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Celebrity Licensing and Celebrity Endorsements

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Indian advertisements has been flooded with plethora of celebrities endorsing several brands. But then why celebrity licensing is lacking behind in India. My research paper touches what are the reasons of its popularity among other countries except in India. Also the reasons behind why they are still in a nascent stage in India

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Celebrity Licensing and Celebrity Endorsements

  1. 1. Title of the Project: In War with Celebrity Licensing– a comparative study between celebrity endorsing and celebrity licensing. Name: PALAK AGARWALA Course: B.B.A. (Hons.) Specialization: MARKETING Roll no.: 32 Room no.: 34 Current year: THIRD YEAR Academic session: 2012 - 2013 Professor Guide: PROF. D. SEN
  2. 2. 2 A comparative study on Celebrity Licensing and Endorsing Strategy BY Palak Agarwala Submitted to the St. Xavier’s College (Autonomous), in Partial Fulfillment of the Requirement for the Degree of Bachelors in Business Administration at the University of Calcutta. April 2013 Date of Submission: April 24, 2013.
  3. 3. 3 ACKNOWLEDGEMENT It would have been impossible for me to complete this project if it were not for Professor D. Sen, my project Guide, who extended a lot of help during the crucial stage of my project. In all likelihood, I might have finished the project by myself, but Sir’s guidance made the journey a lot more informative, interesting and a lot easy for me. I express my thanks to Rev. Father Dominic Savio, Sj, Vice Principal of, St. Xavier’s College, Kolkata, Professor Amitava Roy, the Dean of our BBA Dept., for showing confidence in the students and giving us the chance to do project papers. My deep sense of gratitude to all the respondents who showed keen interest in my survey. I would like to give them my heartfelt thanks for obliging my survey and giving true, unbiased opinion to my questions. It was for their active support feedback without which my survey would not have been successful. I also acknowledge my colleagues, who spent their precious time in providing feedback and helping me in my survey. I extend my thanks to all my other faculty members and the above mentioned faculties who have taught us the level of professionalism, dedication and discipline it takes for one to complete a project.
  4. 4. Lastly, but not the least, I thank my parents, my family and my friends for their immense support and help. 4 THANK YOU.
  5. 5. 5 TABLE OF CONTENTS Sl. No. PARTICULARS Page No. 01 Executive Summary 06 02 Introduction 08 03 In contract with celebrity Licensing and Celebrity Endorsement i. Talking About History ii. In Conversation with Celebrity Endorsing iii. Signing Celebrity Licensing 10-19 04 Let the War Begin… i. Licensing contract v/s Endorsement Agreement ii. In Return… iii. Trust who…? iv. Impact on brands v. Lack of modern and organized sector 20-28 05 Every Cloud has a Silver Lining i. The categories that are yet to be explored ii. Fascination for Dead Celebrities 29-31 06 My Research- • Objective of the study 32-33 07 Research Methodology 34-36 08 Processing… 37-46 09 Let’s Find out, What we Found Out… 47-49 10 All is Well that Ends Well… 50-52 11 bibliography 53 12 Appendix 54-57
  6. 6. 6 EXECUTIVE SUMMARY Celebrity endorsements are a time-honored marketing tool. The theory is that borrowing some of a celebrity's star power will create both an awareness of, and an interest in, a given product. Apparently, the strategy works: A 2011 study published in the Journal of Advertising that looked at athletes' support for brands found that such endorsements produced a 4% growth in revenue (about $10 million a year in added sales of the branded products), and a 0.25% rise in stock returns. The marketers want to choose a celebrity who evokes positive emotions in your target market. They want someone who has a broad appeal, someone who creates buzz, someone who is likeable. At the same time marketers want someone who is a good fit or has some expertise with the product. This gives credibility to the company and as well as ad to the celebrities connect with the audience. The world is witnessing a fast evolving market with a rush of competitive products entering in every day. Customers are in a quandary discerning which is best amongst them as all are equally good. They need more than just motivation and words of the salesman to build confidence in the product. Amongst popular marketing gimmicks to attract consumers, endorsements by popular celebrities top the list. In close heels is Celebrity Licensing, which is emerging as the most lucrative business in recent times given the fact that 9 out of every 10 people would vouch for a product whose identity has a seal of their favourite idol. Further, it has been predicted that celebrity licensing is all set to rule the next era of the marketing concept. Celebrity licensing can be used either to position a new product in the market or to broaden the market of an already existing product and can be either Deceased Celebrity Licensing or Licensing of Living Celebrities. In theory, these arrangements seem appealing and very attractive, to study the reality of the market, a small survey had been conducted which will depict the true picture of the society we live in. Consumer reaction can never be predicted or compared within the consumer groups. The survey tries to understand the perception of the consumer towards an
  7. 7. advertising campaign, the launch of the line of merchandising the products under their own brand name. Through this project we can understand the reasons behind the popularity of the celebrities. The objective behind the marketers entering into agreements with the celebrities, is largely due to the emotional appeal the celebs have on the consumers. They have become the influencers and trendsetters for the consumers, specially the youth of India, who are aged between 15-25 years of age. There is huge scope of expansion in terms of product categories and the market. People can never get exhausted of watching celebrities nor can the products will ever end. The right strategy, organized retail sector, right time and opportunity can make any campaign successful. Be it licensing or endorsing. There should be the right celebrity, the image, the quality which definitely affects a consumers repeat purchase decision, all paly major roles in the success of a campaign. 7
