LSPR COMMUNICATION & BUSINESS

DIGITAL MARKETING STRATEGY

SESSION 6

Oleh:

Joshua Boanerges Tampi

21072140019

POSTGRADUATE PROGRAM
MARKETING COMMUNICATION MANAGEMENT
JAKARTA
2021
 STATEMENT LETTER

I certify that the attached assignment is my own work and that any material obtained from
other sources has been acknowledged following the latest version of APA style. I declare that I
know what plagiarism is and I confirm I have not plagiarized any part of this assignment.
I grant permission to the London School of Public Relations to make copies of assignments
for assessment, review and/or record keeping purposes. I note that the London School of Public
Relations reserves the right to check my assignment for plagiarism anytime even on mid and/or
the final exam. I am ready to bear any consequences including a fail grade in the subject,
ineligibility to proceed to thesis defense, and/or graduate in the given year without any complaint
or dispute.

Name : Joshua Boanerges Tampi

Signed : Date : 19th October 2021

Saya menyatakan dengan ini bahwa tugas yang dibuat ini adalah pekerjaan saya sendiri dan
semua materi yang ada sudah dituliskan sumber referensinya dengan mengikuti APA style versi
yang terbaru. Saya menyatakan bahwa saya memahami tentang plagiarism dan tidak ada satu
bagian pun dari tugas ini yang mengandung plagiarisme.
Saya mengizinkan The London School of Public Relations untuk menilai, mengevaluasi,
dan/atau menyimpan tugas ini. Saya mengizinkan pemeriksaan untuk mendeteksi plagiarism ini
dilakukan setiap saat baik saat Mid maupun Final Exam. Saya menyanggupi untuk menanggung
segala akibat dari plagiarisme yang dilakukan baik jika tidak lulus dari mata kuliah, tidak dapat
mengikuti sidang thesis/non thesis, maupun tidak dapat mengikuti wisuda tanpa melakukan protes
dalam bentuk apapun.

Name : Joshua Boanerges Tampi

Tanda Tangan : Date : 19th October 2021
Weekly Discussion
Why do you think affiliate strategy fits in with the retail industry? What other industries will
have a big impact with this, and why?
 CONTENTS

STATEMENT LETTER........................................................................................................................ 2
CONTENTS................................................................................................................................... 4
CHAPTER 1 OVERVIEW .......................................................................................................... 5
1.1. Retail Business ................................................................................................................ 5
1.2. Retail Business Based on Ownership Type .................................................................. 6
1.3. Retail Business Based on Products and Services ......................................................... 8
1.4. Non-Store Retailing ...................................................................................................... 11
1.5. Affiliate Marketing ....................................................................................................... 11
CHAPTER II ANALYSIS .................................................................................................................. 13
2.1. Affiliate Marketing & Retail Industry ....................................................................... 13
2.2. Affiliate Marketing is Compatible with Retail Industry .......................................... 16
CHAPTER 3 CONCLUSION .................................................................................................... 21
3.1. The Power of Affiliate Marketing ............................................................................... 21
3.2. The Advantage of Affiliate Marketing for Merchants .............................................. 22
REFERENCES............................................................................................................................ 24
 CHAPTER 1
OVERVIEW

