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Influence of Celebrity Brand Endorsement

Celebrity Endorsement As a Tool For Advertising Strategy

CHAPTER 1: INTRODUCTION

1.1 Introduction

It is a routine for us to encounter with number of commercials endowed with well known persons, in either electronic media or paper media. Such commercials, endowed with famous personalities, are the part and parcel of company’s promotion mix strategies. This concept, in general, is known as Celebrity endorsement. Believing that celebrities are the effective spokespersons for the company, marketing persons spend enormous fund for such contracts. (Katyal, 2007) Celebrity choice for endorsement is very critical by nature, as it involves significant fund along with the reputation of the firm. Choice of celebrity is done based on two parameters. One of these is ‘compatibility index’ and another is ‘trait fit index’. By compatibility index, we mean the match between the celebrity and the brand. Whereas the trait fit index is defined as conformity of brand personality traits to the celebrity personality traits. (Sengupta, 2005)

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A radical increase in the use of celebrity endorsement as a tool for advertising strategy has been n oticed in the last few years. Celebrities were used to promote almost every kind of products or services, let it be sports to beverages or beauty to luxury. This drastic increase of celebrity endorsers is just not limited to any specific sector of the economy. Companies use celebrity endorsement for all industry categories inclusive of packaged goods, automobile industries telecommunication and financial services. (Okorie, 2010; Okorie & Aderogba, 2011) According to the study of White (2000), in the US, 25% advertisements in paper media employ the use of endorsers. As a result, The hypothesis that celebrity endorsement positively affect the consumers’ attitudes and buying behaviors, is accepted by many US firms. (Okorie & Aderogba, 2011)

The motive behind the celebrity endorsement in the brand communication strategies is just not to increase income, but is to add value to a company, brand or product. Celebrity endorsement strategy is more likely to be pragmatic for those products, which are having a high price-production cost margin with a larger customer base. (Amos, Holmes & Strutton, 2008) or in general, the celebrity endorsements are the characteristic for nationally marketed products rather than for local or niche market products. The conglomerates tend to invest enormous amounts of money for matching its products and the celebrity believing that this is going to catch the attention towards the endorsed products or services and assist in transferring the image to products or services in the course of the fame of a celebrity. (Meenaghan and O‚ÄüMahony, 1998)

A huge range of publically recognized celebrities are used by food advertisers to endorse or act as spokespersons for a product and also to recommend it to the public. After 1920, the relationship between celebrities and their audiences came to the notice of the advertisers. Popular entertainers and the movie stars were the early endorsers. This list later on extended to embrace TV stars and persons from specific occupations like politics, sports, arts, and business etc.

By an endorsement, an endorsing icon makes the product much recognizable to the target public. This can be made by a number of ways. Like:

  • Explicitly: Here the endorser directly made declaration for endorsing the product.
  • Implicitly: Here endorsement is done by implying the use of product by the endorser.
  • Imperatively: Here the endorser suggests the use of the product.
  • Co-presently: Here the endorsement is done by endorsers’ presence with the product.

Celebrities are selected to stand for values, which are embodied in the endorsed product. Bill Cosby, the comedian, endorsed the soft drink Coca-Cola. Though there exist a close association between the star and the product yet use of celebrity endorsement does not guarantee the increase in product sales. John Houseman, was not successful as an endorser for McDonald's but fared well in other endorsement campaigns. An endorsement fails when actually they fail to transfer meaning.
In Indian advertising industry, the first celebrity endorsement ad was carried by LUX, the star bathing soap. Subsequently, it came into the trend of attaching celebrity credibility to the products through an endorsement stunt. (Belch et al, 2009) Today strategic positioning along with effective communication has become the formula for the success in this competitive market. Both the above objectives can be achieved through endorsement strategy. Shifting our discussion to the Indian markets, this concept of celebrity endorsement has become so popular among the marketing person that, for an ad of Eclaires toffee, which cost one rupee to the consumer, Kareena Kapoor is approached for the advertising campaign. Celebrity endorsement gives a touch of glamour to the brand. (Reynolds, 2000) Celebrity endorsement is a billion dollar industry today worldwide. (Kambitsis et al, 2002)
In India, bollywood stars, such as cricketers, players, singers, athletes etc. have a huge fan following. This fact provides all these famous personalities the celebrity status. According to a research paper, bollywood viewers counts to be 3.6 billion worldwide which is quite high from the viewership of the Hollywood, which is 2.6 billion in numbers. This statement strengthens the success of celebrity endorsement strategy in Indian markets.
The Soft-Drink Industry of India amounts to be 3500 crore rupees, comprising of consumer’s right through the country, and of all age groups. Major players of the industry are Coca-cola India Pvt. Ltd., Dabur foods Ltd., Parle Agro Ltd., Parle Bisleri Ltd., Pepsico India Holdings Ltd., Pioma industries Ltd., Mount Everest Mineral waters Ltd., Navarangs Hospitality Service Pvt. Ltd. etc. PepsiCo India entered the Indian Soft Drink industry in and became a leading name within a few years. Their popular products are Slice, Pepsi, Nimbooz, Mountain Dew, Mirinda and 7UP.
Coca-Cola India and PepsiCo India are the two popular giants in the Indian Soft Drink market. Launched in 1993, Coca-Cola India is a leading soft drink producer in India which has more than 1.3 million retailers and more than 7000 distributors in India. Thums up, Limca, Fanta and Coca-Cola are some of their popular brands. With the rising growth of soft drink industry, both the manufacturers adopt strategies to expand their sales through advertisements.

