Advantages and Disadvantages of Celebrity Endorsement

Celebrity endorsements are capable of manifesting both favorable and adverse effects for the brands with which they associate. The general belief among advertisers is that advertising messages delivered by celebrities provide a higher degree of appeal, attention and possibly message recall than those delivered by non-celebrities. Marketers also claim that celebrities affect the credibility of the claims made, increase the memorability of the message, and may provide a positive effect that could be generalized to the brand (Cooper, 1984). Despite the potential benefits they can provide, celebrity advertising increases the marketers’ financial risk. Indeed, it is believed that using celebrities are an unnecessary risk unless they are very logically related to the product (Beverage Industry 1989; USA Today 1995 [1] ). In the history of advertising – products or services, political parties or ideas – celebrities have played a seminal role in boosting the bottom line. Whether what’s on offer is a soft drink, beauty aid, ideology or public health message, it’s the celebrity endorsement that makes the difference between recognition and anonymity. Unique selling propositions are best boosted when a popular credible figure vouches for it. A Govinda who claims to wear a particular brand of banian impels scores to switch brands. An Aishwarya Rai pledging her eyes motivates thousands to queue up to pledge theirs. A Jayalalithaa or an MGR mouthing the party manifesto sends millions to the polling booth. As long as the public persona’s charisma is being used to promote something that’s not bad for you, why complain? Among the most successful celebrity endorsements are those that carry a public health message or that create an awareness campaign.

If there is heightened awareness of the need for vaccination, of HIV-AIDS prevention or even the need to seek treatment for tuberculosis, the credit goes largely to advertisements or events that persuade people through popular figures. A celebrity carries credibility. She has mass appeal, attracts attention, and has the power to stimulate emulative action. So what if the endorser gets paid a bomb for it? A picture is said to be more eloquent than a thousand words.

A picture of the celebrity using the product or service is enough to send a strong message across diverse groups and locations, transcending all kinds of barriers. Sports-persons and movie stars have popular appeal. Even a good brand needs a catalyst to achieve its due market share. And that little fillip from an endorsement can help instant recall that translates into sales. [2] 

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There are not many researchers who have embarked on the concept of negative information, which celebrities’ causes for consumers’ evaluations of endorsed brands (Till & Shimp, 1998), but still there are many different aspects on how negative information can be viewed. Furthermore, Soderlund (2003) argues that celebrities can be perceived less trustworthy when they are advertising too many brands (multiple brand endorsements) since the consumers get diverse information. On one hand, a celebrity who his linked with positive information has a greater opportunity to reach out the targeted audience. On the other hand, negative information brings an association that decreases the trustworthiness of a celebrity and the fit with the brand (Dimed, Joulyana, 2005). The use of celebrity endorsers has a high potential risk to advertisers if the celebrity is subsequently found to have transgressed society’s norms (Miller, 1994). Consumers may also form preconceived notions of what celebrities are like as people (Misra & Beatty, 1990) which may further limit the range of products for which they are credible endorsers.

Floyd Landis’s potential as a product endorser dropped faster than a cyclist speeding down a mountain road when he tested positive for synthetic testosterone after winning this summer’s Tour de France. Within the span of a week, Landis went from obscurity to fame to shame with hardly a moment in between to celebrate his (short-lived) victory. Sports columnists like Selena Roberts of The New York Times denounced him as a symbol of the ills not just of professional cycling — which can’t seem to root out performance-enhancing drugs — but of all pro sports. And his positive drug test seriously set back the companies that had invested tens of millions in him and his team in hopes of profiting from a victory in cycling’s highest-profile event. Within weeks of the positive test, Phonak, a Swiss hearing-aid maker, announced that it would drop its sponsorship, as did iShares, a subsidiary of Barclays, a British bank. iShares also said that it would no longer fund any pro-cycling team or event. In today’s economy, athletes and celebrities push all manner of products and services, and their travails can tarnish, by association, the brands and companies that they endorse.

