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1
Project on
A STUDY ON THE IMPACT OF CELEBRITY ENDORSEMENTS AS A
SOURCE OF BRAND BUILDING AND BUYING BEHAVIOUR OF CONSUMERS
In the Subject
Marketing Strategies & Plans
Submitted to
University of Mumbai
For Semester II Of
Master Of Commerce
By
Shruti Vikram
(Management 166)
Under the Guidance of
Prof. Mistry
Year 2012 – 2013
2
INDEX
Chapter Topic Page No
1 Executive Summary 3
2 A. Introduction to the subject
B. Evolution of the subject
6
3 History Of Automobile 26
4 Review of Literature 37
5 A. Statistical Representation and Interpretations
B. Findings
39
6 1. Summary
2. Conclusion
3. Limitations
4. Recommendations
53
7 Bibliography 58
3
Chapter 1
Executive Sum m ary
India is a country where people love to live in dreams. They worship celebrities.
Celebrities may be Cricket stars like Sachin Tendulkar, Mahinder Singh Dhoni or film stars
like Salman Khan, John Ebrahim. They treat them as God. Marketers’ use this very
preposition so as to influence their target customers - may be existing or potential ones. For
this they rope in these celebrities and give them whopping amount of money. They believe
that by doing this they can associate their products with their target customers. This is
called celebrity endorsement.
But do these celebrity endorsements acts as a source of brand-building and have impact
over the purchasing behavior of customers in case of automobiles? For this I decided to
conduct this very research and objectives of my research are:
T o identify the influence of celebrity endorsement on consumer buying behavior.
T o study celebrity endorsement as a source of brand-building.
To find which type of celebrity persona is more effective.
4
Lot of researchers has done extensive research work regarding celebrity endorsement, its
influence over customers purchasing decisions. After studying the whole literature related
to celebrity endorsement I found a gap in the study. This gap was whether celebrity
endorsement acts as a source of brand-building. So I decided to undertake research on this
particular aspect.
This research is limited due to various constraints like time available, scarcity of resources
etc. From this we can make an attempt to generalize the result to the whole universe. After
conducting research it was found that brand name and celebrity endorser are the two key
factors that play an important role in affecting purchase intention. Majority of the people
want to see their favorite celebrity endorsing their brands.
During our research an important factor revealed that mostly people want to see male
celebrities endorsing automobile vehicles rather than female. This fact is also supported by
advertisement of glamour motorbike which have baseline “Definitely male. This particular
advertisement created hot spaces at Cannas festival. There are large no. of mediums of
persuasion but celebrity endorsement is an effective mode of persuasion.
People love to see sports stars endorsing automobile vehicles than that of bollywood stars.
This particular aspect is mainly supported by the fact that in India where Cricket is religion
and with the success of IPL-1 cricketers like Gautam Gambhir, Ishant Sharma are able to
displace big film stars like Hrithik Roshan for advertisements of Coca-Cola. Another
important fact which came into existence was majority of people follow their favorite
celebrity while making a new purchase every time.
5
Beside this one major factor come into existence that mostly respondents were able to
recognized the celebrity used in various advertisement. So in this brand recall test, mostly
positive results were found. One open-ended question was also included about suggestion.
From that it was concluded that mostly people want that instead of spending huge amount
of money onto celebrities, company should come out with some schemes so as to lure their
customers. So it can be concluded that for a small extent Celebrity endorsement acts as a
source of brand-building but company should follow integrative approach so as to build
strong brands. Beside celebrity endorsement they should run certain schemes so as to
provide value to the customer and to build strong brand.
6
Chapter 2
2.1.1Introduction to the subject
There are large no. of brands available in the market. Some are very familiar and rest are
somewhat. What are the things that distinguish those from rest? It may be brand name,
advertisement, royal heritage and may be celebrity endorser who endorses them. E.g. Raid
and Taylor has the rich heritage of roping in various cascades of James Bond 007 as their
brand endorser and it has helped them strongly to build their brand. Businesses have long
sought to distract and attract the attention of potential customers that live in a world of
ever-increasing commercial bombardment. Everyday consumers are exposed to thousands
of voices and images in magazines, newspapers, and on billboards, websites, radio and
television. Every brand attempts to steal at least a fraction of an unsuspecting person's
time to inform him or her of the amazing and different attributes of the product at hand.
Because of the constant media saturation that most people experience daily, they
eventually become numb to the standard marketing techniques. The challenge of the
marketer is to find a hook that will hold the subject's attention.
Also from a marketing communications (marcoms) perspective, it is vital that firms design
strategies that help to underpin competitive differential advantage for the firm's product or
services. Accordingly, marcom activities back-up other elements in the marketing mix
such as designing, branding, packaging, pricing, and place The term Celebrity refers to an
individual who is known to the public (actor, sports figure, entertainer, etc.) for his or her
achievements in areas other than that of the product class endorsed (Friedman and
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Friedman, 1979). This is true for classic forms of celebrities, like actors (e.g., Amitabh
Bachchan, Shahrukh Khan, Rani Mukherjee Aamir Khan and Pierce Brosnan), models
(e.g., Mallaika Arora, Lisa Ray, Aishwarya Rai, Naomi Campbell, Gisele Buendchen,
etc), sports figures (e.g., Sachin Tendulkar, Zaheer Khan, Sourav Ganguly, Anna
Kournikova, Michael Schumacher, Steve Waugh, etc), entertainers (e.g., Cyrus Broacha,
Oprah Winfrey, Conan O'Brien), and pop-stars (e.g., Madonna, David Bowie) - but also
for less obvious groups like businessmen (e.g., Donald Trump, Bill Gates) or politicians.
Celebrities appear in public in different ways. First, they appear in public when fulfilling
their profession, e.g., Vishwanathan Anand, who plays chess in front of an audience.
Furthermore, celebrities appear in public by attending special celebrity events, e.g., award
ceremonies, inaugurations or world premieres of movies. In addition, they are present in
news, fashion magazines, and tabloids, which provide second source information on
events and the 'private life' of celebrities through mass-media channels (e.g., Smriti Irani
being regularly featured in various publications). Last but not least, celebrities act as
spokes-people in advertising to promote products and services, which is referred to
celebrity endorsement.