  8. 8. 8 INTRODUCTION Brand licensing is a well-established business, both in the area of patents and trademarks. The process of creating and managing contracts between the owner of a brand and a company or individual who wants to use the brand in association with a product, for an agreed period of time, within an agreed territory; Licensing has been used by brand owners to extend a trademark or character onto products of a completely different nature. Trademark licensing has a rich history in American business, largely beginning with the rise of mass entertainment such as the movies, comics and later television. Mickey Mouse's popularity in the 1930s and 1940s resulted in an explosion of toys, books, and consumer products with the lovable rodent's likeness on them, none of which were manufactured by the Walt Disney Company. This process accelerated as movies and later television became a staple of American business. The rise of brand licensing did not begin until much later, when corporations found that consumers would actually pay money for products with the logos of their favorite brands on them. McDonalds play food, Burger King t-shirts and even ghastly Good Humor Halloween costumes became commonplace. Brand extensions later made the brand licensing marketplace much more lucrative, as companies realized they could make real dollars renting out their equity to manufacturers. Celebrity branding, soon become phenomenal, which took the form of celebrities attending PR events, appearances in advertisements and several other promotional activities. In recent times given the fact that 9 out of every 10 people would vouch for a product whose identity has a seal of their favorite idol. The popularity of celebrities has always been a tool for marketers to promote their products through advertisements and PR events. Licensing Celebrities to use their fame and “name” to start up a new product has gained success in the recent decade. Today, celebrities are not only endorsing big brands but are also entering licensing contracts wherein, the celebrity allows the licensee to use his brand image and name for promotion of his products, with due active participation in wake of the promotion of the product. In return, he would
  9. 9. be entitled to a royalty fee. The contract is the medium of negotiation for them. In India, the scenario is still a little different. We see advertisements and many events where the celebrities are seen promoting products of big brands and sometimes, new brands. But, we do not come across many examples of celebrity licensed products. There can be several reasons behind it. The celebrities may not want to commit to one licensee as it has certain predefined restrictions. Or maybe manufacturers are conservative in their marketing approach. In this study, we are going to evaluate the positive and negative aspects of being in an endorsement agreement or celebrity licensing agreements. We will analyse several examples of celebrity licensing abroad and in India. Understand the various maneuvers of being in such a contract. My research study will emphasize on the consumer insight and their beliefs about their favorite celebrities in advertisements and their response towards the launch of products by the celebrities themselves. My research study will help gather the reasons why the celebrity endorsements are such a hit with the marketers and the advantages of Indian celebs engaging in licensing activities. 9
  10. 10. 10 In Contract with CELEBRITY LICENSING And CELEBRITY ENDORSEMENTS
  11. 11. 11 Talking About History… Celebrity Branding can take several different forms, from a celebrity simply appearing in advertisements for a product, service or charity, to a celebrity attending PR events, creating his or her own line of products or services, and/or using his or her name as a brand. The most popular forms of celebrity brand lines are for clothing and fragrances. Many singers, models and film stars now have at least one licensed product or service, which bears their name. More recently, advertisers have begun attempting to quantify and qualify the use of celebrities in their marketing campaigns by evaluating their awareness, appeal, and relevance to a brand's image and the celebrity's influence on consumer buying behavior. For example, Omnicom agency Davie Brown Entertainment has created an independent index for brand marketers and advertising agencies that determines a celebrity’s ability to influence brand affinity and consumer purchase intent. According to the Wall Street Journal, the Davie-Brown Index (DBI) will "enable advertisers and ad-agency personnel to determine if a particular public figure will motivate consumers who see them in an ad to purchase the product advertised." Celebrity branding is a global phenomenon and it assumes paramount importance in countries like India where celebrities are given the status of demi Gods by the masses. There is a certain correlation between successful celebrity branding and brand endorsements.
  12. 12. 12 In Conversation with Celebrity Endorsing… Technically, Celebrity endorsement is the use of celebrities in order to increase the sales and or recall the value of particular brand. Any individual who enjoys public cognition and who uses this cognition on behalf of a consumer good is said to be a part of an endorsement campaign. The world is witnessing a fast evolving market with a rush of competitive products entering in every day. Customers are in a quandary discerning which is best amongst them as all are equally good. They need more than just motivation and words of the salesman to build confidence in the product. Amongst popular marketing gimmicks to attract consumers, endorsements by popular celebrities top the list. Many people idolize certain celebrities for their sporting achievements, appearance, or other talents. Advertisers often use this to sell products that claim to have a particular effect. As we all know, actor Ranbir Kapoor is considered as the Youth Icon of India, call it a media hype or his talent which gave him the title, but anything he does, the youngsters would try to copy and do thing like him to be called or referred to, as him. The advertisers of Pepsi, very well know about this image of Ranbir Kapoor, so he becomes the obvious choice for Pepsi Campaigns, be it “Hai Yeh Youngistan Meri Jaan” campaign (Darling, this is the land of Youngsters campaign) or the recent campaign – “Oh Yes Abhi!” campaign (Right here Right Now campaign). The audiences can easily connect with the emotions delivered by the celebrity. The presence of the actor increases the brand recognition, for consumers well remember, which brand he was endorsing for, for the ads show what their idols are like in real life. Before the 1990’s, not many actors or other celebrities like sportsmen or musicians were seen in advertisements on television or in the product’s marketing campaigns. Nor the advertisers and marketers were interested in any such agreements. But at the turn, of 1990, when the government allowed liberalization and globalization policies, that foreign products started entering the Indian Market, increasing the competition in the market. Now, the competition was not only with the domestic players but
  13. 13. also international products, which was cheaper and were of better quality. To stay in competition, the marketers spent heavily on advertisement and promotional campaigns. This meant getting famous, popular and those celebrities who can influence the audience. In India where actors are worshipped, companies spent crores in these campaigns, to not only promote their products, but also to create an emotional bonding with the products and the celebrities. Table 1.: The list of the most popular celebrities into endorsements and the name of the companies they endorse for.ce CELEBRITIES COMPANIES THEY ENDORSE FOR Salman Khan Thumbs up, Suzuki, Relaxo footwear, Yatra.com, Wheel Shahrukh Khan Tag Hueur, Pepsodent, Nerolac Paints, Sona Chandi Chyavanprash, Belmonte, Dish TV, Lux. Katrina Kaif Nakshatra, Lux, Veet, Berger Paints, Slice, Pantene, Godrej, Olay, Titan Raga and Panasonic M. S. Dhoni Aircel, Pepsi, Boost, Sony bravia, Reebok, Big bazaar fashion Virat Kohli Cinthol, Emami Fair and Handsome, Celkon Mobiles, Flying Machine Kareena Kapoor Sony, Philips, Alpenlibe, Limca, Lakme, Lavie bags 13