1.3 (a) Advantages and Disadvantages from Using Celebrity Endorsements

Advantages from using Celebrity Endorsements

• A celebrity can enhance brand equity (Till, 1998)
• Consumers’ attitude toward a brand can be changed or affected by celebrity (Till, 1998).
• Celebrity can contribute, freshen and add a new dimension for a brand (Till, 1998).
• Culture road block can be manipulated by using celebrity with worldwide reputation (Kaikati, 1987).
• Celebrity is able to build brand credibility in a short period of time (Abbot et al., 2001). Furthermore, Mullikin and Petty (2006) state that “appearing of celebrity in advertising can built some independent credibility to the advertisement”.
• Atkin and Block (1983) suggests that “celebrities may help advertisements stand out from surrounding clutter, thus improving their communicative ability”
• Advertisers believe that consumers will buy products associated with people they admire and respect (Wright, 2000).
• Celebrity endorsement can underpin competitive differential advantage among other companies (Wright, 2000)
• Celebrities make advertisement believable (Kamins et. al., 1989)
• They help in brand name recognition (Petty, Cacioppo, Schermann, 1983)
• Enhance message recall (Friedman and Friedman, 1979)
• Influence consumer’s purchase intentions (Tripp, Jensen, Carlson, 1994)
• Create a distinct personality to the endorsed brand (McCracken, 1989).

Disadvantages from using Celebrity Endorsements

• Consumers’ skepticism; consumers might not believe that the endorsers really consume the product that they endorse (Hsu and McDonald, 2002).
• Consumers give less credibility to celebrities who endorse many products (Tripp et al., 1994).
• On the one hand, single endorser for one product might be seen as boredom. On the other hand, consumers might get confused by using multiple celebrity endorsement (Hsu and McDonald, 2002).
• Louie and Obermiller (2002) state that “celebrities who are blamed for negative events (e.g. accidents) can have detrimental effects on the products they endorse”.
• Another risk can arise if celebrity loses his/her fame, his/her image changes resulting to contradicting image of endorsed brand
• Vampire effect’ or ‘celebrity vamping’ can be perceived, when endorsing celebrity is too attractive, drawing attention away from the product (Rossiter and Percy, 1997)
• endorser’s effectiveness is reduced when there is a bad fit between the endorsing person and the product (Till and Shimp, 1998)

1.4 Choice of Product Category

FMCG goods were chosen for the purpose of the study. FMCG is the fourth largest sector in the Indian economy. The term FMCG refers to those retail goods that are generally replaced or fully used up over a short period of days, weeks, months and within a year. As the economy was facing the slowdown in demand in 2008, the FMCG sector did not witness any visible sign of demand destruction, but is growing with healthy pace. During the July-September 2008 quarter the aggregate revenues increased by 22% despite cost inflation and aggregate net profit grew by almost 20% on yearly basis. The bunch of factors like increased spending power in rural markets, appropriate pricing policies by companies, better product mix and organic and inorganic expansion has shown consistent growth for the industry and is expected to continue the drive the growth further.

SENSEX v/s BSE FMCG Index

India is among the world’s youngest nations, with a median age of 25 years as compared to 43 in Japan and 36 in the US. This coupled with a large population and rapidly evolving consumer preferences, has translated into a large market opportunity for FMCG players. Indian cities are expected to add 379 million people to the consumer base for FMCG companies, as the urbanization rate is expected to increase from the current 30 to 45 percent in the next 40 years. Also, according to the recent estimates, household income in the top 20 boom cities in India is projected to grow at 10 percent annually over the next eight years. [3] According to FICCI- Technopak report, India’s FMCG sector is poised to reach and by US$ 43 billion by 2013 US$ 74 billion by 2018. The report states that implementation of the proposed goods and services tax (GST) and the opening of the foreign direct investment are expected to fuel growth further and raise the industry’s size to US$ 47 billion by 2013 and US$ 95 billion by 2018. [4] According to figures released by market research agency Nielsen, demand for personal care products grew faster in rural areas than urban areas during the period January- May 2011. Furthermore, according to data from Nielsen, the FMCG industry posted a 14 percent sales growth year- on- year in April 2010, the highest in eight months.