'Celebrity Endorsement'
McCracken's (1989) definition of a celebrity endorser is, "any individual who enjoys
public recognition and who uses this recognition on behalf of a consumer good by
appearing with it in an advertisement (marcoms), is useful, because when celebrities are
depicted in marcoms, they bring their own culturally related meanings, thereto,
irrespective of the required promotional role."
8
Friedman and Friedman (1979) found empirical evidence that, in the promotion of
products high in psychological and/or social risk, use of celebrity endorser would lead to
greater believability, a more favorable evaluation of the product and advertisement, and a
significantly more positive purchase intention.
Thus, companies use celebrities to endorse their products; however, there are deeper
attributes that are involved in celebrity endorsement. Celebrities might endorse as a brand
ambassador or a brand face. Some time people have this habit of relating this very term of
celebrity endorsement with brand face. But this is not so.
Difference between Brand Ambassador & Brand Face
A Brand Ambassador would be one who is not only a spokesperson for the brand or is just
appearing as a testimonial for the brand's benefits. He/she is an integral part of the brand
persona and helps to build emotion ale, which goes beyond just appearing on TV
commercials.
He takes up the cause of a Brand Champion and is associated with every aspect related
with the brand. What is more, there is a significant difference between making just an
endorsement for say, a shampoo or an automobile, and being that brand's alter ego. Both
parties take the latter far more seriously to the deal. So a brand ambassador would be
involved in press releases, he/she would be actively participating in any sales promotion,
sporting the Brand all the while. For example, Fardeen Khan is the brand ambassador for
Provogue while he remains a brand face for Lux Body Wash.
9
On the other hand, a Brand Face would be the current celebrity who is just used as a tool
to increase brand recall and is only appearing in the advertisement. It is usually seen that a
brand face is a temporary contract and is very short term at times. An example would be
Sona Chandi Chawanpryash using Sourav Ganguly for a while in its commercials. Brand
faces are easily forgotten and fade away with the campaign's end.
The motive behind total branding may be decocted as an attempt to amalgamate diverse
activities to win customer preference. Apropos to this context, the topic “Impact of
celebrity endorsement on overall brand”, is a significant one. The crescendo of
celebrities endorsing brands has been steadily increasing over the past years. Marketers
overtly acknowledge the power of celebrities in influencing consumer-purchasing
decisions. It is a ubiquitously accepted fact that celebrity endorsement can bestow special
attributes upon a product that it may have lacked otherwise. But everything is not hunky-
dory; celebrities are after all mere mortals made of flesh and blood like us. If a celebrity
can aggrandize the merits of a brand, he or she can also exacerbate the image of a brand.
If I may take the liberty of rephrasing Aristotle’s quote on anger, “Any brand can get a
celebrity. That is easy. But getting a celebrity consistent with the right brand, to the right
degree, at the right time, for the right purpose and in the right way... that is not easy.”
10
Celebrity endorsements are impelled by virtue of the following motives:
Ins tant Brand Awareness and Recall.
Celebr i ty values define, and refresh the brand image.
Celebr i t ies add new dimensions to the brand image.
Ins tant credibility or aspiration PR coverage.
Lack of ideas.
Convincing clients.
Scope of Celebrity Endorsement:
The use of testimonials by advertisers dates back to the 19th century when medicines were
patented. Firms have been juxtaposing their brands and themselves with celebrity
endorsers (e.g., athletes, actors) in the hope that celebrities may boost effectiveness of
their marketing. The increasing number of endorsements throws a valid question to the
consumers. Is there a science behind the choice of these endorsers or is it just by the
popularity measurement? What are the reasons which lead to impact of celebrity
endorsement on brands? The success of a brand through celebrity endorsement is a
cumulative of the following 14 attributes. Greater the score of the below parameters,
greater are the chances of getting close to the desired impact.
11
Impact Regions of C elebrity Endorse m ent
While brand marketers with positive experiences would tend to believe that celebrity
endorsements work and some would disagree, but one would be sure that the magnitude of
its impact is difficult to measure even if sales figures are at our disposal. However, we can
understand why it works and the impact regions of celebrity endorsement.
12
The illustrations below explain the same: -
How Celebrity Endorsements Influence the Consumer
The basis for the effectiveness of celebrity-endorsed advertising can be linked to Kelman's
processes of social influence as discussed by Friedman and Friedman. According to
Kelman, there are three processes of social influence, which result in an individual
adopting the attitude advocated by the communicator:
Compliance, Identification & Internalization
These latter two processes are particularly applicable to celebrity-endorsed advertising.
Compliance infers that another individual or group of individuals influences an individual
because he or she hopes to achieve a favorable reaction from this other group. This
process of social influence is not directly applicable to celebrity advertising because there
is little, if any, interaction between the celebrity and the consumer.
13
Identification applies to the situation wherein the individuals emulate the attitudes or
behavior of another person or group, simply because they aspire to be like that person or
group. This process is the basis for referent power. It was found that celebrities are more
commonly liked than a typical consumer spokesperson.
Internalization as a process of social influence is said to occur when individuals adopt
the attitude or behavior of another person because that behavior is viewed as honest and
sincere and is congruent with their value system. The effectiveness of celebrity
advertising traditionally has not been strongly linked to this process, as a celebrity's
reason for promoting a product can just as easily be attributed by the consumer to an
external motive (i.e., payment of fee) as to an internal motive (i.e., the celebrity's true
belief in the value and benefit of the product). An important issue of concern relates to the
development of a strategy for use in Celebrity Advertising, which benefits from the
dramatic impact of dual support of both the identification and internalization processes of
social influence. Celebrities are well-liked, but the techniques that can be used to enhance
their credibility as spokespeople, and therefore, tie-in more closely with the internalization
process needs to be looked into.
Effectiveness of Celebrity Endorsers
A study conducted by Charles Atkin and Martin Block focused on alcohol advertising and
young audience to examine the impact of celebrity advertising in terms of social effects of
advertising. The sponsoring Company is the underlying source of any advertising
message, but the individual models depicted in the advertising serve as the more visible
communicator in many cases. The most thoroughly studied source quality is credibility.