1.1. Retail Business

Retail business is a term that is now more popular than words with the same
meaning, namely retail trade, retail business, or retail trade. Thus the use of these words
can replace one another (Utomo, 2009). Retailing is an activity of selling goods and
services directly to final consumers for personal and household use, not for business
purposes. If an institutional manufacturer, wholesaler, or retail store sells something to
the final consumer for non-business use, it means they have made a retail sale. The
primary function of retailing is to buy and store products, transferring product
ownership rights to the final consumer. Retailing can also provide information about a
product's characteristics and uses and give credit to consumers in some instances
(Tjiptono & Diana, 2020). Retail trade includes all activities related to selling goods and
services to final consumers and not for business purposes. However, it does not rule out
the possibility of direct sales with industrial users because not all industrial goods are
always purchased in large quantities (Swastha & Sukotjo, 2002). Nevertheless, the
limitation of being called a retailer remains on selling to the final consumer, not the
business (Utomo, 2009). Thus, the definition of retailing is the retail sale of goods and
services directly to final consumers or anyone who wants to buy in retail quantities.
A retail store is a company whose primary function is to sell products to end
consumers for personal and household use. The emphasis on this primary function states
that the retailer is an independent institution. Manufacturers and farmers can also
become retailers. However, their primary function is not selling products to final
consumers but producing certain goods and farmers. The exception is service retailing,
where the retailer, in this case, is the manufacturer. Consumers' considerations in
choosing a retail store are convenience, quality of offered products, reputation for
honesty, and fairness in buying and selling. Consumers also consider prices, such as
whether the retail store sets a price that cannot be offered or flexible prices that
bargaining is allowed. Salesperson assistance can also be considered by consumers, for
example, whether to help passively or actively (Tjiptono & Diana, 2020). Consumers
 also see the value offered, namely the difference in total customer value and total
customer cost. Special services such as free shipping, credit purchases, and return or
exchange products that have been purchased can also be considered by consumers
(Tjiptono, 2019). These aspects can affect consumer interest in buying products sold in
retail stores and also affect their loyalty.
1.2. Retail Business Based on Ownership Type
Retail business based on ownership type can be classified into independent retail
companies, franchises, and chain companies (Tjiptono, 2019). Independent retail
companies are retail outlets that are operated independently and without provision. For
example, stalls or grocery stores individuals own, whether located in regional markets,
traditional markets, residential areas, line of shophouses, or other shops. Franchising is a
marketing system or distribution of goods and services. The franchisor grants special
rights to carry out specific business systems in a predetermined manner for a particular
time and at particular locations to individuals or other companies (franchisees) of small
or medium scale. The franchisee must pay an initial franchise fee and royalties on gross
sales, pay a management fee, pay the usual rent for the franchisor's equipment, and
market products and services in ways determined by the franchisor. One of the
franchising types is product franchise. The franchisor gives authority for franchisees to
produce and distribute a specific product using the brand name with the predetermined
marketing system by the franchisor. Examples are shoe dealers, cars, gas stations, and
soft drinks such as Coca-Cola (Tjiptono & Diana, 2020).
The second form of franchising is business format franchising (entrepreneurship
franchising). In this form, the franchisor develops the business by opening outlets
managed by franchisees who are interested in opening a business with the franchisor.
An example is fast-food restaurants such as KFC, McDonald's, and other networks. The
third form is a business opportunity venture. The franchisor designs a distribution
channel system, then the franchisee distributes goods or services according to the
method set by the franchisor. The distributed product or service is not the
product/service produced by the franchisor, meaning that the franchisee has authority to
produce goods. For example, distribution of motor vehicle components and franchised
pharmacy networks. Another type of retail business is a corporate chain, which consists
of two or more businesses that are interrelated or related in one management and owned
by a group of shareholders. Examples are supermarkets, department stores, specialty
stores, and superstore chains. Matahari, Ramayana Group, Robinson Group, Hero
Group and others. The advantages are high sales volume, the ability to buy in enormous
quantities, and hiring employees with unique skills (Tjiptono, 2019).
Table 1 Retail Business Based on Ownership Type

Independent Retail Franchising Corporate Chain

Firm
Independently Franchising means franchisor gives A corporate chain
owned and operated another individual or company (franchisee) consists of two or
outlets without any the right to sell an item with the procedures more businesses
affiliation. For and methods determined by the franchisor. that are
example, stalls, interrelated in one
grocery stores, For example, product franchising where a management and
traditional markets franchisor gives the right to distribute a owned by a group
and shophouses. certain product according to the brand of shareholders.
name and the predetermined marketing For example,
system. Gas stations, shoe dealers, soft Matahari Group,
drinks are the examples. Ramayana Group,
Robinson Group,
Entrepreneur franchising where franchisors and others.
expand their business by opening stores
managed by franchisees. Fast Food
restaurant can be the example.

A business opportunity venture is when the

franchisor designs a distribution network
and the franchisee distributes the product
or service without being supplied by the
franchisor. Vehicle parts distribution and
franchise pharmacies are examples.
1.3. Retail Business Based on Products and Services
The retail business based on the offered product or service is service retailing and
product retailing. There are three types of retailing services, namely rented-goods
services, owned-goods services, and non-goods services. Rented-goods service is a
business where customers can rent or use specific products. For example, car rental,
motorbikes, video games, carpet cleaners, houses, and apartments. Physical products are
rented at a particular rate for a certain period of time. Consumers can use the product,
but ownership remains with the retailer. Owned-goods service is a service that offers
repair, upgrade, maintenance services. These services include repairing watches, cars,
computers, car washes, dry cleaning, lawn care, golf courses, garden maintenance, and
others. Non-goods service refers to personal services that are intangible. For example,
babysitters, drivers, tutors, tour guides, barbers, and others (Tjiptono & Diana, 2020).
Table 2 Service Retailing

Rented-Goods Owned-Goods Service Non-Goods

Service Service
Customers can rent Owned goods service provides services for Non-Goods
certain products such consumers who want their goods to be services are
as rental cars, treated, repaired, and upgraded. For intangible
motorbikes, video example, services such as repair clocks, services such as
games, apartments. cars, motorbikes, car washes, dry cleaning, driver services,
Physical products garden maintenance, etc. tutors, tour
are offered at a guides, barbers,
specific rate for a beauticians, etc.
certain period of
time.