Overall this segment accounts for around 80 percent of consumer spending in India. As with many other retail segments, companies say the main driving forces in the FMCG segment are rising disposable income together with changing lifestyle patterns in India. Low-priced products constitute the majority of sales volume, and lower income and lower middle-income consumers accounting for over 60 percent of sales. Rural markets account for around 56 percent of total FMCG demand, although some companies believe that much more can be done by the organized sector to tap rural demand. “Road infrastructure is improving and communications infrastructure is improving,” says a vice president of a leading FMCG company; “There is no reason why as many as 300 million new consumers cannot be brought into the ‘consumer basket’. Just by increasing the geographical reach, there will be enormous growth in the FCMG sector.” After four years of growth of between 1 and 1.5 percent, the segment saw revival in 2004, driven in part by a surge in retail innovation. Retailers introduced price cuts, and launched new packaging sizes together with discounts and promotional offers. [6] 

1.5 Structure of the Dissertation

The dissertation will include the following six chapters:

CHAPTER 1 – Introduction

The chapter one on introduction incorporates general backgrounds with respect to historical and present development of celebrity endorsed advertising, current situation and types of celebrity endorsers, and influences of celebrity endorsement in the Indian market will be introduced. The historical background traces the development of advertisements and celebrity endorsements from the eighteenth century till date. The advantages and disadvantages of celebrity endorsements have been discussed on the basis of the findings of various studies on celebrity endorsements. The choice of product category i.e. FMCG has also been discussed by quoting some figures about the growth of the industry with the help of stock market quotes.

CHAPTER 2 – Conceptual Framework & Operational Definitions

Chapter 2 discusses the various models that have formed the basis of celebrity endorsements like the communication process, source credibility model, meaning transfer model, match- up hypotheses, attitude towards ad model, elaboration likelihood model etc. In the operational definitions part, all the variables identified for the purpose of the study are defined.

CHAPTER 3- Literature Survey

The third chapter on literature review includes historical development of celebrity endorsements; celebrity endorsers versus non-celebrity endorsers in terms of effectiveness in advertisements; source credibility, attitude towards brand, and purchase intentions, and additional factors predicting the effectiveness of celebrity endorsement advertisements. A number of national & international research journals, magazines, books, theses and websites have been referred for the purpose of literature survey.

CHAPTER 4- Research Methodology

Chapter four illustrates the type of research that has been undertaken, the methods used to collect secondary and primary data, it will provide reasons for adopting the chosen approach. First, the research aims and objectives are established in order to set up the research structure. This chapter also explains in detail the hypotheses formulated for the purpose of research investigation. The advertisements selected for the study have also been mentioned. All the details related with questionnaire development are also discussed with complete details of the statistical tools to be used to test the data collected with the help of instrument. The structure will demonstrate the different methods used by the researcher to gather the information while explaining the reasons why they have been chosen.

CHAPTER 5- Results & Discussions

The chapter highlights the statistical results of the study. All the results have been discussed keeping in view the hypotheses. SPSS has been used to analyze the data collected through questionnaire. It also includes the discussions of findings of the previous studies on similar topics.

CHAPTER 6- Recommendations & Conclusions

This is the last chapter of the thesis which includes a summary of the findings and recommendations based on the empirical analysis in the present theses. The insight gained from this study would provide insights to stakeholders in the related field with crucial information and knowledge that will benefit them strengthening their brand equity. This chapter also identifies the areas for future research as identified during the course of this research work.

1.6 Summary

The title of this study is “Celebrity Endorsements & Their Influence on Consumers’ Processing of Marketing Communications”. This chapter aimed at introducing the concepts of advertising, it history, advertising and its development in India, modern day advertising, celebrity endorsements, its beginning and development. It also discussed the chapterization plan of the theses. The next chapter will discuss the operational definitions of the variables identified for the purpose of the study and conceptual framework explaining the various concepts related to celebrity endorsements.

CHAPTER-2

OPERATIONAL DEFINITIONS & CONCEPTUAL FRAMEWORK

2.1 Operational Definitions

Operational definition is a definition for a variable stated in terms of specific testing criteria or operations, specifying what must be counted, measured, or gathered through our senses (Cooper & Schindler, pp.714).

2.1.1 Variables

The term variable is used as a synonym for construct or property being studied. In this context, a variable is a symbol of an event, act, or characteristic, trait or attribute that can be measured and to which we assign categorical values [7] .The variables identified for the purpose of this study are:

2.1.1(a) Endorsements featuring celebrities

2.1.1(b) Endorsements featuring non- celebrities

2.1.1(c) Source credibility

2.1.1(d) Attitude towards the brand

2.1.1(e) Attitude towards the advertisement

2.1.1(f) Purchase intentions

2.1.1(g) Demographic variables

2.1.1(h) Product variable

2.1.1(i) Brand variable

2.1.1(j) Multi- brand endorsements

2.1.1(k) Fast Moving Consumer Goods (FMCG)

These variables are defined below.

