinity group membership, other groups, by lifestage, Mintel’s Special Groups and working status, September 2004
- Broadsheet readers are more likely to be affinity group members
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- Figure 17: Affinity group membership, other groups, by TV region, newspaper readership and commercial TV viewing, September 2004
- Around one in ten consumers own an affinity product
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- Figure 18: Affinity product penetration, September 2004
- Affinity credit cards boast the highest ownership levels
- Pet insurers have also developed successful affinity relationships
- ABs and 35-44-year-olds are more likely to own affinity products
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- Figure 19: Affinity product penetration, by gender, age and socio-economic group, September 2004
- ABC1 family and ABC1 third age groups have higher penetration rates
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- Figure 20: Affinity product penetration, by lifestage, Mintel’s Special Groups and working status, September 2004
- Broadsheet readers are also more likely to hold affinity products
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- Figure 21: Affinity product penetration, by TV region, newspaper readership and commercial TV viewing, September 2004
- Over a quarter of environmental charity supporters own affinity products
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- Figure 22: Affinity product penetration, by affinity group membership, September 2004
- Most people feel organisations should be able to promote products
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- Figure 23: Nothing wrong with raising money from financial products, September 2004
- 16-44-year-olds are more likely to support the idea of affinity marketing
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- Figure 24: Nothing wrong with raising money from financial products, by gender, age and socio-economic group, September 2004
- People at the family lifestage are more supportive of affinity marketing
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- Figure 25: Nothing wrong with raising money from financial products, by lifestage, TV region and newspaper readership, September 2004
- Group members are more supportive of raising money in this way
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- Figure 26: Nothing wrong with raising money from financial products, by affinity group membership, September 2004
- Children’s and elderly charity supporters are keen advocates
- Consumers prefer to buy from companies linked to groups they support
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- Figure 27: More likely to buy a product linked to a cause i care about, September 2004
- A significant minority of ABs are not convinced by affinity marketing
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- Figure 28: More likely to buy a product linked to a cause i care about, by gender, age and socio-economic group, September 2004
- Pre-/no family consumers are more likely to buy affinity products
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- Figure 29: More likely to buy a product linked to a cause i care about, by lifestage, TV region and newspaper readership, September 2004
- Motoring group members seem less convinced by affinity marketing
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- Figure 30: More likely to buy a product linked to a cause i care about, by affinity group membership, September 2004
The Consumer – Purchase Prompts
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- A variety of factors influence the decision to buy affinity products
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- Figure 31: Factors influencing affinity purchase, September 2004
- Supporting a good cause is the most common purchase prompt…
- …but price is also a key factor in the purchasing decision
- Better benefits would influence a quarter of potential customers
- Almost two thirds of affinity card holders are supporting a cause
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- Figure 32: Factors influencing affinity purchase, by product holding, September 2004
- Members of environmental charities are particularly committed
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- Figure 33: Factors influencing affinity purchase, by group membership, September 2004
- Political party activists are keen to support the cause
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- Figure 34: Factors influencing affinity purchase, by group membership, September 2004
- A competitive price is the main influence on 25-34-year-olds
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- Figure 35: Factors influencing affinity purchase, by gender, age and socio-economic group, September 2004
- Consumers at the third age lifestage are keen to help a good cause
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- Figure 36: Factors influencing affinity purchase, by lifestage, TV region and working status, September 2004
- Around half of all consumers would pay more for affinity products
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- Figure 37: Would pay more for an affinity product, September 2004
- 16-24-year-olds are more inclined to consider paying more
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- Figure 38: Would pay more for an affinity product, by gender, age and socio-economic group, September 2004
- Consumers in the South are also less likely to pay extra
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- Figure 39: Would pay more for an affinity product, by lifestage, TV region and newspaper readership, September 2004
- Members of professional bodies are less inclined to pay a premium
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- Figure 40: Would pay more for an affinity product, by affinity group membership, September 2004
- A range of factors influence the choice of which card to use
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- Figure 41: Factors influencing choice of credit card, September 2004
- Three quarters of affinity card holders also own another credit card
- Multiple credit card holders tend to use the one with the lowest rate
- Reward points and cashback are more important than donations
- Other factors influence a relatively small proportion of consumers
- Affinity card holders typically reach for their donation cards first
- Environmental group members often prefer a card which donates
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- Figure 42: Factors influencing choice of credit card, by group membership, September 2004
- Members of professional bodies are extremely price-conscious
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- Figure 43: Factors influencing choice of credit card, by group membership, September 2004
- Almost one in eight 16-24-year-olds prefer to use cards which donate
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- Figure 44: Factors influencing choice of credit card, by gender, age and socio-economic group, September 2004
- Consumers in London and the South are extremely price-conscious
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- Figure 45: Factors influencing choice of credit card, by lifestage, TV region and working status, September 2004
- The 25-34s and C1s present a key affinity target market
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- Figure 46: Profile of potential affinity target market, September 2004
- Further analysis on factors prompting use of affinity products
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- Figure 47: Proportion of the sample forming each of the four typologies, August 2004
- Definitions of typologies
- Typology 1: Abstainers (63% of respondents)
- Typology 2: Altruists (15% of respondents)
- Typology 3: Price Concerned (12% of respondents)
- Typology 4: Superiority Seekers (10% of respondents)
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- Figure 48: Typology groups relating to affinity prompt factors, by gender, age, socio-economic group and TV region, September 2004
- Number of factors nominated by typology
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- Figure 49: Repertoire analysis on prompt factors, by four typology groups, September 2004
The Future
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- A number of factors will create a positive backdrop for affinity schemes
- Favourable consumer feelings could also boost affinity sales…
- …but affinity products will need to be relatively competitive
- Affinity cards will continue to face tough market conditions…
- …but they are likely to remain an important niche market
- Further development of the Internet could boost affinity sales
- Expansion into complex product areas still faces potential obstacles
Forecast
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- Scenario 1
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- Figure 50: Forecast of affinity marketing groups, Scenario 1, 2004 and 2009
- Scenario 2
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- Figure 51: Forecast of affinity marketing groups, Scenario 2, 2004 and 2009
- Scenario 3
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- Figure 52: Forecast of affinity marketing groups, Scenario 3, 2004 and 2009
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