  14. 14. 14 Evaluating the Pros and Cons… There are a number of reasons why celebrity endorsements in advertising are so common. A celebrity endorsement can help build trust with current and potential customers, increase the chances of the brand being remembered, and attract a new type of audience. Endorsements also may increase the consumer's desire for a product. This is often achieved by implying that the particular celebrity is successful, talented, or attractive at least partly because of the product. Endorsements are a common tool among manufacturers of retail products. There are a number of reasons for this, but one of the most important is credibility and trust. Many people hold certain celebrities in high regard, so an endorsement of a product instantly increases the amount of trust the consumer has in the brand. This can sometimes work against the brand, however, if the celebrity starts to receive negative press. Another important reason why celebrity endorsements are so common in advertising is brand recall. There are a huge number of products being marketed to consumers all the time, so it’s essential for a brand to find a way to stand out in the crowd and be remembered. If a customer sees an advertisement involving his or her favorite celebrity endorsing a particular product, then his or her chances of remembering that product are greatly increased. (From the findings of my survey, every 4 out of 5 respondents could note down 5 brands, which there favorite celebs were endorsing, out of those 5 brands some had even consumed as many as all the brands.) Celebrity endorsements also are useful for attracting new customers to a brand that otherwise may not have held any interest for the consumer. If, for example, a product has traditionally been marketed to elderly people, then people in other age brackets may be reluctant to try it. A brand can try to rectify this problem by using a celebrity who is associated with a particular age group or demographic. Many people idolize certain celebrities for their sporting achievements, appearance, or other talents. Advertisers often use this to sell products that claim to have a particular effect. Skin care products, for example, are commonly endorsed by an attractive celebrity with seemingly perfect skin. Recently, actresses like Kajol and Madhuri Dixit has been seen endorsing anti-ageing cream brands. These ads have not only been
  15. 15. accepted positively, but also the impact on sales of the product has seen a marvelous. Since, the way advertisers have portrayed these actors in late 30’s having same problems like any ordinary women. This call for women to use the product and have a skin like that of a young wench, has been widely adored. There are a variety of other effects of celebrity endorsements in advertising. A brand that gains a high-profile celebrity's endorsement may, for example, receive greater media coverage than if it had run a standard advertising campaign. The best illustration of this theory can be proved by the campaign which Cadbury had started in India, after few chocolate bars of Cadbury’s Dairy Milk was found with worms. The company initiated a campaign where, the most renowned actor, Amitabh Bachchan, was seen visiting the factory where the bars where made, tasted it and confirmed that it is safe to be eaten by kids. This campaign, was instantly appreciated and the market for Cadbury was regained. This is the power of a celebrity, where the people believe what the celebrities say. There is a trust involved with these celebrities, such as in this case of Amitabh Bachchan saying that “if I can eat, you too can”, gives the audience seeing him, a satisfaction and a conformity, that yes it is safe and edible. A celebrity endorsement also can help to bring an older product, perhaps with consistently decreasing sales, into the modern day. Endorsements don’t always have a positive effect, however, which is why it’s essential to choose a celebrity who is likely to have the desired effect on the product’s target audience. Not all that glitters is Gold… Often the desire of a celebrity to promote a company or his product has been the most common marketing tools of all the times. But at times, this desire can be very expensive, when the celebrity is caught in infamous limelight. Recently, when the Indian Cricket Team Captain, M. S. Dhoni was involved in controversial losses, there were talks of him resigning his captaincy. This was a blow on the marketers, trying to save their brand image, many brands cancelled the contracts with the skipper. This resulted in Captain’s total brand endorsements to fall form 43 brands to only 26. Here’s the problem, Most companies are cannot afford huge cost and losses when situations like these occurs. If the product is of a smaller 15
  16. 16. company, or a nonprofit organization, and their entire strategy is built around one person giving the exposure it needs, it can mean that there is a trouble. Big trouble. The safer bet is to go the grassroots path. Build brand loyalty through old-fashioned means like high-quality products, a strong brand, and effective customer service. Make lots of people want to talk about you rather than paying one person to talk about you. But, again, this takes time, and with the increasing competition among the domestic and international marketing, this is can be a opportunity loss. The problem of distrust is another disadvantage when it comes to a celebrity endorsing it. It was noticed that an actress endorsing a particular cola brand, was seen drinking the brand’s competitor cola brand. When the pictures of her were released her fans were very disappointed. It also affected the cola brand image. The audience is emotionally connected with their celebrities and if the celebrities are seen not doing what they say, leaves the audience disappointed and deceived. Thus, at times it becomes very important for the advertisers and celebrities to take care of those situations. Due to these reasons, the consumers are left with a doubt in their minds that whether they actually use it or it is just the way of earning extra money. When a celebrity agrees to appear in an advertisement, it is expected that the celebrity will also be present at other promotional events. At times, the celebrity may have to travel cities to promote products, thus the whole expenses of the celeb travelling, lodging and other additional expenses are all borne by the company, which is then put on the consumer only. 16
  17. 17. 17 Signing Celebrity Licensing… Celebrity Licensing is an agreement wherein, the name of a celebrity is used, with permission through a properly signed contract to be used on various merchandise, services or to launch a new product. These kind of agreements are most popular in clothing and fragrances. Recently, many actors, especially many sports personalities, have started their own line of gyms and restaurants, which are either partnered by them, mainly using the licensing contracts. Celebrity licensing has taken off in a big way in the past decade making it one of the most lucrative sales avenues for licensors of recent times, and it looks set to stay this way. The world we live in is consumed with celebrity status. It’s become a way for licensors and retailers to target pre teens and teens, a notoriously difficult audience to reach. As a result of this, licensing agreements and celebrity image rights have become big business in terms of generating revenue. Such agreements might involve granting third parties the rights to use a celebrity’s name, image and brand in connection with product endorsement and related commercial ventures. Merchandise opportunities are phenomenal, going way beyond traditional items such as t shirts, key rings and mugs. All manner of licensees will want to get involved in a celebrity licence, making all kinds of items; from electricals to licensed make up. Lead times are short, so auditing is vital to check licensees honour their obligations to retailers. With increased opportunities to merchandise, licensors must ensure they keep a handle on all activity. With celebs and in particular music stars, giveaways, competitions, promotions and new launches are commonplace. Retain full control of how many products are being given away and where they are going. It’s easy for licensors and licensees to lose sight of this when a big star is hitting the headlines and demands are high. The text book example of such an agreement is the hard work that the American actor, singer and entrepreneur Hilary Duff has done to promote her line of merchandise – STUFF FROM DUFF. At the age of 17, (now 25) she launched her line if clothing and cosmetics with the above name. She knew her target audience well, the girls aged between 6-14 and aimed squarely at them. If a consumer would go to her site, she will find her wearing her own brand clothes and giving advice which pieces to mix
