Table of Contents
CHAPTER 2: Literature Review
The present thesis is about the affiliation marketing and its association with the brand awareness. In the light of, the affiliation marketing is explained as the type for the performance-based marketing in which the businesses are rewarded with one or more than one affiliates for each visitors or also with the customers which has been brought through the marketing efforts of the affiliates. In this context, the industry is said to have four different players which includes merchant, network, publisher and the customer. Since, the markets has expanded rapidly, there has been growing complexity which has resulted in the significance of the secondary players which includes affiliate management agencies, third party vendor and super affiliates. Moreover, the affiliate marketing can be overlapped with the internet marketing methods for some extent as it often utilize regular advertising methods such as SEO, PPC, display advertising and content marketing. On the contrary, the affiliates mainly utilize publishing reviews for the products and services which are used by the partners.
Internet has become the enduring as well as ongoing emerging and revolutionary source that tends to be expand further and further. The growth and emergence of Internet grabs the attention of many advertisers and many advertisers perceived the use of Internet as a medium of advertisement as more productive to reach their prospect customers. With the growth and emergence of the Internet gave birth to online marketing or digital marketing. According to Strauss (2016) explained that online marketing is the act of using internet and other related digital communication and information technologies for achieving marketing goals. Online marketing is one of the fastest growing digital marketing and emerged as the interactive tool of marketing. Online marketing enables advertisers to directly interact with their prospect customers and it provides two-way communication where customers can easily reach and interact with company (Kircova & cinar, 2015). Based on the study of Wang, Wang and Liu (2016) defined online marketing as a process of the building, maintaining and retaining customers relationship by applying and utilizing online activities that can facilitates the exchange of products, services and ideas and online marketing efforts satisfy the goals and needs of both the parties involving companies and customers. According to Boone and Kurtz (2013) suggested the significant role of online marketing such as; online marketing help companies to create more customer values, creation and execution of online marketing ideas are easier as compare to traditional marketing and online marketing effort may satisfy both the parties such as individual customers as well as business customer’s goals and objectives.
The most important aspect of online marketing is the affiliation marketing which can be defined as an online marketing practice through which business can provide reward or compensate their affiliates on every visitor, customer or any sale which is brought by the affiliate marketing effort. Hence, Firms pay rewards in terms of commissions to affiliate partners (Prabhu & Satpathy, 2015). Affiliate marketing programs are very intuitive and these programs can be very easy to set up and can offer the spontaneous stream of revenue. According to Duffy (2015) concluded that majority of the companies perceived that the affiliate marketing is related to the money paid for a successful marketed product but it is contrary to that affiliate marketing can be evaluated as the marketing with the lowest risk because marketers get the payment based on performance. Affiliate marketing is sometimes confused with the Referral marketing but in reality they both are different things. Affiliate marketing depends on the motivation come from financial rewards whereas referral marketing sales can be increased through trust and personal relationship (Bowie, Paraskevas & Mariussen, 2014). According to Iwashita and Tanimoto (2016) defined the process and network of affiliate marketing such as; in affiliate marketing network where an advertiser is a firm that offers a product and services to its prospect customers and a partner or publisher that helps the company to promote their goods and services in return of the commission for every sale and a consumer is a final component of the affiliate marketing who actually buy a product by clicking on a link that is provided by an advertiser and consumer can pay for the product whereas publisher can receive the commission on every consumer purchase.
According to Zucker and Shapiro (2015) suggested that affiliate programs are being offered in two ways such as; one to many affiliate marketing and another one is one to one affiliate marketing activities. One -to -many form of affiliate marketing is widely used where merchant or organization defines most of the terms and condition and partners will show their interest and decide whether they will join the affiliate program or not. According to Ayanso, Lertwachara and Mokaya (2014) suggested that one-to-many program is very costly and time consuming and probability of misuse is also exist because it is very difficult for companies to set the terms and conditions with each and every partner. Whereas, one-to-one affiliate marketing program enable the merchant to sign a contract with a particular chosen affiliate partner. In this form of affiliate marketing, partner’s promises their merchants an ample of trafficking and attracting huge number of potential customers. Moreover, this form of affiliate marketing has no any potential misuse and partners are known as the company form a strategic partnership with their affiliate (Yang Yang, CHen, Fu, Hu & Wu, 2014). According to Smith (2016) argued that affiliate marketing is very useful tool for small businesses websites as they have limited resources and no chance of reaching many users with other means of advertising. According to Khmaladze (2017) suggested that affiliate marketing establishment require two pre-requisite one is website and another is product which need to be sold. Company should decide whether they want to join other partner or build their own affiliate network. Furthermore, when company decided to build its own affiliate marketing program then it ensures savings and reduces advertising cost. On the contrary, Anderson (2015) argued that company that built partnership could get the benefit, since third party usually use advance and latest technology and advanced reporting tools. And third party tries to maximize its own commission and provide maximum services to the company because in affiliate marketing it’s a win-win situation for company as well as for affiliate or provider. If third party advertiser performs well then sells of the company increases and if sells increases then they can get commission on every sell.