Product retailing consists of supermarkets, specialty stores, catalog showrooms,

convenience stores, and superstores. Supermarkets are relatively large stores, have low
costs, have relatively small profit margins, have high sales volume, and are
characterized by self-service in meeting the total needs of consumers for wholesale and
household products. Customers select neatly arranged merchandise on specific shelves
and can place it in a stroller or basket and carry it at the cash register. Examples are
Hero, Superindo, Giant, and others. Convenience stores sell several product lines,
typically furniture, furnishings, and household goods, with each line operated as a
separate department managed by specialist merchandisers. For example Matahari,
Centro, Ramayana, SOGO, and others (Tjiptono, 2019). Even though they look similar,
supermarkets and department stores have differences.
Department stores sell various goods from various departments. This store can
sell jewelry, clothing, electronics, sporting goods, and many other items. Each consumer
goods are categorized based on different sections in the same store. Supermarkets
usually sell fresh fruits, dairy products, baked items, meat, and non-food items such as
kitchen items, household items, pharmacy products, toiletries, etc. A department store is
a retail store that sells goods of a wide variety. Meanwhile, supermarkets generally sell
foods and household goods. Usually, supermarkets do not sell jewelry, hardware,
clothing. Also, unlike department stores which are not bound by corporate chains
(Arora, 2020). In other words, department stores are more varied in selling goods than
supermarkets.
Table 3 Product Retailing

Supermarket Department Store Specialty Store

Supermarket sells various
consumer needs for
groceries and household
products. This market is
relatively large, low costs,
relatively small profit
margins, high sales
volume. Supermarkets
such as Hero, Superindo,
Giant, Tesco, AEON are
some examples.
Department stores sell
various product lines such
as furniture, furnishings,
and household goods. For
example, Matahari,
Centro, Ramayana,
SOGO, and others.
Specialty stores are stores
with limited types of
merchandise. Examples
include Harvey Norman,
The Limited, Benetton, and
Athlete Foot. The product
variants are complete
because they focus on
certain categories. Athlete
Foot focuses on sports
shoes, Benetton on youth
clothing, and others.
 Product retailing also consists of specialty stores that have a narrow product line
(Kotler & Keller, 2012). However, the product variants are relatively complete. For
example, stores such as Harvey Norman, The limited, Benetton, and Athlete Foot.
Usually, these stores are located in large shopping centers. Moreover, product retailing
consists of catalog showrooms that offer low prices, national brands, and small
shopping areas adjacent to retail displays. In general, consumers will review the
distributed catalogs before visiting the store. The buyer must first complete a form
before the item is handed over to consumers at a central location. With no limitations,
showroom catalogs can reduce the risk of theft or loss (Tjiptono & Diana, 2020).
Convenience store is a small store in a residential area usually open 24/7, selling a
relatively limited product line with a high sales turnover rate at a slightly elevated price.
For example, Indomaret, Alfamart, Circle K, 7-Eleven, Family Mart, Lawson, and
others. Superstore is a large store that aims to meet every consumer need, both food, and
non-food products often purchased by consumers. This may include supercenters, a
combination of supermarkets and discount stores, and category killers, stores that sell a
full range of product items in a particular category. Examples are Walmart Supercenter,
Super Target, Barnes & Noble, Home Depot, Best Buy, and Meijer (Tjiptono, 2019).
Table 4 Product Retailing

