Impact Of Celebrity Endorsement By Sohag Sarkar

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This Business Paper tries to look beyond the benefits that might be derived out of celebrity endorsement. It tries to understand the process of consumer psychology and impact of celebrity endorsement on the overall process of brand building. The in-depth study of various models brings to light the complexities pertaining to celebrity endorsement. Analyzing its success is as much a necessity as is the understanding of its need. The importance of celebrity management has been emphasized to realize success or failure in its true sense. A symbiotic model has been proposed to define: how to make celebrity endorsement a win-win situation for both the brand and the brand-endorser.

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Impact Of Celebrity Endorsement By Sohag Sarkar

  1. 1. A Business Paper on“Impact of Celebrity Endorsement on overall Brand” (Towards “In search of excellence” Business Paper Writing Competition) Impact of Celebrity Endorsement on overall Brand
  2. 2. TABLE OF CONTENTSAbstract1. Introduction2. Branding & Celebrity Endorsement 2.1 What is a Brand? 2.2 Definition of Celebrity 2.3 Definition of Celebrity Endorsement3. The Need for Celebrity Endorsement4. The Process of Celebrity Endorsement 4.1 The Meaning Transfer Model5. The Importance of Celebrity Management 5.1 Schema-Based Expectancy Theory6. Celebrity Selection 6.1 Stereotyping 6.2 The Tears Model 6.3 The no Tears Model7. Why Celebrity Endorsement Fails? 7.1 The Reasons 7.2 The Solutions 7.3 The Symbiotic Model8. Celebrity Endorsement: The Issues Involved 8.1 Price vs. Profit 8.2 Multiple Brand Endorsement vs. Multiple Celebrity Endorsement9. ConclusionReferencesWeb LinksGlossary TABLE OF FIGURESFigure 1: The Meaning Transfer ModelFigure 2: The Symbiotic ModelFigure 3: Multiple Brand Endorsement (Shah Rukh Khan)Figure 4: Multiple Celebrity Endorsement (Adidas & Hyundai Santro) Impact of Celebrity Endorsement on overall Brand
  3. 3. ABSTRACTSuccessful branding programs are based on the concept of singularity. The objective is to create in the mind of the prospect the perception that there is no other product on the market quite like your product - Al Ries & Laura RiesIndian advertising started with the hawkers who used to call out their wares right from the dayswhen cities and markets first began. Since then, Indian advertising has metamorphosed into astrategic tool that enhances sales, siphons more profits and helps in the process of brand-building and product promotion. With this evolved a strategy that tried to benefit from theemotional attachment of the admirers or the fans of the celebrities; in the form of celebrityendorsement. It does help in creating instant awareness & visibility; but for a cost.This paper tries to look beyond the obvious benefits that might be derived out of celebrityendorsement. It tries to understand the process of consumer psychology and impact of celebrityendorsement on the overall process of brand building. The in-depth study of various modelsbrings to light the complexities pertaining to celebrity endorsement. Analyzing its success is asmuch a necessity as is the understanding of its need. The importance of celebrity managementhas been emphasized to realize success or failure in its true sense. A symbiotic model has beenproposed to define: how to make celebrity endorsement a win-win situation for both the brand andthe brand-endorser.“Brand” is the most valuable asset of any firm. Any thoughtless adventure can be like the Swordof Damocles. It’s the “strong idea” of promotion which is a more strategic means of brand-building; which can be an economical alternative over celebrity endorsement. It doesnt matter how new an idea is: what matters is how new it becomes. - Elias Canetti Impact of Celebrity Endorsement on overall Brand
  4. 4. Impact of Celebrity Endorsement on overall Brand “If youre trying to persuade people to do something, or buy something, it seems to me you should use their language, the language in which they think." -David Ogilvy1. INTRODUCTIONIf the world were full of all wise men and all wise women; we would have never heard of a termcalled “advertisement”. And then good products would have found the right customers and grownto prosperity. Firms would have worked out a mathematical formula to sell and succeed. But thebuying process isn’t rational; and so is this world.Today, the business firms are trying out different ways in advertisement to increase their sales.Indians are die-hard movie and sport buffs; and this aspect of the consumers has invited theconcept of “Celebrity Endorsement” to the world of advertisement. The purpose of this paper is toanalyze the role of Celebrity Endorsement in the process of brand-building by taking appropriateexamples from the advertising landscape.2. BRANDING & CELEBRITY ENDORSEMENTIndian Firms have been juxtaposing their brands with celebrity