14
Research conducted by social psychologists over the past 30 years demonstrates that a
source perceived as highly credible is more persuasive than a low credibility sender
(Hovland and Weiss, 1951; McGuire, 1969; Hass, 1981).
The sources that companies use to present their advertising message typically attempt to
project a credible image in terms of competence, trustworthiness or dynamism. Celebrity
endorsers are considered to be highly dynamic, with attractive and engaging personal
qualities. Audience may also trust the advice given by some famous person, and in certain
cases, celebrities may even be perceived as competent to discuss the product. Friedman,
Termini and Washington cite a 1975 study showing that celebrities are featured in 155 of
prime-time TV commercials. A later survey reported that this proportion was up to 20%
(Advertising Age, 1978). The most widely used celebrities are sports figures, actors or
other types of entertainers. There are several reasons why a famous endorser may be
influential: -
They attract attention to the advertisement in the cluttered stream of messages
They are perceived as being more entertaining
They are seen as trustworthy because of apparent lack of self-interest.
The final element is due to the wide-spread attribution that major stars do not really work
for the endorsement fee, but are motivated by genuine affection for the product (Kamen et
al, 1975).
15
Despite the use of famous endorsers, there is little published evidence regarding the
effectiveness. In one experiment, an advertisement for a fictitious brand of Sangria wine
featured an endorsement attributed to either a celebrity (actor - Al Pacino), a professional
expert, the Company President, a typical consumer and no source (Friedman, Termini and
Washington, 1977). College students read the ad and gave the ad 0-10 scales of
believability, probable taste, and intent to purchase. Across these three measures, the
celebrity condition produced the highest scores.
While the 'no-source' control group had a purchase intention rating of 2.7, the subjects
exposed to the actor scored 3.9. Believability was rated 2.8 by control subjects versus 4.1
by those seeing the celebrity endorsement. For taste, the baselines of 4.0 compares to the
celebrity group score of 5.6. None of the other three endorsers were as influential as the
celebrated person
Brand Image Formation & Brand Preference
Having a congruent image between the brand and celebrity does not guarantee any
positive effect on consumers' brand preferences. The fundamental question is - what a
brand image really does to consumers? Baran and Blasko explained, "Since most products
aren't special, most advertising does that entire so-called image stuff... There's no
information about the product, there's only information about the kind of people who
might be inclined to use the product." (p.13). This view is echoed by Feldwick (1991) who
has suggested that the subjective experience of using a brand can be different from the
subjective experience of using an identical product without the brand reassurance. In the
case of using celebrity advertising to build brand image, the effects are examined with a
social psychological framework.
16
Before we can scrutinize the effects of celebrity endorsement on the overall brand, we
have to look at the implicit nuances that act as sources of strong brand images or values: -
Experience of Use: This encapsulates familiarity and proven reliability.
User Associations: Brands acquire images from the type of people who are seen
using them. Images of prestige or success are imbibed when brands are associated
with glamorous personalities.
Belief in Efficiency: Ranking from consumer associations, newspaper editorials,
etc.
Brand Appearance: Design of brand offers clues to quality and affects
preferences.
Manufacturer’s Name & Reputation: A prominent brand name (Sony,
Kellogg’s, Bajaj, and Tata) transfers positive associations.
The celebrity’s role is the most explicit and profound in incarnating user associations
among the above mentioned points. To comprehend this, let us analyze the multiplier
effect formula for a successful brand: -
17
S=P* D*AV -- the multiplier effect
Where
S is a Successful Brand
P is an Effective Product
D is Distinctive Identity
AV is Added Values
The realm of the celebrity’s impact is confined to bestow a distinctive identity and provide
AV to the brand; the celebrity does not have the power to improve or debilitate the
efficiency and features of the core product. Thus, we are gradually approaching an evident
proposition claiming, "The health of a brand can definitely be improved up to some extent
by celebrity endorsement. But one has to remember that endorsing a celebrity is a means
to an end and not an end in itself."
An appropriately used celebrity can prove to be a massively powerful tool that magnifies
the effects of a campaign. But the aura of cautiousness should always be there. The fact to
be emphasized is that celebrities alone do not guarantee success, as consumers nowadays
understand advertising, know what advertising is, and how it works. People realize that
celebrities are being paid a lot of money for endorsements and this knowledge leads them
to cynicism about celebrity endorsements.
18
Automobile m arketing in India:
The competitive nature of the automobile industry has prompted the companies to take up
new and innovative marketing strategies to thwart the competition. The B segment of cars
is the segment which sees maximum competition as the consumer has a number of models
to choose from and it's the volumes which drive the margins.
All the companies as a part of their marketing strategy offers a range of vehicles in all the
segment to make sure that the customer is driving one of their vehicles only.
Advertisements on the Audio visual medium are a rage as it gives the car makers an
opportunity to flaunt their cars. Flashy cars can be demonstrated on television but when it
comes to the finer prints of the cars, print and online media comes to the rescue.
The online medium offers a greater flexibility to the car companies since they come with a
lot of interactive features like demonstrating the interiors of the car with its salient
features. The print medium on the other hand provides an opportunity to the car makers to
explain the function of a car in detail.
Celebrity endorsements and testimonial advertisements have come a long way and they
are also doing their bit to sell the cars. Super star Shahrukh Khan has been associated with
Hyundai Motor Company for a long time and he comes regularly on television to promote
the Santro car. Similarly Ford has roped in Junior Bachan for the promotion of the latest
offering from the company Ford Fiesta. On a similar note Saif Ali Khan and Rani
Mukherjee is shown chasing each other with a Chevrolet aveo.
19
Aamir Khan who is considered to be one of the most talented actors in the industry is
frequently seen changing roles on screen to promote the Toyota Innova, a car which is
generations ahead of its predecessor Toyota Qualis.
Cricketers haven't been left behind in the race of promoting cars; Fiat Palio had received a
great thrust when the promotion of the car was taken up by the batting maestro Sachin
Tendulkar. In addition to the publicity and advertisement which is done by the companies
there are certain innovative strategies which are taken up by the companies to beat the
competition from time to time.