Catalog Showroom Convenience Store Superstore

Usually, an exhibition of low- Mini supermarkets that
priced products, national
brands, and small shopping
areas close to retail displays.
Generally, consumers have
reviewed products from the
previous catalog, and they
have to fill out a form before
getting the purchased item.
The shop is enormous and
sell daily necessities sells a variety of products,
located in residential usually a combination
areas are usually open 24 supermarket and discount
hours and sell relatively store. Also, include stores
limited product lines. For that sell complete product
example, Indomaret, items in a specific product
Alfamart, Circle K, and category. For example,
others. Walmart Supercenter,
SuperTarget, Barnes &
Nobble, etc.
1.4. Non-Store Retailing
Non-store retailing sells products and services using telephone marketing, direct
selling, vending machines, mail-order retailing, and electronic marketing. Telephone
and media retailers use telephone contacts and advertising media such as television,
radio, newspapers, and magazines to inform and persuade consumers to buy their
products. Vending machines are often found in banks, supermarkets, hotels, campuses,
train stations, airports, and malls. Mail orders are sales made by ordering using specific
catalogues via post. Direct selling is the sale of consumer products directly to
individuals, at their homes or workplaces, through initiated transactions and completed
by salespeople. Generally, the goods sold are cosmetics, insulated food, medicines, and
cooking utensils. Non-store retailing also includes electronic marketing, such as e-
marketing, e-commerce, e-business, digital marketing. The growth and development of
the internet have an impact on the rise of online retailing (Tjiptono, 2019). In essence,
non-store retailing can sell anything where even without a physical store, retail sales can
still be made. For example, Vending machines in other countries are placed freely on
the street, not necessarily in a particular shop.
1.5. Affiliate Marketing
Affiliate marketing is an effective and efficient solution for promotion because it
saves offline promotion costs, broad marketing reach, and knows no time (Tanuwijaya,
2011). Affiliate marketing is a marketing process on the internet to sell other people's
products. If there are sales from affiliate marketing, then the person who runs the
affiliate business (affiliate marketer) will get a commission whose amount is determined
by the product owner (Buana, 2011). The way affiliate marketing works is similar to a
broker or intermediary in the offline world, namely how the affiliate brings as many
visitors as possible to the merchant website that sells products or services. Suppose a
website visitor buys a product or service from a merchant, then the affiliate will get a
commission. Website owners or merchants will know how the visitors come based on
affiliate referrals. People who become affiliates have been given a particular link. This
link will notify the system on the merchant's website when there is a sale and who the
affiliate has successfully referred (Safitri & Sujito, 2012). In other words, an affiliate
can be defined as an intermediary that works with merchants to acquire consumers.
 Affiliate marketers can promote offers from merchants through various online ads
where the merchant only pays for the visible results of the campaign. A merchant only
pays according to the actions the consumer must take on the merchant's website.
Affiliate programs consist of merchants who have websites about certain businesses
where merchants use affiliate marketing and create a network of affiliates who will
promote their business. Affiliates or associates are people who benefit from ad space
posted on affiliate links. Every transaction that occurs through this link will earn a
commission. An affiliate will try to bring visitors (potential customers) to the merchant's
website through ad links. Merchants will give rewards according to the actions required
to finalize the sale, which the merchant can trace back to an affiliate (Ivkovic &
Milanov, 2010). The uniqueness of this affiliate business is that an affiliate doesn't have
to bother taking care of product manufacture, packaging, and delivery. The only thing
needed is to promote a particular link obtained from the vendor (product owner). If
someone clicks the link and purchases from our affiliate link, we will get a commission
(Dumilah et al., 2020).
Furthermore, affiliate marketing is considered as an additional sales force for a
website because they are paid based on performance. Affiliate marketing is often called
"performance" marketing. Affiliate marketing is a system of different business activities
that must create a continuous combination of other advertising strategies and methods
such as search engine optimization, paid search engine marketing, and email marketing
(Stokes, 2011). The advantage of affiliate marketing for affiliate marketers is that it is
relatively faster because someone can start right away. One does not need to bother
making products because they can directly market other people's products. Affiliate
marketing can make it easier for people to earn income. Affiliate marketers do not need
to create a website offering products or think about management costs or other things.
The risk of loss is also more negligible (Ramadhayanti, 2021). This technique does not
have to be with a website. For example, someone helps find people who will buy a
house. When a buyer wants to buy the house, the homeowner will give commission to
someone who helps with the sale (Helianthusonfri, 2014). Therefore, due to the
convenience and benefits generated by affiliate marketers, anyone can become an
affiliate marketer.
 CHAPTER II
ANALYSIS