endorsers in the hope thatcelebrities may boost effectiveness of their marketing and/or corporate communication attempts.Today, use of celebrities as part of marketing communication strategy is fairly common practicefor major firms in supporting corporate or brand imagery.2.1 What is a Brand?Jack Welch, the former CEO of General Electric once said “Our most valuable assets are ourintangible assets.” The intangible asset he was referring to is a brand. The Dictionary ofBusiness & Management defines a brand as: a name, term, sign, symbol, or design, or acombination of them, intended to identify goods or services of one seller or a group of sellers andto differentiate them from those of competitor.2.2 Definition of CelebrityA celebrity is a person who is widely recognized in a society. Whereas attributes likeattractiveness, extraordinary lifestyle or special skills are just examples and specific commoncharacteristics cannot be observed. It can be said that within a corresponding social group Impact of Celebrity Endorsement on overall Brand
  5. 5. celebrities generally differ from the social norm and enjoy a high degree of public awareness.Today’s celebrities are larger figures from movies (Amitabh Bachchan, Shah Rukh Khan),television (Larry King, Smriti Irani) and sports (Sachin Tendulkar, Michael Schumacher).2.3 Definition of Celebrity EndorsementAccording to Friedman & Friedman a “celebrity endorser is an individual who is known bythe public for his or her achievements in areas other than that of the product classendorsed.” So, in the Coco-Cola advertisement; actor Amir Khan is the celebrity endorser for theproduct or brand called Coke and this process is referred to as Celebrity Endorsement.3. THE NEED FOR CELEBRITY ENDORSEMENTThe charisma of the celebrities almost always entices people and their words are worshipped bya lot of people. Their influence also goes on the political front, where they are invited for politicalendorsement. The business firms thus resort to celebrity endorsement to perk up brand recall andproduct sales. This has now become a trend and is being perceived as a strategic means ofbrand building exercise. The Elaboration Likelihood Model (EML) suggests that consumers willscrutinize claims more in important situations (say life saving drugs) than in unimportant ones. So,for almost similar products like Coke & Pepsi it makes sense to use endorsement. Also, Friedman& Friedman have shown that a celebrity relative to a non-celebrity spokesperson would be moreeffective for products high in psychological or social risk, involving such elements as good taste,self-image, and opinion of others. Just for example when actor Shah Rukh Khan endorsesSantro-Zip drive; the consumers are made to think that he is giving his opinion to go for this car.Two reasons why advertisers need celebrity endorsement are to increase the credibility &attractiveness of their advertisement. This is solely to affect consumers’ attitude towards theirbrand. To justify this hypothesis, we can take the example of former Miss Universe Sushmita Senwho helped the Epson brand of printers achieve instant recognition; even with the establishedgiants like Hewlett-Packard and Wipro in the running. Similarly, actress Rani Mukherjee hasturned the tables for Bata’s ladies footwear brand called Sundrop as sales increased by awhooping 500%.4. THE PROCESS OF CELEBRITY ENDORSEMENTThe process of celebrity endorsement is more of meaning translation & meaning application. Adeeper insight into this complex process is provided by the following theory. Impact of Celebrity Endorsement on overall Brand
  6. 6. 4.1 The Meaning Transfer ModelMcCracken, the author to this model, has suggested that “The effectiveness of the endorserdepends, in part, upon the meaning he or she brings to the endorsement process.” Acelebrities’ effectiveness as endorsers stems from the cultural meanings with which they areendowed. It is a three-stage process of meaning transfer that involves the formation of celebrityimage, transfer of meaning from celebrity to the brand, and finally from the brand to the consumer. Figure 1: The Meaning Transfer ModelTo explain it with the help of an example, we can take the case of Rahul Dravid and Castrol. Thecricket icon is seen as “Mr. Dependable”. And when he endorses Castrol, an image of“dependability” is tagged on to the brand under promotion.5. THE IMPORTANCE OF CELEBRITY MANAGEMENTIn a world full of faces, the ones’ which bolt from the blue are perhaps of the celebrities. Theadvertisers are always on the look out for such faces for the purpose of endorsement. But, themajor challenge before them is to find the right faces for their brands or in other words celebritymanagement. McCraken quotes: “In the best of all possible worlds, the marketing oradvertising firm first would determine the symbolic properties sought for the product... Itwould then consult a roster of celebrities and the meanings they made available, andtaking into account budget and availability constraints, would choose the celebrity whobest represents, the appropriate symbolic properties.” This suggests that the image of thecelebrity must fit or be congruent with the product which can be explained from the theoreticalperspective using a social cognition framework. Impact of Celebrity Endorsement on overall Brand