2.2Evolution of subject:
The celebrities get huge amount of money to endorse the product which actually creates
recall-value for the product like
Coca Cola Aamir Khan
Tag–Heuer Shahrukh Khan
Cadbury chocolate Amitabh Bachan
The adding up of any celebrity with any brand may not always increase the sales volume
but if somehow the image of the product damaged, celebrity endorsing helps in recovering
the image. Like when Cadbury India’s reputation as a safe chocolate was almost gone due
to the worm controversy, they used Amitabh Bachan in a commercial assuring the
audience about the quality of the Cadbury. Similarly when Pepsi & Coke was infected by
the Pesticides controversy, Pepsi used both SRK & Sachin Tendulkar for damage control
& coke used Aamir Khan for image recovery.
20
Not all products go with the image of all celebrity. It depends on the matching of attributes
between the product & the celebrity. In the age of Sunil Gavaskar & Kapil Dev, Gavaskar’s
attributes matched with the products which were being used by the higher society people &
Kapil dev’s attributes matched with products that were for common man. This means
Gavaskar was much trustworthy for the advertisement of pen & cans and Kapil Dev had
gone for shaving cream & bicycles. Kapil’s advertisement of Palmolive Ka Jawab nahi in a
slightly hariyanvi style is still a legend among the Indian advertisements. Sachin Tendulkar
is the first celebrity in India whose mass appeal is so high that he can endorse product for
any section of the society. The filmstars before year 2000 has limited endorsement and
didn’t explore the advertising market of India but post 2000 the scenario has changed.
Amitabh Bachan after KBC got huge popularity among the masses & his popularity is
being used by various products from Reid & Taylor to Parker. But during his hay day as a
superstar in the ‘80s, he never endorsed anything. Another success story is SRK who is
currently endorsing more than 35 products & earned more money from endorsement than
his last 2 super hit films CHAK DE INDIA & OSO. The cricketers are also not in the
backyard. After winning the T-20 World Cup Indian cricket players also got few numbers
of endorsements Dhoni, Yuvraj & Zaheer Khan grabbed few endorsements but in terms of
numbers they are much less than the actors. With the change in strategy of PepsiCo India
to promote their ‘Youngistaan’ campaign they didn’t renew their contract with players like
Sachin and Sourav. Instead they have taken rising actors like Ranbir Kapoor and Deepika
Padukone to promote their product. This incident also indicates that the cricketers are
losing their endorsed products to the filmstars. One exception is Sania mirza, in spite of
all controversies, off-form and injuries she is able to survive in the advertisement world.
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Apart from Big B, SRK and Aamir Khan some other stars also make their own mark in the
endorsement market like Hrithik Roshan, Saif Ali Khan, Kareena Kapoor, Priyanka
Chopra and Katrina Kaif.
The problem in the endorsement market is that here glamour plays a big role. That is why
Abhinav Bindra, the only Indian to win a Gold Medal in the Olympics gets only Samsung
as the only product to endorse whereas filmstars gets offers from various companies to
endorse their products.
Brand V/s Celebrity
Sometimes the celebrity is more highlighted than the products, making no recall value of
the product. When Rahul Dravid advertised for Castrol, the brand gets overshadowed by
the celebrity & that is also a wrong choice of celebrity. Dravid is never famous for racing
& when he promotes the product, if gives a wrong signal to the customers. The product
can use Narain Karthikeyan to endorse it which will give some reliability to the product.
Some success story
Cadbury India used Amitabh Bachan not only to recover their image from worm
controversy but also to establish itself as the leading company in the Indian chocolate
market.
Aamir Khan’s ad campaign ‘Thanda Matlab Cocacola’ was also a huge hit. Not only that
the company uses the superstars to come out from the pesticides controversy.
Dabur brings in Amitabh Bachan in the stagnant chawanprash market which brings in
boost in market and helps Dabur to remain the market leader.
22
The Lux Story
The Lux Soap in its 75 yrs journey as a product always used a Film Celebrity to promote
the product with the most catchy lines ‘Lux meri Khubsurti Ka raaj’. They used a huge
number of celebrities from the beginning to promote their product & in their 75 years
celebration advertisement campaign; they used SRK as the main endorser who has said
the famous ‘Lux mera Khubsurti ka raaj’ along with Hema Malini, Sridevi & Kareena
Kapoor. That is the first time a male celebrity endorsed a female product in India.
Some Controversies
When SRK promoted Emami’s Fair & Handsome cream. It was highly criticized as
saying that if a star with SRK’s stature promote whiteness cream then actually we are
advocating for racism saying black is bad & white is gold. And how SRK could can
endorse such products as there will be a huge impact among the masses regarding the skin
colors. A person must be judged by his/her qualities & not by his/her skin color. But what
we basically forgot that stars get money to endorse products & we shouldn’t eye washed
by the advertisement & there is no point in criticizing a celebrity for endorsing product
like Fair & Handsome.
Shilpa Shetty & Romanov Vodka.
Shilpa Shetty also hardly criticized for promoting alcohol. As being a celebrity she must
be a responsible citizen & a responsible citizen should never promote alcohol.
Celebrity branding is all right as long as the celebrity conducts himself in a good manner
but if something wrong happens it will affect the image of the product also. When Salman
Khan got warrant for killing endangered dear ‘Thumbs Up’ has no option but to replace
him.
23
So the product and the celebrity remain good as long as both of them remain individually
good. The main problem of celebrity branding is that when a particular product is known
to the common people with the effect of the celebrity, it is very difficult to separate the
product from the star. Like Coca-Cola - Aamir Khan, Cadbury- Amitabh Bachan, Santro-
SRK. Now, if any one of the company want to change their endorser they have to redesign
the product to let out their product from the shadow of the old campaign. In case of
celebrity marketing another problem also arise, that no separate brand value grows up for
the product unless and until the product is extraordinary. The product is known in the
name of the celebrity. Sometimes if the attributes of the celebrity doesn’t matches with the
product, it also gives a negative attribute to the product endorsed. Like in a Survey study it
is found that people locates Amitabh Bachan with Asian Paints the most but in reality
Amitabh endorsed Nerolac paints and Nerolac’s biggest competitor is Asian paints. So
there are certain positive as well as negative points in celebrity branding in India. As a
producer of the product the company always wants to minimize the negative sides of the
celebrity endorsement and maximize the positive impact of the celebrity endorsement.