  18. 18. and match. Her licensing agent Bravado ensure that her looks and the clothes are in sync. This has been one of the most successful licensing agreements in recent years, though David Beckhem’s Homme brand is a huge success all over the world. Counting Merits and Demerit… Celebrities have long sought to license their names and likenesses in an effort to garner additional revenue and to extend their presence to new product categories. Traditionally, retailers sought out celebrity licensed products because a celebrity’s name on a product would serve to differentiate it and make it more attractive to consumers. At the same time, manufacturers looked favourably on celebrity products because they could charge higher prices for those items than for generic products. Due to the plethora of newly-minted reality television stars in and around the world, there are now more ‘celebrities’ seeking licenses than ever before. However, at the same time, the global recession has made celebrity licensing more difficult and challenging. With so many retailers either cutting back or going out of business, there are now more celebrities fighting over reduced shelf space in retail. As a result, the marketplace is simply overcrowded with celebrity brands, making it harder and harder for celebrities to get new deals. Though these types of licensing agreements are more common abroad, than in India. The concept is yet to set in, in India. Though, the Bollywood actor Shahrukh Khan tried to launch his range of merchandise under the brand name of Ra.One, but failed to capture market. (this will be discussed in later chapters in details.) Price is a relative term. For a country like India where middle class people are dominant in income group, not many people can afford premium products. Though the 5% rich class are better off than many in the whole world, but the dominant middle class cannot be avoided. For a upper middle class person Rs. 1000 will be accounted as affordable, for a rich person it will be seen as a meager amount, whereas, the middle class it will be counted as “priced indulgence”. So, the strategic pricing is necessary in India to survive and capture market share in the competitive market. 18
  19. 19. 19 LET THE WAR BEGIN…
  20. 20. 20 The Licensing Contract v/s The Endorsement Agreements A celebrity when agrees to a particular company to promote its product, the company (marketer) and the celebrity enters into a legal contract. The few features of a general contract may include: • The time period of the contract it will be effective till. Usually these time periods are relative and short. They are mostly based on the campaign they are running. If the campaign is successful they may renew their contracts or may just appoint another celebrity and also change their campaigning strategy. For instance, the Pepsi, India’s best Cola brand, launches different campaigns as per the events happening in India. When Indian Cricket team was up for the World Cup, they launched campaigns with the sports celebrities like, M.S. Dhoni, Gautam Gambhir, Virat Kohli and likes. Whereas, currently all the ads of Pepsi have Ranbir kapoor promoting the campaign to drink Pepsi whenever you want, it doesn’t matter where you are or which IPL team is winning. • The agreement lays down the terms and conditions, which the celebrities will follow as well as the company shall comply with. It also states the payments and expenses that the company will borne in continuation of the contract. Usually, in these agreements, the travel expenses of the celebrity, to promote the products, is borne by the company themselves. The Celebrities is always at the upper hand here, as the company and the celebrity all know that their campaigns are based on the image and popularity of the celebrity. Thus, the agreement leaves very low scope of negotiations. Also, there is no binding on the celebrity to endorse any other products or from other product line from a rival company. For an example, Katrina Kaif who endorses Mazaa, a mango drink, which is a product of Coca Cola, can endorse Pepsi, the cola drink of Pepsico. Both being rival companies. Now, if we turn our attention towards the Licensing contracts, which is more organized in comparison to any other arrangement. The contracts have clauses, which helps the manufacturer negotiate with the celebrities
  21. 21. keeping the tap on the latter. In these arrangements, the celebrities are bounded by several terms and conditions, that does not give them full freedom to do as they feel apt. Some of the issues discussed in these contracts different from the endorsement agreements are-o A clause for public appearances: This clause obligates the celebrity to wear or use the products is essential. Also, the celebrity would have to wear or use the product or promote the services wherever possible, including in advertisements, at public appearances and award shows. A favourable provision for the manufacturer would be the following: “Celebrity shall be actively involved in promoting the licensed products (whether requested or not by licensee) and wherever reasonably practicable and appropriate, shall publicly wear or use the licensed products, particularly at public events, shows and appearances.” o The Moral Cause:It is essential that the manufacturer requires the celebrity to maintain his or her public goodwill through appropriate public conduct. An entire licensing programme can be tarnished from the celebrity’s inappropriate conduct, which could end up costing the manufacturer millions of dollars. There are many ways to structure the morals clause. One such example is: “Celebrity agrees to conduct herself with due regard to public conventions and morals, and agrees that she will not do or commit any act or thing that materially degrades her in society or brings her into public hatred or contempt, or that shocks public morals or decency in her community or otherwise substantially and materially devalues the value of this license grant. Any criminal indictment or legal complaint filed with a court for a felony involving moral turpitude by Celebrity shall be deemed a material breach of this agreement by the licensor. The licensor’s violation of this paragraph shall constitute a material breach of this agreement.” 21