2.1. Affiliate Marketing & Retail Industry

In short, affiliate marketing is a marketing effort using recommendations, reviews
or other word of mouth. Recommendations through affiliate marketing can be tracked.
For example, if someone comes to a merchant's website through a review from A and
makes a purchase, A will get a commission. The person named A becomes an affiliate
or can be called a publisher. Using affiliate marketing is very easy to set up, low-risk,
and has excellent potential for a business. According to tapfiliate.com, affiliate
marketing can be more effective than other channels, with the average order value for
affiliate sales being 21% higher than other marketing channels. Promotion through
affiliates uses native methods and is more profitable than traditional advertising. If our
business uses affiliate marketing services, we only need to pay a concession if there is a
sale. We can also choose to pay for a lead, regardless of the purchase or not, although
this practice is less common (Alexandra, 2021). The use of affiliate marketing is not
wrong to use because the risk is low from a cost point of view.
Based on the doorfinder website written by Sam Smith, the benefits of affiliate
marketing are the increased visibility of e-commerce that we use without investment,
meagre cost, no risk, infinite scalability. But there are some drawbacks, such as
requiring software. Using the affiliate platform can be difficult if the shop is small, need
to prepare resources for affiliates such as banners. It is only possible if we have large
profit margins. Affiliates need to invest time and resources to promote our products. If
there is no high return on investment, they may refuse (Smith, n.d.). Influencers,
bloggers, big media websites can be used to become affiliate marketers to promote
specific businesses. An affiliate marketer can get paid based on a pre-defined
agreement. For example, pay per sale, pay per lead, or pay per click (Enfroy, 2021).
Affiliate marketers don't always have to target sales. However, this does not mean no
effort needed. According to the agreement, merchants can set specific targets for
affiliate marketers, and affiliate marketers will try to promote merchants' websites.
 In general, in pay per sale, payment is made when there is a sale. Revenue in the
form of a percentage of the sale price of the marketed product. Another method is pay
per lead which is even more complex where payments are based on the conversion of
leads. Affiliates must be able to persuade consumers to visit the website and take
specific actions. For example, filling out a contact form, signing up for a product's trial,
subscribing to a newsletter, or downloading software of files. There is also pay per
click, the affiliate has a website, and the affiliate tries to make visitors interested in
entering the merchant's website. For example, an affiliate marketer has website A and
places an advertisement about a website owned by a merchant, namely website B.
Affiliate marketers try to attract their website visitors to switch to website B (Enfroy,
2021). Saying pay per lead is more complex is not without reason. Visitors are
sometimes lazy to fill out contact forms or download specific software because they
want instant effort. Visitors sometimes just want to purchase without many procedures,
so getting them to download specific files and fill out contact forms or any other action
can be complex.
The merchants need to be picky about choosing affiliate partners. Therefore,
tracking is carried out to understand new customers brought in through affiliate
marketing. Thus, a merchant can make informed decisions regarding spending and
doubling down affiliate marketing efforts to obtain the best returns in the long term.
Some examples include Harry & David, which specializes in selling premium food gifts
and gift baskets. The company invests in affiliates, whether working with individual
partners, affiliate networks, or long coupon websites. Digital marketing manager
Christian Schwindle said that the company's analytical approach to affiliate investment
led to best returns, skyrocketing revenue from one particular affiliate from five digits to
seven digits (Abbamonte, 2018). Amazon has a website called amazon associates, an
extensive affiliate program with more than 1 million affiliates. Amazon can turn visitors
into repeat buyers. So many people believe in amazon that amazon's average conversion
rate for Prime members is 74% per cent, greater than 90 million Prime members. This
means that for every 100 visitors to Amazon, at least 14 people will become buyers.
Then from 100 visitors, some can become Prime member. Therefore, the conversion
rate is relatively high (Khan, 2020).
 Figure 1 Return on Investment Calculation
(Alexandra, 2021)