2.1.1(a) Endorsements Featuring Celebrities

According to the Federal Trade Commission (1980) [8] , an endorsement is defined as:

“Any advertising message (including verbal statements, demonstrations, or depictions of the name, signature, likeness or other identifying personal characteristics of an individual or the name or seal of an organization) which message consumers are likely to believe reflects the opinions, beliefs, findings, or expertise of a party other than the sponsoring advertiser. The party whose opinions, beliefs, findings, or expertise the message appears to reflect will be called the endorser and may be an individual, group or institution.”

Celebrities are individuals who enjoy public recognition and who use this recognition on behalf of a consumer by appearing with it in an advertisement (McCracken, 1998). Friedman and Friedman (1979) state that a celebrity endorser is an individual who is known to the public for his or her achievements in areas other than that of the product class endorsed. Advertisers sometimes develop and use fictitious characters to serve as endorsers for their brand. These fictitious characters can also be classified as celebrities. Examples of these characters are actors, actresses, fantasy creations, or animal personifications like the Energizer Bunny. The term celebrity itself do not exclude individuals who may be controversial or disliked by the general population, as long as they are used carefully to convey a certain image (Tellis, 1998).

Essential for the definitions are that they are discussing an individual who is known to the public in different ways. The individual is famous and utilize his or her publicity to advertise a product that does not have anything to do with the individual fame. We consider McCracken’s definition as the most informative one and it is short and concise. The definition gives a clear view of what a celebrity endorser is. Endorsers can be classified into three broad groups, experts, lay endorsers and celebrities. Experts are individuals that the target population perceives as having substantial knowledge in a particular area. Typically experts are chosen because of the knowledge they have accumulated through experience, studies or training (Tellis, 1998). Lay endrosers may be real or fictitious. They are (initially at least) unknown individuals or characters, which are selected to closely resemble the target segment, enabling the target segment to identify with the endorser and the message. The anonymous voice- over in video and audio advertisements is often that of a lay endorser (Ibid).

2.1.1(b) Endorsements Featuring Non- Celebrities

When an organization cannot find a celebrity that is in unison with the organization’s brand image, they can create their own “celebrity” endorser, i.e. a created spokesperson. There are two types of created spokespersons an organization can create; either real people acting out a role or animated/imaginary roles (Waldt et. Al, 2009). A created spokesperson has some advantages (Erdogan, 1999: 293 and Tom et al, 1992: 47 – 49). Created spokespersons have a higher degree of control and are less costly than celebrities and marketers have the possibility to create a better fit between the product and the endorser. The endorser’s longevity will be for as long as the method is successful for the organization, whereas “real” celebrities have limited longevity. The same created spokesperson can be used indefinitely and adapted to changing circumstances. According to Tom, Clark, Elmer, Grech, Masetti and Sandhar (1992: 50) the created spokesperson’s effectiveness is in establishing a lifelong link with the product.

The biggest disadvantage when using a created spokesperson is that the endorser will only be well known after the organization has created awareness and a high advertising spend. Tom et al (1992: 51) suggest that marketing professionals should make use of created endorsers when the advertising objective is to create a long-term link between the endorser and the organization. It should also be noted that celebrities would be the better choice when the organization is interested only in establishing a short-term memorable link.

2.1.1(c) Source Credibility

Credibility refers to a person’s perception of the truth of a piece of information. It is a multi-dimensional concept that serves as a means for the receiver of the information to rate the source or transmitter of the communication in relation to the information. This rating correlates with the willingness of the receiver to attribute truth and substance to the information (Hovland et al. 1953, p.21). Hovland and his associates (1953) popularized the term “source credibility” and used it to describe a communicator’s positive characteristics which affect the receiver’s acceptance of a message. Ohanian (1990) defined message source credibility as “a term commonly used to imply a communicator’s positive characteristics that affect the receiver’s acceptance of a message”.

Endorser credibility refers to the expertise, to the objectivity and the trustworthiness which the consumer associates to the endorser. This dimension shows consumer’s beliefs that the endorser is competent and willing to provide with accurate information which is necessary for an adequate evaluation of the competing products or brands. The persuasive capacity of a credible endorser is higher in the case in which the consumer doesn’t have information about the product (brand) or did not have an opinion about it. Table 5.1 below shows some previous factor model studies of source credibility.