  22. 22. 22 In Return… The major difference in these two types of arrangement is of the payment clause and their remuneration. In endorsement agreements, there is no industry fixed percentage or amount that a celebrity will get. The amounts are negotiable and range from lakhs of rupees to crores, depending on the popularity and image of the celebrity in consideration. Table 2: The table below depicts the fees the few celebrities charge to appear in an advertisement and promotional campaigns. Aamir Khan Rs 14 cr Shah Rukh Khan Rs 10 cr Amitabh Bachchan Rs 8 cr Salman Khan & Ranbir Kapoor Rs 8 cr Hrithik Roshan & Akshay Kumar Rs 6 cr Aishwarya Rai Rs 4 cr Katrina Kaif, Priyanka Chopra, Deepika Rs 3 cr Padukone, Kareena Kapoor Sonam Kapoor Rs 1.25 cr to 1.5 cr Anushka Sharma Rs 75 L to 1 cr Genelia DSouza, Sonakshi Sinha Rs 75 L to 1 cr It is clear from the above table that the fees charges vary from person to person, male to female, sports star to movie stars. At the same time, when a celebrity enters a licensing agreement, there is industry specific amount of percentage. Each industry has developed certain set of parameters in which most deals fall. There might be differences based on the type of licensed property, for example, the types of properties for royalty purposes are usually broken into art, celebrity, character/entertainment, collegiate, corporate, designer, event and sports. Each of those general categories will often have a different range of
  23. 23. royalties rates. For example, when licensing for a scrapbook album covers, the royalty rates would be in the following ranges: Art 6-10%; Celebrity 3-7%; Character/Entertainment 8-12%; Collegiate 6-8.5%; Corporate 5-8%; designer 3-7%; Event 10-15% and Sports: 8-10%. 23
  24. 24. 24 Trust Who...? As we had earlier discussed the problem of distrust among the audience, when a celebrity endorses a product. The audience is not sure whether they actually use the products they advertise for. There is a preconceived notion that the celebrities are so rich and popular why would they buy or use products, which can be used by a mass. Also, there has been past instances where a celebrities were seen endorsing a product in television and few days after, were seen using the rival company’s product. This not only disgusts the audience but also diminishes the brand image of the products. The celebrity loses the trust and so does the company, which the celebrity was associated with. These trust issues can be resolved through licensing agreements. As the public appearance clause states they are obligated to wear, promote and talk about it to any event and shows they go to. Thus, promoting their products. The best example of this case is the line of clothing from Hilary Duff – Stuff from Duff and Paris Hilton Bags and Accessories, by Paris Hilton herself. They not only appear in advertisements and campaigns. But also involve themselves actively. They have been seen wearing their own range of clothes and accessories in several events. This gives the audience who are seeing them a sigh of relief that yes, they use the things, which they advertise or promote for. The best instance I can think of is of our very own, former Indian Cricket Team Captain Saurav Ganguly’s restaurant, Caught and Bowled. The restaurant has been popularized in the name of the cricketer. From the big name attached to it, we can perceive that the restaurant will be good in ambience and taste. At the same time, the restaurant does offer the same. The perks of visiting this restaurant is that you can be lucky enough to spot Saurav Ganguly and his cricketer friends dining with you adjacently!
  25. 25. 25 Impact on Brands… Usually, in both the arrangements be it, Celebrity endorsements or Celebrity Licensing agreements, the whole campaign is based on the celebrity. The image, popularity, attitude, and presence of the celebrity all of it decides the fate of the campaign. The success of the campaign hugely depends on the celebrity. Now, if anything happens during the campaign, where the negative publicity of the celebrity starts doing the round. The company has no other way, other than to discontinue their endorsement campaign. This is because, if the celebrity is involved in any thing, which is against his image, then not only his name, but also the company’s goodwill and product’s brand name suffers. Though, is a little safer and the losses are less and can be recovered, when one is in a licensing agreement. This is due to the moral clause, we talked about in previous pages. The clause binds them, and breach of such contract will mar the image of the celebrity more than the manufacturer’s. This is because the brand name used for the product is of the celebrity’s and not of the manufacturers’. The promotions are done on the name of the celebrity as his/her line of merchandise. One could certainly have argued a couple of weeks ago that Nike’s relationship with “the blade runner” Oscar Pistorius was a match made in heaven. Pistorius made a name for himself during the 2012 London Olympics. He was the first double amputee to race and he performed admirably. Stories about how he inspired many other physically challenged athletes were the talk of the summer. Pistorius had been hosting a Nike ad at his site that said, “I am the bullet in the chamber.” This ad went well with the spirit of the sports company Nike as well as with the sportsperson. That was all well in the past now. On Valentine’s Day, Pistorius was arrested for the murder of his girlfriend, who was found shot inside his fortified house. In perhaps, the most cringe-worthy incident of celebrity endorsements gone wrong. Not surprisingly, Nike pulled this ad immediately. Will anyone hold Nike responsible for using Pistorius as a celebrity endorser? Probably not. It was a match made in heaven. His Olympics
  26. 26. performance seemed to embody Nike’s “Just do it” attitude. And how could they have known such a terrible thing would happen? At this hour, the company’s image also suffers, if the celebrity in the campaign is involved in such activities. But not all celebrities are like him. At the same time, the manufacturers involved in licensing agreements are safer. Because if anything happens like this. The image of the celebrity suffers more than the manufacturer, as the brand name is of the celebrity himself. The manufacturer can now appoint a new licensor, who would agree to launch his or her brand of cloth line. And again the company is back in the market, with the losses recovered from the celebrity, itself. 26
  27. 27. 27 Lack Of Modern And Organized Retail Sector In India, a country that treats its celebrities Gods, it would seem logical to develop robust celebrity brand licensing programmes. In fact, Amitabh Bachchan, arguably the most famous celebrity to grace Indian cinema, was forward thinking enough to launch his own branded products in the late 1990’s. However, because of the lack of modern or organized retail and other significant issues, it met with little success. But with the modern retail is now growing faster, its high time to introduce such programmes. We have a retail store for Paris Hilton’s bags and accessories, but there are no Indian Celebrity retail stores. Shahrukh Khan, launched his range of toys, children’s merchandise as well as video games. Even after heavy promotions and publicity, the campaign was a failure. One of the reasons can be that the movie flopped. This was the major set back. Also, the distribution was not well organized. Even after the big name of Shahrukh Khan attached to the merchandise, it was not of a big success. The reasons behind such a failure, has been a matter of study for many market researchers. It can be blamed on the distribution channel, or on the lack of persuasion skill of the celebrity to attract the consumers or we can also put it as the consumers are not yet ready to buy these kinds of products; and are happy with the celebrities in the endorsements.