This clearly raises a question what impact celebrity endorsements have on people in case
of automobiles and whether it acts as a source of brand-building?
2.2.1 Objectives of study:
The objectives of the study are as follows:
To identify the influence of celebrity endorsement on consumer buying behavior.
To study celebrity endorsement as a source of brand-building.
To find which type of celebrity persona is more effective.
24
2.2.2 Need of the study:
After going through various sources like magazines, newspapers, websites I found that lot
of research work has undertaken by researcher regarding impact of celebrity endorsement.
But there was a gap in the research regarding whether celebrity endorsement act as a
source of brand-building. So there is a need to discover this fact. So I decided to work on
this particular aspect.
2.2.3 Scope of the study:
As due to time constraint it is very difficult to cover the entire sectors so I decided to cover
automobile sector. I am covering automobile sector as whole and not concentrating on any
particular category.
2.2.4 Research Met h odology:
Research Desig n :
A research design is an arrangement of conditions for collection and analysis of Data in a
manner that aims to combine relevance to the research purpose with Economy in
procedure. It constitutes the blueprint for collection, measurement and analysis of data.
My research design will be exploratory research design.
25
Data Source s :
In dealing with any real life problem it is often found that data at hand are inadequate,
and hence, it becomes necessary to collect data that are appropriate. The researcher can
collect data either through primary source or secondary source.
a) Primary data: These are those data which are collected afresh and for the first
time, and thus happen to be original in character. I will be using the structured
questioners.
b) Secondary data: These are those which have already been collected by someone
else and which have already been passed through the statistical process. I will
collect it from the sources like internet, published data etc.
Population of the study
Youth (Male) will be included in population.
Sampling Size:
It is the total number of respondents targeted for collecting the data for the research.
Sample size of 100 persons will be taken for this research.
Sampling Technique:
Random sampling technique will be used in this research project.
26
Chapter 3
3.1 History of A utomobile Industr y :
The automobile as we know it was not invented in a single day by a single inventor. The
history of the automobile reflects an evolution that took place worldwide. It is estimated
that over 100,000 patents created the modern automobile. However, we can point to the
many firsts that occurred along the way. Starting with the first theoretical plans for a motor
vehicle that had been drawn up by both Leonardo da Vinci and Isaac Newton.
In 1769, the very first self-propelled road vehicle was a military tractor invented by
French engineer and mechanic, Nicolas Joseph Cugnot (1725 - 1804). Cugnot used a
steam engine to power his vehicle, built under his instructions at the Paris Arsenal by
mechanic Brezin. It was used by the French Army to haul artillery at a whopping speed
of 2 1/2 mph on only three wheels. The vehicle had to stop every ten to fifteen minutes to
build up steam power. The steam engine and boiler were separate from the rest of the
vehicle and placed in the front (see engraving above). The following year (1770), Cugnot
built a steam-powered tricycle that carried four passengers.
In 1771, Cugnot drove one of his road vehicles into a stone wall, making Cugnot the first
person to get into a motor vehicle accident. This was the beginning of bad luck for the
inventor. After one of Cugnot's patrons died and the other was exiled, the money for
Cugnot's road vehicle experiments ended.
27
Steam engines powered cars by burning fuel that heated water in a boiler, creating steam
that expanded and pushed pistons that turned the crankshaft, which then turned the
wheels. During the early history of self-propelled vehicles - both road and rail
vehicles were being developed with steam engines. (Cugnot also designed two steam
locomotives with engines that never worked well.) Steam engines added so much weight
to a vehicle that they proved a poor design for road vehicles; however, steam engines
were very successfully used in locomotives. Historians, who accept that early steam-
powered road vehicles were automobiles, feel that Nicolas Cugnot was the inventor of
the first automobile.
The automotive industry has certain trends it has to follow, just like fashion designers
and musical composers. In times of recession and decreasing sales there is less room to
take chances and manufacturer are prone to follow the common pattern as a safer bet rather
than releasing a controversial product or idea that might or might not be successful.
However throughout the automotive industry's history, great innovators have "boldly gone
where no man has gone before" to set new trends which have dynamically altered the
industry as a whole.
28
3.1.1 Growth and Land m arks of automobile indust r y in India :
The automobile industry, one of the core sectors, has undergone metamorphosis with the
advent of new business and manufacturing practices in the light of liberalization and
globalization. The sector seems to be optimistic of posting strong sales in the next couple
of years in view of a reasonable surge in demand.
The Indian automobile market is gearing towards having international standards to meet
the needs of the global automobile giants and become a global hub. Players are
strategizing to consolidate their position and gradually increase market penetration with
the launch of new models, targeting different segments. Since the sector is price driven,
huge investment is envisaged to remain competitive through cost advantage, for which
indigenization is highly important. The product becomes dearer if it is manufactured using
imported parts. IT in the automobile sector plays a crucial role.. Some players are working
towards development of efficient production systems that control the entire production
process with high precision and accuracy. Such systems working on real time operating
systems allow efficient control of different parts of manufacturing and production. It is
essential to leverage skills of different engineering disciplines to build these kinds of
integrated systems.
Analysts foresee high scope in the electronics for auto sector and expect the retailing of
such electronics products to contribute a major chunk of future revenues. The government
is increasing the research and development (R&D) fund for the automobile industry over
and above the Rs 1400 crores earmarked for eight years. All laboratories in the country
researching on automobile technology, such as BHEL which is developing cell technology
as alternative fuel, have also been brought together through the setting up of a national R
& D working group. The group is working out a plan to link all major laboratories across
the country to give a thrust to automotive research.
29
Indian automobile sector being a driver of product and process technologies, and has
become a excellent manufacturing base for global players, because of its high machine tool
capabilities, extremely capable component industry, most of the raw material locally
produced, low cost manufacturing base and highly skilled manpower Not only a large
number of world manufacturers have set up production bases in India but also a large
number of foreign companies are collaborating with the auto component suppliers and
vendors.