There are numerous research studies has identified different models for affiliate marketing strategies. According to Rivera (2016) suggested that the success of affiliate marketing plan is highly dependent on its successful implementation of models. The author has suggested various affiliate marketing strategies options that can be suitable for the different needs of company’s product promotion such as coupon, SEO, product reviews, Ad banners, blogs, loyalty or incentive and offline affiliate. Coupon model is considered as the most attractive model of affiliate marketing strategies. There are numerous websites are available where customer can click on the coupon banners to get a direct access to the main website from where customers can buy products and save their money. Members of the website as well as non-members of the website can get the access to the affiliate links and grabbed the offers of different company.
According to the Fan, Lau and Zhao (2015) suggested that coupon model attract the customers towards the company different offers and it helps the company to increase its sales and promotion because company provide coupon on their limited offerings, provide discount on products so ultimately it increase the company sales and promote company’s product. Customers are more attracted towards the coupons because that help the customers to save their money. According to Mackey, Miner and Cuomo (2015) elaborated that product reviews are also an important tool used in affiliate marketing. Customers tend to need information related to product before they could make buying decision. There are various website that provides the product reviews and link of the product from where customer can buy the product after reading the review. Positive product reviews drives the positive decision of the customers.
Nowadays customers want complete information regarding the product they want to buy so product reviews assist the customers buying decision and provide them complete product information. Based on the study of Mai (2016) concluded that when customers are intended to buy expensive product then they require thorough information related to product. Also customers need a solution that provides them with the comparison of one product with the similar product of different company. Comparisons between the two identical products facilitate customer’s decisions. So overall product reviews provide the customers with the relevant information related to the product and also facilitate in their purchase decision. Another popular model of affiliate marketing is the Search Engine Optimization (SEO). According to Chachra, Savage and Voelker (2015) suggested that when customers search for any product in the search engine then they typically ended up with two types of the results. One is the paid ads that appear on the right side of the search engine page and the rest random results appear on the page. Every business or affiliates striving to be get their site listed in natural results and appears on the first pages to get the maximum trafficking of customers on their respective sites. SEO is the techniques through which affiliates can make their site appear on the top ranking of the search engine. The more site reach on the top of the search engine the more they will get the trafficking. Hence, affiliates needs to use certain keyword that can appear their sites on the top of the search engine page. According to the Lemon (2016) suggested those sites that appear in the first page of the natural list in the search engine is much regarded by the customers and also it improves the brand image of the company.
Many researchers has identified other forms of the affiliate marketing such as ad banners that can be defined as the pop up pictures appear on the screen which has a direct back link with the websites and through that advertiser can track their affiliates. Another model is the incentive or loyalty model of affiliate marketing that is mostly used by shopping and airline sites. Through that companies provide discounts vouchers and bonuses are given to only their member customer by asking them to follow certain links of marketers. So through all these models of affiliates marketing, the company and third party marketers tend to increase the product information, expand their prospect customer reach, enhance the brand image and increase the product sales so that partner earn more commission out of it (Wortley, Diehl, Heuring & Johnson, 2014)
According to Grieco, Lasevoli and Michelini (2016) suggested that there are several benefits are associated with the affiliate marketing. Considering the sheer amount of websites are prevailing on the internet, it has been more and more difficult for the businesses to get noticed without investing a lot of losing their essence. Changing scenario compels businesses to find innovative ways in order to reduce their marketing cost and achieve the profitable return on its investment. According to Stone and Woodcock (2014) companies can achieve better ROI by using affiliate marketing, because it increases sales, bring more customers and reduce advertising cost. If company choose right affiliate partner then program will be very successful and partners can help the company to bring right customer. Whereas company only has to pay on performance of the partner so customer acquisition cost is also decreased (Patel 2015). Marketing is very powerful tool that enables the brand to increase their exposure and increase their customer base by using different mode and mediums of communication. Due to increase in the exposure of the internet customers, especially young generation can be easily available on the social media and other digital platform. Companies are using online or digital marketing in order to reach their prospect customers. Moreover, firms are using affiliate marketing tactics because it is cost effective and performance based marketing. And company and affiliate marketer and partner work together to achieve the revenues by increasing sales for company and partner tend to increase their commission (Turban, Strauss & Lai, 2016). According to Peters, Verhoef and Krafft (2015) suggested that affiliate marketing is the digital platform that enables the firm to enhance their brand image and provide product information to their prospect customers. Hence, affiliate marketing contributes to overall brand awareness of the product.
H1: Affiliate marketing strategies have a significant impact in sales and promotion
H2: Affiliate marketing strategies have a significant impact on brand attributes
H3: Affiliate marketing strategies have a significant impact on brand image
H4: Affiliate marketing strategies have a significant impact on product information
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