Very first, Babe Ruth, the great baseball player endorsed Red Rock Cola soft drink brand in the late 1930’s and since then companies all over the world inclined towards celebrity’s endorsement for their products as an integral part of the promotional campaigns. Sports icons and film stars were being associated with soft drinks for their promotion. E.g. Akshay Kumar is associated with Thumbs Up brand, Shahrukh is being associated with coca cola also Ranbir Kapoor for promoting Pepsi. This kind of endorsement campaigns helps the corporate to reap quantity profits.

1.2. Research Aim

Although the concept of celebrity endorsement and Indian soft drink industry is heavily documented in the academic literature, but what makes out study different and interesting is its relevance to the consumer buying behavior. Its area of study makes it particular and more consistent as covers the Indian soft drink industry. Not much research has been laid down for this topic. Although the Indian soft drink industry has been the point of discussion for celebrity endorsement strategy among the marketers and the media.
Indian market scenario is going through a change phase because of the presence of high competition and spread of awareness among the Indian consumers. Think of the ads in 1990 or earlier, these were just informative but it’s not the scene with the today’s ads. These days ads are more innovative and consumer involvement has become a must trick of success. Consider washing powders market in India. Earlier completion was not that much stringent only a few players like Nirma, Ghadi etc were there. Presence of MNC’s like P&G, Uniliver etc has changed the game. Consumer attitude is changing with a rapid pace, making them much aware of the products. Research has been carried out for studying the impact of celebrity endorsement on the buying behavior of the Indian soft drink consumer and their response to the celebrity endorsement ads. For example people feel much motivated for buying a Nakshatra brand diamond endorsed by Ashwarya Ray rather than buying a traditional gold jewelry..
Majority of soft drink ads in India are targeted towards the youngsters. This makes the importance of young celebrities to be included in the ads. For an billion dollar industry, finding out the role and importance of celebrity endorsement, particularly for the context of Indian soft drink industry, has its own significance. Here in this study, our point of discussion will be on Indian soft drink industry and celebrity endorsement, its impact on the consumer buying behavior. Coca-cola India, as its marketing strategies and inclusion of endorsement strategy in the marketing plan, is spending enormous amount on endorsement contracts. In the past few years in India, as the demand for the top celebrities shot through the top, their charges too looked skywards. On an average top stars charge anywhere between Rs 1–1 .5Cr. a day and according to the industry executives even during the economic slowdown, the rates didn't come down but kept growing even though at a slower speed (Economic Times, 2010).

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1.3 Research questions

The research will be carried out answering the following questions:

  • How does the celebrity endorsement influence the Indian soft drink consumers’ buying behavior?
  • How much important is the celebrity endorsement in Indian soft drink industry?
  • How much an endorsement cost to the firm?

1.4 Research Objectives

This research is structured for attaining three research objectives. First objective is to measure the impact of celebrity endorsement on the consumer buying behavior for Indian markets. The second objective is to mould the impact study of celebrity endorsement for Coca-Cola India. Last but certainly not the least objective is to have an idea of the costing side of the endorsement strategy. Objective statement is as follows:

  • To establish relationship between celebrity endorsements in advertisement and buying behavior of Indian consumers.
  • To evaluate the effectiveness and impact of celebrity endorsed advertisements for Coca-Cola.
  • To analyze the spending trends of company on celebrity endorsement.