Indian Automobile Components Industry has been making rapid strides towards
achievement of world-class Quality Systems by imbibing ISO 9000/QS 9000 Quality
Systems whereby the Indian Automotive industry has become more competitive in the
export market due to its technological and quality advances, so much so that in quality
conscious markets such as Europe and America, it is emerging as a major player, based on
its performance. India today exports: Engine and engine parts, electrical parts, drive
transmission & steering pats, suspension & braking parts among others.
The sector is striding inroads into the rural middle class after its inroads into the urban
markets and rural rich. It is trying to bring in varying products to suit requirements of
different class segments of customers.
States like Rajasthan, Uttar Pradesh, Maharashtra, Andhra Pradesh and West Bengal are
vying to woo global players with proposals including heavy tax exemptions and to create a
more investor friendly regime, each state is proposing to provide all regulatory clearances
at express speed.
The Government should promote Research & Development in automotive industry by
strengthening the efforts of industry in this direction by providing suitable fiscal and
financial incentives.
30
The current policy allows Weighted Tax Deduction under I.T. Act, 1961 for sponsored
research and in-house R&D expenditure. This will be improved further for research and
development activities of vehicle and component manufacturers from the current level of
125%.
In addition, Vehicle manufacturers will also be considered for a rebate on the applicable
excise duty for every 1% of the gross turnover of the company expended during the year
on Research and Development carried either in-house under a distinct dedicated entity,
faculty or division within the company assessed as competent and qualified for the purpose
or in any other R&D institution in the country. This would include R & D leading to
adoption of low emission technologies and energy saving devices.
Government will encourage setting up of independent auto design firms by providing them
tax breaks, concessional duty on plant/equipment imports and granting automatic approval
Allocations to automotive cess fund created for R&D of automotive industry shall be
increased and the scope of activities covered under it enlarged.
31
3.1.2 Structure of Indian automobile se c tor and some facts:
Structure:
The Indian automobile industry can be broadly classified into:
2 /3 Wheelers
Passenger Cars
Commercial Vehicles (LCV/HCV/MCV)
UV (Utility vehicles)
Tractors
The models in the car market can be fitted to different segments as given below:
Category Models
Economy segment Maruti Omni, Maruti 800 etc.
Mid-size segment Fiat Uno, Hyundai Santro, Tata
Luxury car segment Tata Indigo, Honda City, Astra,
Hyundai Accent & others Super luxury segment Mercedes Benz & other imported
32
The economy segment has a very large foothold over the Indian automobile
market as compared to the mid-size and luxury segment.
Segment Market Share (%)
Economy 90.2
Mid-size and luxury 9.8
Source: SIAM/ Auto Car India
Increased urbanization, low pricing policies, improvement in products and technology
have fuelled demand for 4-wheelers. The markets are clearly segmented between
economy models and premium models. The easy availability of finance and increased
levels of disposable incomes has led to higher demand for premium models. Rural areas
have also become an exciting market to cater to.
The growth of the economy has also resulted in a shift in consumer preferences in each of
the segment. Gradual shift can be seen in buyers from mopeds to economy scooters, from
economy scooters to premium and from premium to motorcycles.
The passenger car segment has seen rapid growth on the back of rise in disposable
income, increased availability of consumer finance, and reduction in excise and customs
duties. Post-1991, this segment has seen maximum foreign investment. There is a clear
segmentation of passenger cars based on price and size. While the lower and medium
range cars (Maruti, Ford, Cielo) have been moderately successful, luxury cars such as
Mercedes have found the going tough.
33
The CV segment is directly linked to industrial production and foreign trade and
is therefore subject to cyclical fluctuations of the economy. The demand for CVs
is related to growth in movement of goods transported and freight rate levels, both
of which are linked to level of production.
Demand for utility vehicles and tractors come from rural India. These vehicles
have witnessed steady demand growth over the past few years due to successive
monsoons, better procurement prices, improved irrigation facilities, and
availability of finance.
A strong in-house R&D capability allows a manufacturer to develop and
introduce products at lower prices, thus saving costs of importing technology.
However, Indian companies spend very little on R&D.
Availability of quality components is another factor that determines smooth
production without bottlenecks. High rejection rate of auto components has
prompted several global majors like Ford, to get their international suppliers
34
3.1.3 The Land m ark of Indian auto m obile sector:
1928- The first imported car was seen on Indian roads
1942- Hindustan Motors incorporated
1944- Premier automobiles started
1948- First car manufactured in India
1953- The Government of India decreed that only those firms which have a
manufacturing program should be allowed to operate
1955- Only seven firms, namely, Hindustan Motors Limited, Automobile Products of
India Limited, Ashok Leyland Limited, Standard Motors Products of India
Limited. Premier Automobiles Limited, Mahindra & Mahindra and
TELCO received approval.
1960 - 1970 - The two, three wheeler industries established a foothold in the Indian
scenario.
1970 - 1980 - Not much change was witnessed during this period. The major factors
affecting the industry were the implementation of the MRTP Act (Monopolies
and Restrictive Trade Practices Act), FERA (Foreign Exchange Regulation Act)
and the Oil Shock of 1973 and 1979.
1980 - 1990 - The first phase of liberalization was announced by the Govt. -With the
liberalization of the Government's protectionist policies, the advantages hitherto
enjoyed by the Indian car manufacturers like monopoly, oligopoly, slowly began
to disappear.
35
1991 - Under the Govt.'s new National Industrial Policy, the license raj was dispensed with,
and the automobile industries were allowed to expand freely.
1993 - With the winds of liberalization sweeping the Indian car market, many
multinationals like Daewoo, Peugeot, general Motors, Mercedes-Benz and Fiat came
into the Indian car market.
1997 - The National Highway Policy was announced which will hopefully have a positive
impact on the automobile industry. The Government also laid down the emission
standards to be met by car manufacturers in India in the coming millennium. There
were two successively stringent emission levels to be met by April 2000 and April 2005,
respectively. These norms were benchmarked on the basis of those already adopted in
Europe, hence the names Euro I (equivalent to India 2000) and the Indian equivalent of
Euro II.