  7. 7. 5.1 Schema-Based Expectancy TheoryA schema is an abstract, cognitive structure that represents some stimulus domain, e.g., a person,place, event, or thing. It is organized through experience and consists of a knowledge structure.They can determine what information will be encoded or retrieved from memory. Schemas areinvolved in encoding, interpretation, retention, and retrieval of information. They can influenceperceptual cognitive activities through the generation of expectancies. In the case of well-knowncelebrities, individual would typically have personal relevant schemas (person schemas),acquired over time. When a celebrity endorses a brand, the characteristics of that celebrity maybe compared with the advertised attributes of the brand by the audience for congruence or fit withtheir available person-schema. The degree of congruence between the new information (thebrand attributes) and the existing information (the celebritys characteristics) may then influencethe level of recall of the new information.The Associative Network Model suggests that information inconsistent with an individualsschema may be quite salient and information will, therefore, be attended to more closely and beprocessed more deeply. Therefore, this information would be conceptually linked to a largernumber of items in the memory, compared to a piece of information that is consistent with theschema.While the Schema-Pointer + Tag Model proposes that consistent or typical items are encoded interms of a "pointer" to a generic schema that contains the typical components and relationshipsfor that particular knowledge domain. The atypical or incongruent items are, on the other hand,encoded with a rather distinctive "tag" and stored as a unique, separate unit. This leads to higherrecalling for incongruent items than for typical items. And empirical researches confirmsignificantly higher recalling when the image of the celebrity is congruent with the brand image.Therefore, celebrity management it is very important for the success of any brand. "If commerce is the engine of our economy, then advertising is the spark. Responsible advertisers are the drivers who keep us on the right track, leading to a richer, more benevolent society." -Brian Philcox6. CELEBRITY SELECTIONThere are various scientific ways in which the right celebrity is selected for the productendorsement, which are discussed hereunder. Impact of Celebrity Endorsement on overall Brand
  8. 8. 6.1 StereotypingTellis defines stereotypes as perceptions and depictions of individuals based on simplistic, biasedimage of the group to which they belong, rather than on their own individual characteristics. Forexample: its’ better to select celebrities who say are teens for chocolate advertisements andfemales for detergent ads etc.6.2 The TEARS ModelThe attributes highlighted by the acronym “TEARS” are gauged for celebrity selection. These are: o Trustworthiness: For example – Legendary actor Amitabh Bachchan who is an icon of trust; promoting ICICI Bank. o Expertise: For example – Golfer Tiger Woods for a sports brand. o Attractiveness: For example – Tennis player Anna Kournikova who earns 10 Million dollars per year in just endorsement. o Respect: For example – Former Miss World Aishawarya Rai and the Eye donation campaign. o Similarity: For example – a child artist promoting a chocolate brand.A celebrity scoring high on all the above attributes can turn out to be a good endorser for thebrand under question.6.3 The no TEARS ModelThe “no TEARS” approach is a tool for managers and their advertisers how to go about selectingcelebrities so as to avoid the pitfalls from making an unwise decision. It gauges the followinginformation: o celebrity & audience match up, o celebrity and brand match up, o celebrity credibility, o celebrity attractiveness, o cost consideration, o a working ease and difficulty factor, o an endorsement saturation factor, o a likelihood-of-getting-into-trouble factorSelecting the right celebrity does more than increasing sales; it can create linkages with thecelebrities’ appeal, thereby adding new dimension to the brand image. Research conducted byKatherine Eckel has revealed celebrities can get people to make a better choice but cannotinfluence ‘people to make a foolish choice’. The success of celebrity endorsement in India can besought from a market research conducted earlier which found that 8 out of 10 TV commercialsscored the highest recall were those with celebrity appearances. A few examples: Sachin Impact of Celebrity Endorsement on overall Brand