  28. 28. 28 Every Cloud Has A Silver Lining…
  29. 29. 29 The categories that are yet to be explored… There is no category untouched as licensing is spreading its wings to all possible product range be it lifestyle products, health and wellness category, real estate, hospitals, toys, school stationeries, entertainment or corporates etc. Though, there are few product categories like Entering restaurants and premium cafes, video games and toys, liquor brands, Accessories like watches and training schools for sports or acting schools. Fascination for Dead Celebrity… Marilyn Monroe, Elvis Presley, Yves St. Laurent and Michael Jackson are supposedly the biggest selling dead celebrities. This year, Michael Jackson took the No.1 spot on Forbes Top Earning Dead Celebrity 100 with gross earnings of $ 275 million. Coming in at No.2 is Elvis Presley with 60 million $. Well, the dead celebrity ranks change each year and in most cases they are like old wine that betters with age. Moreover, lot also depends on how the celebrity has died. For example, if a celebrity dies a tragic death and at a young age, there is lot of immediate sympathy in the air which the business could cash on. Marylyn Monroe and Michael Jackson died young and abruptly, leaving us asking for more. Through licensing, we are not only keeping them alive but also paying ode to them. Let us see how the dead celebrities can benefit the manufacturers. Advantages of Licensing a Dead Celebrity Less interference as the celebrity is dead. Consistency in image. For example: A living celebrity who loses his market due to a personal problem also loses his credibility. Emotional Bubble encashment (Like in Michael jackson’s case) the markets want to see him everywhere. Disadvantages No in- person endorsement. No support in terms of material and assets (Limited assets). Advantages of Licensing a Living Celebrity In- person endorsement.
  30. 30. 30 Support in terms of material and assets. Disadvantages Interference. Personal problems may affect his market. The advantage of having a dead celebrity client is that there is no direct interference from them. And their popularity is more than the living celebrities thus the legends are consistent in the market. Whereas in the case of living celebrities, they interfere a lot, and their personal problems can have a direct impact on their salability, for example take Lindsay Lohan who is having a tough time recently with her addiction. But in India, currently, celebrity licensing is rampant but mostly it the game of Cricketers and Bollywood stars. Well, whether dead or alive, celebrity licensing doesn’t stop to lure us.
  31. 31. 31 MY RESEARCH -
  32. 32. 32 OBJECTIVE OF THE STUDY Ø To understand the popularity of celebrities in marketing brands. Ø To understand how celebrity endorsements have become the common marketing strategy all around the world. Ø To understand the trend, fashion and lifestyle of the youth of India. Ø To get a brief idea of how Celebrity Licensing works. Ø To know the impact of celebrity endorsements on the audience. Ø To know the effect of advertisements and campaigns on the youth especially. Ø To find out if celebrities can be called influencers. Ø To know the benefits of celebrity licensing and endorsing. Ø To note the reasons of failure of Celebrity Licensing in India. Ø To find out the scope of expansion in India. Ø To note the benefits the consumers will get from such agreements. Ø To know the scope for merchants, manufacturers and retailers in India.
  33. 33. 33 Research Methodology Used…
  34. 34. 1. DESCRIPTION OF RESEACRH DESIGN AND PROCEDURES USED: 34 Ø A topic was selected and defined. Ø A method study was determined. Ø Population size was determined. Ø Out of which a sample size was selected. Ø A survey was conducted among the selected sample size. Ø The feedback was recorded with the help of statistical tools and instruments. Ø The recorded data was then, analyzed and represented using charts and figures. Ø Secondary data was collected from various sources, for example, internet, and was compared with my research analysis. Ø Conclusion was made and scope of expansion was determined.
  35. 35. 35 2. SOURCES OF DATA: A. NATURE OF DATA v PRIMARY DATA was collected from the people of Kolkata. v SECONDARY DATA was collected from magazines and internet. B. POPULATION v Teens between the ages 13-17 years. v Youngsters between the ages of 18-25. C. SAMPLING v 65 teens from the age group of 13-17 years. v 67 youngsters who are in the age group of 18-25 years. D. SAMPLING PROCEDURE v CONVINIENT SAMPLING method has been selected, as constraints like: Ø Time constraint Ø Cost constraint, and Ø More importantly, being the lone person doing the survey, there was a Labor constraint. v I have tried to be unbiased in my research work. I have not restricted my work to the people I know, but have included Ø Students from our college, St. Xavier’s College, Kolkata; Ø My housing complex, Mani towers. Ø For the survey of youngsters I had posted the questionnaire on the internet.
  36. 36. Processing… 36
  37. 37. 37 Part 1: Celebrity Endorsements: Q: A celebrity on a television advertisement attracts you to the product/brand? Response 0 5.8 10.3 66.6 17.3 Strongly Disagree Disagree Neutral Agree Ø When the consumers were asked if a celebrity in a television ad attracts them, 66.6 % people agreed upon this saying that yes, they are attracted towards the ad when a known face is endorsing it. Ø Whereas, none of the respondents, disagreed with the fact, though a fraction of people said they were unaffected, by who is there in the ad, but the content of the ad was more important.