1999 - The Hon’ble Supreme Court passed an order directing all car manufacturers to comply
with Euro I emission norms (India 2000 norms) by the 1st of May, 1999 in National
Capital Region(NCR) of Delhi. The deadline was later extended to 1st June, 1999
2004 - Tata Motors becomes the first Indian auto company to be listed on the New York
Stock Exchange
2008- Tata Motor becomes the first auto company to produce world’s smallest car “ Nano”.
36
3. 1.4 Major player in Indian auto m obile sector:
These are the major players in Indian automobile sector:
Maruti Udyog Ltd.
Hyundai
Mitsubishi Motors
Mahindra & Mahindra
Tata Motors
37
Chapter 4
Review of Literature
1. Kambitsis et al., (2002) Celebrity endorsement is a billion dollar industry today with
companies signing deals with celebrities hoping that they can help them stand out from the clutter
and give them a unique and relevant position in the mind of the consumer. The reasons for using
celebrity endorsement involve its potential to create awareness, positive feelings towards their
advertising and brand. Advertisement featuring celebrity endorsement is often also perceived to be
entertaining.
2. Pettitt (2000): Advertising is heavily used in process of personality creation. This follow
logically from the fact that personalities are particularly important for brand building. They
provide unique associations with the brand and these associations’ acts as a stimulus for the
customer to link their personality with the brand.
3. Tellis (1998) argues that consumers in a high-involvement situation might actually be offended
by the use of celebrity to endorse the brand. He also suggests that when there seem to be perceived
high differences among competing brands, the consumer will perceive it as a high-involvement
situation and put extra emphasis on information about the product more than being influenced by
celebrity endorsers.
38
4. Freiden (1994): He concluded that celebrities are particularly effective spokespersons because
they are viewed as highly trustworthy, believable, persuasive, and likeable. A credible
spokesperson is, other things being equal, more effective than a less credible spokesperson.
5. Shimp (2007): A recent estimate indicates that almost 20 percent of all advertisements
worldwide use celebrity spokespersons. The general belief among advertisers is that 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.
39
Chapter 5
Statistical Representation and Interpretations
1. Occupation of respondent:
Occupation Percentage
Business Class 25
Service Class 25
Student 30
Others 20
Interpretation:
From this pie-chart it is clear that majority of the respondents are students and rest of the share is
occupied by service and business class.
40
2. Age of the respondent:
Age Percentage %
18-25 30
26-32 20
33-39 30
Above 40 20
Interpretation:
This pie-chart depicts that mostly respondents are young and while rest are above 25 years.
41
3.Gender of the respondent:
Gender Percentage %
Female 65
Male 35
Interpretation:
This pie-chart depicts that 65% of the respondents are female and 35% are males.
42
4. Type of Vehicle:
Vehicle Percentage %
Two-wheeler 45
Four-wheeler 35
Both 20
Interpretation:
This pie-chart depicts that 45% of the people have two-wheeler and 35% of the people have four-
wheeler and rest 20% have both two-wheeler and four-wheeler.
43
5. Factors affecting purchase intention:
Factor Percentage %Price 20
Opinion-leader 15 Celebrity endorser 35
Brand name 30
Interpretation:
This pie-chart depicts that 35% of the people consider celebrity endorser while going for the
purchase, followed by brand name-with 30%.,opinion leader 15% and 20% people consider price.
Brand name usually covers all aspects like functional aspects viz. mileage, speed etc. As people
usually are more interested towards well known brands and if these brands are advertised by
famous celebrity it creates an huge impact.
44
6. Like to see any celebrity endorsing your brand:
Preference Percentage %
Yes 55
No 25
Can't say 20
Interpretation:
This pie-chart clearly indicates that 55% of the respondents want their products to be advertised by
celebrities, 25% don’t want and 20% of the respondents weren’t sure. So, this clearly shows how
much important these celebrities are in the daily life of common man.
45
7.Male v/s Female celebrity endorser:
Preference Strongly
Agree
Agree Indifferent Disagree Strongly
Disagree
Male 25 05 10 5 10
Female 5 15 10 10 5
Interpretation:
It is confirmed after the analysis that male celebrity endorser are more effective than that of female
celebrity.
46
8. Celebrity endorser as an effective method of persuasion:
Preference Percentage %
Strongly Agree 45
Agree 15
Indifferent 10
Disagree 20
Strongly Disagree 10
Interpretation:
This chart depicts that mostly people agree that Celebrity endorsement is an effective tool of
persuasion. 45% of people strongly agree that celebrity endorsement is an effective tool of
persuasion and 20% of people disagree that it is one of the tool.
Hence it can be concluded that celebrity endorsement is an effective tool of persuasion to
facilitate customer to go for purchase.
47
9.Celebrity endorsement affects my purchase decision while going for the purchase
of automobile products.
Preference Percentage %
Strongly Agree 30
Agree 15
Indifferent 10
Disagree 35
Strongly Disagree 10
Interpretation:
This chart depicts that 45% of the people agree strongly or simply on the fact that their
automobile purchase is being affected by celebrity endorsement,10 % of the people
remain indifferent and 45% of the people disagree with this fact.
48
10. Celebrity persona you like most:
Celebrity persona Percentage %
Bollywood stars 55
Sports star 25
None of the above 20
Interpretation:
This pie-chart depicts that majority of people like to see
bollywood stars to endorse their brands and 25% of them sports
star. While remaining 20 % don’t want to any celebrity endorsing
their brand.
Hence it can be concluded that people like to see sports stars
endorsing their products rather than bollywood stars.
11. You follow your favorite celebrity while purchasing new automobile every time:
Response Percentage %
Every time 40
Rarely 25
Never 35
Interpretation:
This pie-chart depicts that 40% of people follow their favorite celebrity every times while
going for the purchase of new automobiles. That means frequency is pretty large. On the
other hand 25% of the people rarely follow their favorite celebrity. While 35% of the
people doesn’t follow any celebrity for purchasing any of the automobile vehicle
every time.
12. Identify the following ads regarding various automobile products:
1. “More Car per car…………………”2. “The sun-shine car ……………….”3. “Why should boy have all the fun?…………………..”4. None
Option Percentage
1 15
2 20
3 40
4 15
Interpretation:
Out of 100 respondents, 40 were able to identify the celebrity in ad 3 , 20 were able to
identify ad 2, 15 were able to identify 1 and 15 people were there who weren’t able
to identify even a single celebrity. Majority of the respondent were quite familiar with
Priyanka Chopra’s “Why should boy have all the fun?” So majority of the respondents
were able to recognize the celebrity used in the advertisement so it clearly tells that
celebrity endorsement act as source of brand-building.