  9. 9. Tendulkar-Adidas, Sourav Ganguly-Britannia, Leander Paes and Mahesh Bhupati-J. Hampstead,Shah Rukh Khan-Pepsi, Sushmita Sen-Epson and Aishwarya Rai-Coke.7. WHY CELEBRITY ENDORSEMENT FAILS?There maybe cases where brands are not able to take-off even after the backing of celebrities.And this leads to speculations in the Ad World on the soundness of celebrity endorsement as aneffective communication strategy.7.1 The ReasonsAccording to leading management thinker Dr Seamus Phan, “Many celebrity endorsements failbecause they identify a celebrity they like in an emotive and un-researched manner andthen try to create advertising to force-fit the celebrity into the creative concept.” Therefore,the advertisers must associate the celebrity to the advertisement and not vice versa. Thinking onthe similar lines, the advertisers shouldn’t identify the brand to associate with the celebrity but dovice versa. The success of celebrity endorsement also depends upon the capacity, knowledge,experience, and qualification to talk about the product. Failure may be attributed to improperpositioning (Example: Amitabh Bachchan, Abhishek Bachchan & Maruti Versa), negativeperception after use of product/service (inferior products), misapprehension of the meaningof the endorsement, etc."The philosophy behind much advertising is based on the old observation that every man is really two men -- the man he is and the man he wants to be." - William FeatherAnother reason for the celebrity endorsement to turn against the brand is due to“Overshadowing.” This happens when the celebrity is larger than the brand being endorsed.And unfortunately though the celebrity generates higher levels of attention among viewers, theimpression is not always strongly linked to the advertised brand. Finally, brand may also fail to getnoticed given a recent negative publicity of the celebrity endorser. Example: Michael Jordan losthis endorsement deals when he announced in 1991 that he’s HIV-positive. It wasn’t until July2003 that he landed his first endorsement deal since the announcement.7.2 The SolutionsAs discussed, celebrity management is very crucial to avoid the brand-celebrity disconnect andsubsequently brand failures. Proper market research should be carried out and right positioningstrategies should be in place. If the consumers have questions in their minds regarding the quality Impact of Celebrity Endorsement on overall Brand
  10. 10. or performance of the product then even God cannot save the brand. There shouldn’t be anyambiguity or confusions when showing the celebrity in the advertisement. The obvious solution tothe problem of overshadowing is to make sure that both the advertisement and the celebrity arefocused on the brand or product. To avoid any bad publicity arising out of celebrity defames,companies may resort to multiple celebrity endorsement. For Example: Pepsi while capitalizingon the popularity of cricket and films in India used several cricketers and film stars in their ads. Sowhen Azharuddin & Jadeja got embroiled in the match-mixing controversy, Pepsi’s severed itsassociation only with these stars, but its relationship with cricket continued.7.3 The Symbiotic ModelBased on our understanding of the celebrity endorsement process we can propose our ownmodel taking cue from the biological kingdom. There are various symbiotic relationships that canexist between two organisms. Similarly, we can visualize two entities “brand” and “celebrity”. Toachieve a perfect success there should be absolute symbiosis between the two entities. Theremay be one of the six effects to the celebrity endorsement process: Figure 2: The Symbiotic Model o Mutualism (M): Both help each other (Example: Tata & Narayan Karitiken) o Commensalism (C1): Only one among them is benefited (Example: A failed endorsement) o Parasitism (P): One is benefited; other is harmed (Example: Azharuddin and Pepsi. Also, Home Trade & Shah Rukh Khan, Sachin Tendulkar, Hritik Roshan) o Neutralism (N): None of them benefited or harmed (Example: Amitabh Bachchan, Abhishek Bachchan and Maruti Versa) o Amensalism (A): Only one of them is harmed; other unaffected o Competition (C2): Both are harmed Impact of Celebrity Endorsement on overall Brand
  11. 11. Celebrity endorsement is a complex process of balancing your risk with your gains. "The pure and simple truth is rarely pure and never simple." -Oscar Wilde8. CELEBRITY ENDORSEMENT: THE ISSUES INVOLVEDThere are several factors to consider before resorting to celebrity endorsement. There is nosingle formula to win in the world of marketing. A company must analyze the prospect ofendorsement from 360 degrees, prior to product promotion.8.1 Price vs. ProfitThe most important issue is that of return on investment (ROI). Companies need to perform acost-benefit analysis prior to endorsement. The process of gauging the effectiveness ofendorsement on the overall brand is but difficult. The companies expect to bring, in the long run,future sales, revenues and profit from the present