  38. 38. Q: Do you think celebrity advertisements help you remember brand and to be interested in it? Ø 70.7% people agreed that celebrity advertisements help them remember brand and to be interested in it. Whereas, 23.7% people strongly agreed that celebs in an ad helps them recollect and associate better with brands than other ads on television or print media. Ø But there was not even one respondent who could disagree with the fact that the celebrity presence does makes it easier for the consumers to remember the brands. 38 0 5.6 70.7 23.7 Response Strongly Disagree Disagree Nuetral Agree Strongly Agree
  39. 39. 39 Q: Will you purchase the product/brand just because of the endorsing celebrity? 30 25 20 15 10 5 0 Very Unlikely Responses Unlikely Neutral Likely Very Likely Responses Ø The above bar graph makes it very clear that around 50% people would buy a product just because of the celebrity association with the product. Ø The majority of the people, who said they would buy any product due to a celebrity in the ad, were majorly agreed upon by the respondents in the age group of 15-18 years of age. Ø Whereas, the majority of respondents saying no to such purchases were all above the age of 20, who would indulge in more thoughtful and planned purchases, than random purchases.
  40. 40. 40 Q: Do you really believe celebrities use the products they endorse for? 40 35 30 25 20 15 10 5 0 Responses Very Unlikely Unlikely Neutral Likely Very Likely Responses Ø The above chart shows that majority of the people do not trust the celebrities that they really use the products, they endorse. Ø Though, the teenagers believe that celebrities do use the products they endorse for. The majority of respondents believing the celebrities were majorly teens of age 15-18.
  41. 41. 41 Q: Does your purchase decision change if the celebrity is associated with a negative publicity? Responses 0 5 10 15 20 25 30 35 Very Likely Likely Neutral Unlikely Very Unlikely Responses Ø When the consumers were questioned about the effect on their purchase decision if their celebrities were involved in negative publicity, 33.3% respondents were neutral to such situations. Ø The majorly differences appeared in the opinion of the teenagers again. Some said they would stop using it, others where unaffected by any such publicity, they would buy the product anyway.
  42. 42. Part 2: Celebrity Licensing Q: What type of product would you prefer – the one which is endorsed by a celebrity(option A), or the one which is celebrities own line of products (option B), (for example, Homme perfumes by David Beckham)? 42 48.8 Responses 51.2 Option A Option B Ø 48.8% respondents believed that they would purchase the product, licensed by their favorite celebrities. Ø Whereas, the rest were happy with the celebrities endorsing a particular brand.
  43. 43. 43 Q: Does these products have an emotional impact on you? 70 60 50 40 30 20 10 0 Very Unlikely Responses Unlikely Neutral Likely Very Likely Responses Ø The respondents agreed that these products had an emotional impact on them. Since, it had an association with a celebrity specially one of their favorites. Ø Though, the respondents above the age of 18, did not agree that they were emotionally attached to a particular celebrity that they could affect their purchase decision.
  44. 44. Q: Do you think that use of products or services like, Paris Hilton Bags and Accessories, Britney Spears Perfume by Elizabeth Arden and such products, add to your status? 0 Responses 28.6 50 14.3 7.1 Strongly Disagree Disagree Neutral Agree Strongly Agree Ø More than 50% respondents agreed that the licensed products add value to their status, if they purchase it. 44 Ø But, as high as 28.6% respondents did not feel the same as others and said they do not add to status, they are just like any other products in the market.
  45. 45. Q: Will you pay a premium price for product just because it has the brand name of your favorite celebrity? 20.2 Ø The trend in here is same as, when it comes to being emotionally attached to the celebrity and the product associated with it. Ø The 50% respondents did not mind paying extra amount to posses such products, because these were the line of products by their favorite celebrities. 45 11.1 18.7 22.2 27.8 Responses Very Unlikely Unlikely Nuetral Likely Very Likely
  46. 46. 46 Lets Find Out, What We Found out…
  47. 47. 47 Findings of the survey: § From the analysis of the survey, it is very palpable that consumers are attracted to an advertisement, when they spot any celebrity in the same. Thus, they take notice of the product and subconsciously register them. This helps in brand recall when they are making a buying decision. § The presence of the celebrity in a promotional event interests them to take part in them and also to consider buying the product. § This largely explains why the celebrity endorsements are so common in Indian marketing campaigns. § The teens play the most important role as a buyer, as they are more emotionally attached to hero-worshipping, be it male or female. They are attracted to their favorite celebs and will do anything to copy them. § Connecting with brands is very easy when celebrities are endorsing it. § These findings tell us that celebrity licensing too can work in India, where majority of population are under the age of 25 and these are the people who are mostly affected by the celebrity presence in their buying behavior. § Keeping them in mind, the manufacturers can launch merchandise to fit their taste, image of the celebrity and with the on going trends. § The problem of distrust exists among the users. As high as 35% respondents said they did not trust the celebrity when it came to they using the products themselves. § The people in India are not opinionated about a product being endorsed or licensed. But yes, they prefer a celebrity being associated with the product. § The licensed product, if launched in an organized in a proper, organized sector, the people will pay any price for it, for they see it as a mean to be seen as their celebrity. It adds to their status. When celebrity is launching a range of merchandise as its own, it is perceived as they are using it in their daily life too, as it is their
  48. 48. favorite. Anything favorite to a celebrity is a favorite to his or her fan. § Also, when the respondents were asked whom they would want to launch their lien of products, around 80% people ranked movie starts as the celebrities that should have their own range of merchandise followed by the sportspersons. § These facts and figures makes it clear that celebrity licensing has full scope to flourish in recent times, as India being a country where celebrities are worshipped, their line of product should succeed as people are waiting for such products. Only issues like retail sector and other distribution channels needs to worked up again. § When respondents were asked to give feedback on repeat purchases, nearly 90% of the people said that quality, utility derived from the product and the right price, would affect their repeat purchase decision. Due to the influence of the celebrity they might try it once, but the repeat purchase would come down to the factors like price and benefits one could enjoy from such a product. 48