For example, we have a shop that sells coffee at an average of $10 per pack, then
the monthly affiliate program costs. For instance, if there are eight affiliate sales per
month, a positive return on investment will be obtained. If there are 18 sales per month,
it will get two times the investment. With eight sales through affiliates, ROI earned is
3.9%. If there are 18 sales, it can be 106%, so it can be stated that the great profit that
the merchant can get through affiliate marketing (Alexandra, 2021). Affiliate use is also
not limited to online only. Merchants can also do offline affiliates by assigning a
discount code to identify any buyers coming through the code. Many websites are
liaisons between merchants and affiliates where merchants can register there. The
criteria that affiliates see are usually the average amount of traffic, conversion data, and
average profit margin (Smith, n.d.). Affiliate programs can provide significant benefits
for retail businesses because they facilitate higher sales, grow brand recognition, and
promote trust in merchants. Thus, boosting revenue can be done through affiliate
marketing (Abbamonte, 2018). Companies such as Amazon and Harry & David have
given proof about the power of using affiliate marketing.
2.2. Affiliate Marketing is Compatible with Retail Industry
The MVMT company, which is popular with branded watches, uses affiliate
programs to boost revenue. MVMT proves that affiliate marketing plays a role in
performing various functions for our business. This company creates a large group of
affiliates by offering commissions above 10%. To ensure that payments are made for
immediate sales, not brand awareness or leads, this company uses a time limit based on
its commission. Affiliates are paid when customers buy from their links for 15 days
(Abbamonte, 2018). In the UK, affiliate marketing has an ROI of 15$ per every 1%
spent. Roughly 40% of Amazon's revenue is from affiliate marketing (Prussakov, 2016).
Retailers are aware of a conversion rate of 5% from visitors via affiliate links. For
example, an affiliate can earn $405 per month by selling one watch product at MVMT
company. If 100 per day, then $ 40,500 can be earned per month (Ferreira, 2020).
Examples such as MVMT, Amazon, Harry & David are proof of the success of affiliate
marketing in increasing revenue. Thus, affiliate marketing is very suitable for retail
businesses.
Affiliate marketers can be an extension of merchants to promote their products or
services through various media. For example, placing an online ad that will direct to the
merchant's website when clicked by a visitor. Offline affiliates can also be done with
promotions in the form of discounts. Companies can also provide other promotions. For
example, when customers buy one product, they get another product and other similar
benefits. Thus, affiliate marketers will offer promotions that contain these offers from
the company. One type of marketing similar to affiliate marketing is referral marketing
which is done through word of mouth delivery. Referrer recommends products or
services to friends, colleagues. The key to success is customer trust. People tend to
believe in personal recommendations rather than traditional advertising. Referrals and
affiliates both involve bonuses, referrals, and word of mouth. The difference is that
affiliate marketing consists of people looking for profit, and they are even sought after
by the company itself (Gryaznova, 2019).
However, as stated earlier that the similarities between the two, one of which is
word of mouth. The definition of word of mouth is a personal or non-personal statement
conveyed by someone other than the organization to customers. This type of
communication is usually easily accepted by customers because those who convey it are
trusted people such as experts, friends, family, and mass media publications (Sunyoto,
2018). This type of communication can persuade people to believe because it is
delivered by people who are considered trustworthy. An affiliate can ask family,
friends, or other people to purchase the products offered. People who are offered may
trust the person because of a close relationship, or an affiliate is a person who has a
positive reputation. Especially if affiliate marketers market products or services from a
merchant online by utilizing good SEO techniques. In this way, merchants can profit
from purchases, and affiliate marketers earn commissions.
For example, retail businesses such as supermarkets or department stores are
located in certain areas. Affiliate marketers can make the store's existence viral by
marketing website links or advertisements about the store online. Thus, more and more
people came to the shop. Affiliate marketing can benefit affiliate marketers because
they don't have to produce or think about delivering or managing products or services
but earn commissions through sales alone. The commission is a few percent of sales, so
if the affiliate only gets a small part of the sale benefits, the company that earns more
revenue should feel a more significant profit. The more affiliate marketers there are the
more opportunities for a store that uses this program to go viral. Affiliate marketers will
undoubtedly ask friends, family, and other closest people to buy the products they offer
in the hope of getting a commission. In addition, they also target other people they do
not know. Primarily through an online platform where known people will interact
online, and also anyone who uses the internet can become a potential customer.
The impact of word of mouth can also be seen from the VTube application, an
attempt to deceive people. Ads in applications that have no segmentation, unclear
products sold in the application. However, quite a lot of people become members
through referral codes from the closest people. On the one hand, the marketing efforts
are terrible because there is no precise segmentation, fraud by using the name of big
companies, but on the other hand, it is also quite good because it uses word of mouth.
Even though, of course, people's ignorance is being used, we can take the point that
companies that sell things that are not clear can reach consumers until there are loyal
followers who defend VTube, even though it is clearly a fraud, meaning that if we sell
useful products, have a clear marketing strategy, we will also have the potential to
attract consumers through other parties, in this case, affiliate marketing. VTube is not
being made viral by companies but by people hoping to recruit innocent people who
don't know much about marketing. Hence, honest companies selling useful products can