1.5 Research Methodology

This is a qualitative research. Here for the fulfillment of the research objectives two types of research methods are used for analyzing both primary data and the secondary data. Primary data are collected through questionnaires. The population for the study is India. 100 responses are collected through these questionnaires and further these responses are analyzed using quantitative research tools, i.e. charts, graphs, tables, excel formulae etc. this sample of 100 respondents are a random sample. Questionnaire is filled through an encounter method. Under this the first 100 persons encountering at a key place are asked to fill the questionnaire. This key place can be a mall, restaurant, college, etc. where the soft drink consumers can be approached with least efforts.
The secondary data are availed from the company sources. An exploratory study method is applied for analyzing these secondary data. From the secondary data a spending trend are drawn against the monetary or nonmonetary benefits derived. After collection of data, data analysis techniques are used as per the requirements of the data. On the basis of data analysis results are derived or authenticated.
Finally, results of both the methods are combined to test the hypothesis and derive answers to the research questions.

1.6 Contribution of the Study

First and foremost, this research aims to analyze the buying behaviors of the Indian soft drink Consumers and next, the Study attempts to incorporate facts of Indian consumer attitudes with regard to the celebrity endorsed advertisements of Coca Cola. It tries to investigate appreciation of celebrities among the consumer and their attempt to emulate them. Further the study tend to analyze the spending trend of soft drink leader coca-cola. This cost aspect will also be analyzed and evaluated on the ground of benefits derived. Earlier, many scholars have done research on this front but, in this study, the area of analysis is conical as we are taking into consideration only Coca-cola India. This makes the view much clear and concise.
The undertaken research on the celebrity endorsement and its impact on consumer buying behavior is of much use from the academic as well as professional perspective. As it analyzes the behavior of consumers, it will provide theoretical base for scholars and practical directives to the managers and professionals.

1.7 Structure of the Dissertation

This dissertation is segregated into six chapters to follow the proper research process, named as Introduction, Literature Review, Research Methodology, Findings and data analysis, Discussion and interpretation of findings and finally Conclusion, implications and recommendations.
Chapter one is of introductory chapter. This chapter will acquaint the reader with the ground of the study. Here the research aims, objectives methods etc. are disclosed. Beginning of the chapter sketches the pertaining scenario of the Indian soft drink industry and celebrity endorsement. Later, the process of the research, its significance and importance are stated.
The second chapter deals with the literature review. This chapter provides details about the previous studies on the concerning topic. Also define the key terms and provide theories required for the completion of the study. This chapter is concluded giving ground to the research.
Research tools and methods used for deriving the objectives of the study are defined here. Complete illustration of the process from data collection to the final data analysis and interpretation is described in this section. Techniques of sampling, sample size, data analysis tools are also given here. It continues with a description of the two research methods and justify the adoption of particular quantitative technique.
Data analysis and findings chapter is numbered four. Here at the initial stage, primary data collected from survey through questionnaire is discussed and analyzed. Also definition of variables used and the survey techniques is given in the early section of the chapter. In this analysis is done using charts and tables for each instance observed from the questionnaire. Chapter is concluded with hypothesis testing and objective derivation.
In the fifth section of the dissertation a detailed discussion of findings is done. Through the discussion, research interpretations are done. These interpretations are further generalized so that results can be implemented for the universe at large.
In the end, all findings of the study are summarized along with the limitations of the study. Finally giving ground to the further research opportunities, dissertation ends.

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REFERENCES

  • Amos, C. Holmes, G and Strutton, D., 2008, International Journal of Advertising, 27(2), pp.209-234.
  • Banon.T.2012.Mail online India, [online] Available at [Accessed on 17th July 2012].
  • Belch, G. E. & Belch, M. A. 2001. Advertising and Promotion – An Integrated Marketing Communications Perspective. 5th ed. New York: McGrow Hill.
  • Blakeley, K. 2001. Oops, They Did It Again. Forbes. Vol.168(8). P. 54.
  • Bryman, A., and Bell, E., 2007. Business Research Methods. Oxford University Press.
  • Byrne, A. Whitehead, M. and Breen, S., 2003.The naked truth of celebrity endorsement, British Food Journal, 1059(4), pp. 288 – 296.
  • Byrne, A., Whitehead, M. and Breen, S., 2003. The naked truth of Celebrity Endorsement. British Food Journal. 105(4/5) pp.288-296.
  • Charbonneau, J and Garland, R., 2006. The use of celebrity athletes as endorsers: views of the New Zealand general public, International Journal of Sports Marketing & Sponsorship Damian Thompson, 2(4), pp.42-43.
  • Consumer Buying Behavior. n.d. [Onlne]. Available from: < http://www.udel.edu/alex/chapt6.html>. [Accessed 4 June 2012].
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