  49. 49. 49 All Is Well That Ends Well…
  50. 50. Conclusion The whole process of starting and till the completion of the project has been a learning process for me. Through this research project, I got the opportunity to understand the various marketing tools that companies have been indulging in to promote their products and services. The growing competition among the plethora of brands, new horizons like licensing and similar marketing strategies are being explored, giving consumers more of each product. Since past two decades consumers have been exposed to several domestic and international brands, they did not expect they would at the time of independence. Today, the demand is not as high as the number of products available in the market. The only way to stay in the market is to innovate new ideas, strategies to capture the market share before their competitors do. The advertisers play an important role developing these strategies. They are the people who decide how the message the company wants to give to the audience will be sent. The conceptualization of the message and then putting it into a small audio-visual is very important. Then comes the role of celebrity. In India, the celebrity is the biggest influencers and opinion and reference groups. They can persuade and influence people. They are the trendsetters. Every consumer has a role model, and when a consumer sees his role model, an actor or a sportsperson advertising a product asking to try and feel like him or her, and become like them; they are subconsciously attracted to such products. The consumers wants to get the feel of being like the role model, and when they see their celebrities talking about a product they use, they instantly made up their that they have to invest in that particular brand of person. Advertisers and marketers cash upon the emotional side of the consumers and try to change their buying behavior. The history of such advertising has shown that celebrities have a more positive effect on the consumers than an unknown person in an ad. The advertisers show the celebrity in such a way that people are convinced that it would give them happiness and worth. This has lead to the concept of licensing their names of famous and popular celebrities – dead or alive, alike. It gives a safer and more organized retailing to the manufacturer. The losses are much more less in licensing agreements, as the celebrity and the manufacturer are both 50
  51. 51. bounded by a contract and thus are at the safest position, when it comes to branding and image consulting. We can never find a perfect way to sell a product, but we can improvise certain strategies to market our products. We can never say that this strategy is the best strategy it will never fail. Globally, celebrity brand licensing is very popular and there have been many successful stories, which we can study. But, in India, they have failed to capture that market, which the marketers have been expecting it to. There can never be perfect thumb rule for anything, it all depends on how consumers perceive and act. With this I would like to conclude my research paper. 51
  52. 52. 52 BIBLIOGRAPHY § Shah, S 2012, 'Tapping Bollywood Glam' Retailer, March-April 2012, pg. 113. § Ferdinand, J 2012, ‘Risk And Benefits of Celebrity Licensing’ Retailer, January 2013, pg. 85 § Unknown, ‘Royalties Rates: Not as simple As you may think!’, www.jjkaufman.com/articles/royaltyrates.htm § Clayman, M 2013, ‘the Problem with Celebrity Endorsements and Influencers’, www.claymanmarketingcommunications.wordpress.com/201 3/02/20/the-­‐problem-­‐with-­‐celebrity-­‐endorsements-­‐and-­‐ influencers/ § Seth, S, ‘The Fame Game’, http://www.licenseindia.com/fame_game.php § Unknown, 2010, ‘Brand Licensing’, http://en.wikipedia.org/wiki/Brand_licensing § Other than this, the references has been taken from various presentations and research articles I came across while collecting secondary data for my project, special mention to the presentation ‘Luxury Connect’ by Hubspot company.
  53. 53. 53 APPENDIX Given below is the sample questionnaire which were given to respondents to gather information about the consumers perception towards the celebrity endorsements and celebrity brand licensing. Questionnaire Part - 1 1. What is your gender? Male Female 2. How old are you? Under 18 Between 18-25 3. A celebrity on a television advertisement attracts you to the product/brand? • Strongly disagree • Disagree • Neutral • Agree • Strongly agree 4. Do you think celebrity advertisements help you remember brand and to be interested in it? • Strongly disagree • Disagree • Neutral • Agree • Strongly agree
  54. 54. 54 5. Do you want to purchase the product/brand after watching celebrity endorsement? • Very unlikely • Unlikely • Neutral • Likely • Very Likely 6. Will you purchase the product/brand just because of the endorsing celebrity? Very unlikely Unlikely Neutral Likely Very likely 7. Will you decide to buy the product with celebrity endorsements without getting to know more about it? • Very unlikely • Unlikely • Neutral • Likely • Very likely 8. Do you really believe celebrities use the products they endorse for? • Strongly disagree • Disagree • Neutral • Agree • Strongly Disagree
  55. 55. 55 9. Does your purchase decision change if the celebrity is associated with a negative publicity? • Very unlikely • Unlikely • Neutral • Likely • Very likely 10. What reason would you give for repeat purchase of such endorsed products/brands?
  56. 56. 56 Questionnaire Part -2 3. What type of product would you prefer – • the one which is endorsed by a celebrity, or • the one which is celebrities own line of products, (for example, Homme perfumes by David Beckham) 4. According to you a celebrity should start their own range of products rather than endorsing it? • Strongly disagree • Disagree • Neutral • Agree • Strongly agree 5. According to you, what kind of celebrity are best for starting their own range of products: (please rank them) Business leaders Athletes/ sportsperson Movie stars Famous models Singer/ musicians Political figures 6. Does these products have an emotional impact on you? • Strongly disagree • Disagree • Neutral • Agree • Strongly agree
  57. 57. 57 7. Can the name of the celebrity affect your buying decision? • Very unlikely • Unlikely • Neutral • Likely • Very likely * 8. Do you think that use of products or services like, Paris Hilton Bags and Accessories, Britney Spears Perfume by Elizabeth Arden and such products, add to your status? • Strongly disagree • Disagree • Neutral • Agree • Strongly agree 9. Will you pay a premium price for product just because it has the brand name of your favorite celebrity? • Very Unlikely • Unlikely • Neutral • Likely • Very Likely

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