earn more revenue through the role of outsiders, namely affiliate marketers.
VTube was closed because of a view point where members had to pay money to
get VP. VTube members carry out VP buying and selling activities (Laucereno, 2021).
This PONZI system is looking for profit by selling VP to sesame members or
prospective new members. The question is, what if everyone sells, then who will buy?
Inevitably the deluded new members. One of the criteria for a healthy trade is that there
is a product or service. Although intangible, there are benefits that can and are
determined to be parasitic to particular consumers. VTube does not provide services or
products that can be enjoyed other than the money earned by selling VP to fellow
members or luring new people. However, on the one hand, many people are tempted,
but on the other perspective, the number of VTube players is small. Even though there
are 10 million people who use VTube (Rizal & Nugroho, 2021). Suppose that it is true
that there are 10 million people who download VTube, then only about 3.8% of people
use the application. Not to mention counting with one person who uses various accounts
and various cellphones. Also, people who have not used the application. Then, of
course, after calculating the conditions, the members will become lesser than ten
million.
The lesson to be learned is that even though Vtube does not sell beneficial
services and products for consumers, it can still get members. Although there are not
many members, some are loyal to VTube (FajarPapua.com, 2020). So, if we market our
products and services correctly, selling products and services that benefit us from sales
and have a positive impact on consumers, consider the needs and goodness of
consumers. Even if we apply principles such as corporate social responsibility for the
community, of course, we can be much better than VTube. If we have built a good
reputation through the products and services we sell, the quality of the products and
services that make our store trustworthy, and other aspects, then we have the potential to
earn big profits. A good reputation can attract other parties to cooperate. One of them is
affiliate marketers. They certainly see the profile and reputation of the company, and
companies that have a good profile and reputation can get a lot of affiliate marketers.
The power of affiliate marketing can be used to maintain and even strengthen the
reputation that has been built.
Affiliate marketing is beneficial for non-store retailing. For example, non-store
retailing that relies on sales through the website. Solely relying on a website is not
necessarily enough because it is not necessarily a website that can automatically appear
in search results as soon as it is created. Then need a promotion that invites people to
click on a website. Affiliate marketing can be a solution to get other people to click on a
website. The non-store retail business can benefit significantly because the number of
traffic increases and can potentially be directly proportional to the number of sales. This
is one of the reasons why affiliate marketing is suitable for retail businesses. Affiliate
marketing can also be applied to wholesale businesses. Wholesale is selling products in
large quantities to non-consumer final buyers for resale, rental, further management, and
other business purposes (Tjiptono, 2019). Affiliate marketing can be applied to
wholesale businesses, for example, through website promotion where affiliate marketers
market the merchant's website on social media or offer the merchant's website on their
blog. Maybe consumers will not be easily attracted to buy goods in large quantities. But
those who click can see the offered products or websites so they can share what they see
to others.
The visitors can be traders who want to buy goods in large quantities or have
acquaintances with traders. Visitors may actually need goods in large amounts. Then
they can become customers or bring in new customers. The use of affiliate marketing
can also be used simply to increase consumer awareness of the company. Also, a
company can pay affiliate marketers through pay for leads or pay for clicks, not
necessarily pay for sales. Merchants can also provide targets. For example, if affiliate
marketers can bring in merchants who buy wholesale goods, then affiliate marketers get
a tempting commission. Even though affiliate marketing is proven to be effective in
increasing revenue, as in the case of Amazon and others, it does not mean that it cannot
be applied to the wholesale industry. Also, considering that wholesale stores with
websites can use affiliate marketers to increase engagement, increase awareness, and
others. Hence, it is not only about sales.
Affiliate marketing is not separated from word of mouth. Similar to what has been
explained, affiliate marketers may ask their close friends, family, and colleagues to visit
a website they promote or purchase a particular product or service. Hence, word of
mouth is related to affiliate marketing. Also, its power to make a specific product or
service and the merchant viral cannot be separated from the internet. AISAS model
acknowledges the power of the internet and word of mouth. This model adjusts to the
development of technology. Attention stage, where consumers are interested in
messages or advertisements they see related to a brand. After successful attention,
consumers can have an interest in knowing more, namely interest. Then the search
stage, where consumers can find information about a brand. Next is the action, which is
the stage of buying and using a product. The next stage is share, which spreads their
experiences and interactions related to a brand to many people (Sugiyama & Andree,
2011).
AISAS contains nonlinear stages (Rakhmadhona, 2020). Consumers who already
have an interest can enter the action stage without entering the search stage, namely
buying and using a product. These consumers can also directly enter the share stage,
meaning they share what they think about a brand. The power of sharing and finding
information is getting more robust in the era of social media. This is also in accordance
with the strength of affiliate marketing in marketing a product or service and
introducing certain companies. In today's era, finding and sharing information does not
require high costs, so it is easy and widespread to do. This aligns with affiliate
marketing, where affiliate marketers don't have to be bothered with selling, producing,
and maintaining goods. They simply promote a particular product or service. On the
other hand, companies that use affiliate marketing do not need to spend a lot of money.
 CHAPTER 3
CONCLUSION