investments on celebrity endorsement.Celebrity endorsement is an expensive means of brand promotion and the price burden almostalways shifts on to the consumers; if not then it narrows the companies’ profit.8.2 Multiple Brand Endorsement vs. Multiple Celebrity EndorsementIn the advertising landscape we find either a celebrity endorsing multiple brands or multiplecelebrities being used to endorse a single brand. Sachin Tendulkar for example in 2002 endorsed12 brands (including Pepsi, Boost, Colgate Total, Gillette, Britannia Tiger, Fiat Palio, TVS Victor,Fiat Sienna, MRF, Adidas, Visa Cards and Home Trade). Tripp et al, says that the endorsementof as many as four products negatively influences the celebrity spokesperson’s credibility andlikeability. Figure 3: Multiple Brand Endorsement (Shah Rukh Khan)Also, the use of multiple celebrities to endorse a brand may hinder the meaning transfer processand thus lead to confusion among the consumers. Impact of Celebrity Endorsement on overall Brand
  12. 12. Figure 4: Multiple Celebrity Endorsement (Adidas & Hyundai Santro)9. CONCLUSIONCelebrity endorsement can be a goldmine or a minefield for a company’s brand building process.There have been extensive studies relating to the process of celebrity endorsement and brand-building. These studies indicate that celebrity endorsement has worked well in some consumersegments while failing in others. Few celebrities have been more successful than those withalmost parallel fame. So the role of celebrity endorsement in the advertising space is equivocaland cannot be seen as a assured strategic tool to win profits, market share, revenues, etc.Consumers can identify the clear difference between a good script and a good brand idea. Forexample, while Pepsis Sachin and Bachchan (kite flying) ad was seen as one with a good script,Coca-Colas Thanda Matlab… was seen as an insightful and strong brand idea. For all the flak itdrew in its vainglorious attempts to run down competition, Thumbs Up was seen as the onlyexample of seamless linkage between brand positioning and brand celebrity.“Brand” is the most valuable asset of any company; building its image is thus of paramountimportance. Any thoughtless adventure can be like the Sword of Damocles upon your head.Celebrities do not make brands but ideas do. If the former were true then brands would havevanished when the hype and hoopla around the celebrities faded. Celebrity endorsement is alsoone of the ideas. But, its’ easy to come up with new ideas; the hard part is letting go of whatworked for you two years ago, but will soon be out-of-date. Therefore, it is imperative to invest ingood ideas; which will bring good returns. Thus the need of the hour is to focus less on yourReturn-on-Investment and think more in terms of your Return-on-Ideas. “There is one thing which is stronger than all the armies of this world, and that is an idea whose time has come” -Victor Hugo Impact of Celebrity Endorsement on overall Brand
  13. 13. REFERENCESBergstrom Christian & Skarfstad Rikard, May 27, 2004, Celebrity Endorsement – case study of J Lindeberg, LuleaBhusan Ratna, January 29, 2004, Celebrities: Bang for buck?, India, www.hinduonline.comChandran Rina, April 08, 2003, Coke, Pepsi bothered by naughty endorsers- celebrity matlab trouble, India,www.hinduonline.comHarwood Gary, May 16, 2004, Do celebrity endorsement build brands?, South Africa, www.biz-community.comJayarangan, L, September 09, 2003, Ad celebrities, India, www.hinduonline.comJoshi Sangita, April 24, 2003, Face value, India, www.hinduonline.comKanaujia Deepak, August 17, 2004, How to build a powerful brand?, India, www.indiainfoline.comKhatri Manoj, Is it smart to use celebrity endorsement for branding?, India, www.etstrategicmarketing.comKumar Ramesh, S, May 15, 2003, Cutting through celebrity clutter, India, www.hinduonline.comRadhakrishnan Shanker, July 13, 2002, Sachin, Shah Rukh have top recall value:Study, India, www.hinduonline.comSchlecth Christina, January 15, 2003, Celebrities’ impact on branding, Columbia,Sen Shunu, May 16, 2002, Celebrity need to be at home with the trade, India, www.hinduonline.comSridhar Ramanujam, January 01, 2004, Of Celebrities or crisis?, India, www.hinduonline.comSwamy Srinivasan, K, April 07, 2005, Is advertising really building brands? , India, www.financialexpress.comWaker Dave, Celebrity Ads that sell, North AmericaZafer Erdogan, B & Baker Michael, J 1999, Celebrity Endorsement: Advertising Agency Managers’ Perspective,www.cjsm.com Impact of Celebrity Endorsement on overall Brand
  14. 14. WEB LINKSwww.agencyfaqs.comwww.biz-community.comwww.buildingbrands.comwww.domain-b.comwww.etstrategicmarketing.comwww.fcps.k12.va.uswww.financialexpress.comwww.hinduonline.comwww.indiainfoline.comwww.investorwords.comwww.lockergnome.comwww.mediaware-infotech.comwww.netvigator.comhttp://03.indiatimes.com Impact of Celebrity Endorsement on overall Brand

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