3.1. The Power of Affiliate Marketing

Affiliate marketing is beneficial for retail businesses and even wholesalers
because it can expand its reach in reaching new consumers. Even though a company has
a website, its website is not necessarily known for its existence by consumers. Not
necessarily also directly into the main search results. Therefore affiliate marketing needs
to be done. Affiliate marketers can invite people closest to them to click on the website
they are promoting, buy the goods or services they are enabling to earn a commission.
Examples such as amazon, MVMT, and Harry & David are evidence of the success of
affiliate programs. Moreover, a fraud and harmful company (organizations or
companies that use the PONZI scheme), which only rely on word of mouth, can get
loyal customers. If such a company manages to reach consumers and loyal people, then
a company with a good reputation can also get loyal costumers and many consumers if
they use word of mouth properly. Moreover, consumers normally check the quality of
offered products, reputation for honesty, and fairness in buying and selling, meaning
that a company who has positive all of these criteria (instead of fraud company with a
PONZI scheme and similar strategy), getting more consumers and loyal customers can
be guaranteed.
Companies with negative reputation, useless product where the users only get
benefits by “harming” others can get customers and some of them are loyal. Hence, a
company who establishes a positive reputation, honesty, fairness, good quality of
product or service may have higher chances to get more customers. Also, loyal
customers can be guaranteed. A company with PONZI scheme where the mechanism is
selling view point to fellow users or deceiving new people into purchasing the view
point can utilize word of mouth. The outcome is they have loyal customers despite its
fraudulent procedure to get benefit. Therefore, a honest company who sells highly
reputable and good quality product or service can be better than such companies. If
companies with negative reputation, fraudulent procedure, and obviously deceitful can
be successful in utilizing word of mouth (despite not so successful), then a good
 company can also be the same and even better. One of the utilization is to use affiliate
marketers. They can share the promoted product or service to their fellow family,
friends, co-workers and many more, meaning that word of mouth is guaranteed to be
established. The use of affiliate marketers can be a means to utilize word of mouth
where word of mouth from affiliates may help increase sales, brand awareness and other
similar purposes.
3.2. The Advantage of Affiliate Marketing for Merchants
Affiliate marketing can synergize well with merchants. Especially when the
merchants already have a good reputation. A good reputation can help merchants to
recruit competent affiliates. On the other hand, affiliates can register by themselves
because the merchant is already reputable. A company that has a good reputation needs
to maintain its reputation, including making it even better. The use of affiliate marketers
services can be an extension to expand the reach of merchants. For example, affiliate
marketers market their products to more people in various regions, increasing the
number of people who know the merchant promoted by affiliate marketers. For
instance, a retail company that sells sports shoes. The targeted market segmentation is
young people, folks fond of exercising, sports community. This company uses the
services of affiliate marketers, which aims to increase consumers and make the retail
store viral. The better the affiliate marketer's efforts in making the retail company viral,
the more known the company is in front of the public. Even though the company is
already known by 1000 young people, with affiliate marketers promoting the store
offline and online, the company is known by 3000 young people.
This means an increase in one group of segmentation, from 1000 to 3000
youngsters. Hence, an increase in young people as one of the marketing segmentation
happens. In addition, affiliate marketers can also invite people closest to them to buy
products at the stores they promote. At this stage, the affiliate help forms new market
segmentation. For example, mothers who want to buy their children sports shoes
because of sports violations at school. The affiliate program makes the retail store
known to many people and adds new market segmentation. The existing segmentation,
meaning the group in which the company has already targeted, increased in quantity
(1000 to 3000 youngsters know the merchant's existence). Also, the affiliate marketers
help the merchant get a new group of segmentation (mothers who want to buy shoes for
their children). Affiliate marketing is truly potential for merchants (companies,
organizations) to expand their segmentation and increase the quantity of the existing
segmentation they have targeted before using an affiliate program.
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