Findings:
After completing survey I found that:
Brand name and celebrity endorser are two factors that people consider before
making a purchase intention of automobile vehicle.
Maximum number of people wants to see celebrity endorsing their automobile
vehicles that means they have high involvement with the celebrities.
One of the abstract finding of the survey was regarding people’s orientation
towards gender biasness. This finding clearly indicated that people like to see male
celebrities endorsing automobiles than that of female celebrities.
Most no. of people believe that celebrity endorsement is an effective mean of
persuasion i.e. it convey the message clearly to the target audience regarding
product offerings and persuade them to go for the purchase.
It was found that celebrity endorsement have an impact over the purchase of
automobile products. As large no. of people surveyed confirmed this fact.
In country like India were Cricket is a religion and cricketers are worshiped as
God. One of the finding revealed that people admire sports player as better
celebrity persona than that of bollywood actor/actress.
It was found that while making every new purchase of an automobile most no. of
people follow celebrity endorser while rest of them denied this fact.
The results of brand recall were astonishing most no. of people were able to
recognize the celebrities endorsing the given advertisement. So it showed that
celebrity endorsement is a source of celebrity endorsement.
Chapter 6
6.1 Summary:
Celebrity endorsement is a method employed by marketers as a promotional tool so that
people can associate themselves with the product as they associate themselves with the
celebrity endorser. Companies spend huge amount of money to rope in such celebrities so
as to endorse their brands. They generally determine their effectiveness by measuring
ROI. Lot of studies conducted on celebrity endorsement but no one clearly indicated
whether it can act as a source of brand-building. So a research was conducted on this
particular aspect. It wasn’t possible to concentrate this study on the entire sectors so
automobile sector was selected.
Primary data was collected through structured questionnaire. Secondary sources were also
used in the beginning so as to gain an insight of the problem.
After carrying it was found that male celebrities are better than that of female celebrities.
People love to see sportsperson endorsing automobile than that of bollywood stars. It was
found that celebrity endorser affects people intention regarding purchase of the automobile
and celebrity endorsement acts as a source of brand-building.
6.2 Conclusio n :
Despite the obvious economic advantage of using relatively known personalities as
endorsers in advertising campaigns, the choice of celebrities to fulfill that role has become
common practice for brands competing in today's cluttered media environment. There are
several reasons for such extensive use of celebrities. Because of their high profile,
celebrities may help advertisements stand out from the surrounding clutter, thus improving
their communicative ability. A brief assessment of the current market situation indicates
that celebrity endorsement advertising strategies can, under the right circumstances, indeed
justify the high costs associated with this form of advertising.
But it would be presumptuous to consider celebrity endorsement as a panacea for all
barricades. Celebrity endorsement if used effectively, makes the brand stand out,
galvanizes brand recall and facilitates instant awareness. To achieve this, the marketer
needs to be really disciplined in choice of a celebrity. Hence the right use of celebrity can
escalate the Unique Selling Proposition i.e. it can act as a source of brand-building of a
brand to new heights; but a cursory orientation of a celebrity with a brand may prove to be
claustrophobic for the brand.
It was found that people love to see celebrities endorsing their brands so the involvement
of common man is pretty high with these celebrities. So marketers should use the right
celebrity matching with the product. During survey it was found that male celebrities are
considered to be better celebrity endorser than that of their female counterparts. This is
because lots of research regarding consumer’s behavior towards automobile indicates that
people view automobile as female so in order to attract the attention of target customers
they preferably use male celebrity endorser. Also it was found that people love to see
sports stars endorsing their automobile than bollywood stars.
This is because of the fact in India Cricket is very famous and people worship players like
Sachin Tendulkar, Kapil Dev, Sourav Ganguly etc. So they love to see these players
endorsing their automobiles. At last I just want to say A celebrity is a means to an end, and
not an end in him/her.
6.3 Limitation:
There are following constraints of the study which can be explained as:-
The time of research was short due to which many fact has been left untouched
The Area undertaken in research in limited only. But to do a complete research a
wide area is required, so the area is also a constraint of the study.
Sample for the study taken is of only 100 consumers. Which can also act as a
constraint in the study.
While collecting data some of the respondents are not willing to fill the
questionnaire, so they might not fill their true behavior. This can also be a
constraint of the study.
6.4 Recommendations:
After studying impact of celebrity endorsement on buying behavior of customers in
automobile sector and as a source of brand-building I want to suggest following
recommendations:
From study it was found that respondents were able to recognize the Priyanka
Chopra’s advertisement “Why should boys have all the fun” This advertisement
was designed on such an idea that everyone can recognize the brand of Scotty
Pepp easily. So instead of hiring any celebrity companies should try to create such
nice innovative idea and then match the suitability of celebrity with the idea. This
is also supported by the fact that Today’s era is of Gen X their taste changes very
fast and wants fresh material.
This study reveals that celebrity endorsement act as a source of brand-building but
it isn’t the complete solution. Company can’t rely only on celebrity endorsement
to sell their products but they should follow an integrative approach so as to
generate good sales volumes. They should provide more schemes to their
customers in order to sell their products.
One of the important recommendations that I want to give is that during this
slowdown period companies are cutting their advertisement expenditure but they
shouldn’t do this. This is because this slowdown provide them an opportunity to
differentiate themselves from their competitors. This is also supported by the
researches. One of the research explained that during 1960’s recessions 290
global companies increased their advertisement expenditure and their sales
increased by whopping 300%. Some of the companies are well established brand
name todays like IBM, Microsoft, 3M etc.
Chapter 7
Bibliography:
WEBSITES:
www.marketingmania.in/india.htm
http://en.wiki.wikipedia.com/indian_industry
www.managementparadise.com/consumerbehaviour_celebrity endorsement_automobiles.htm
http://www.hindustantimes.com/StoryPage/StoryPage.aspx?sectionName=&id=ac f176cd-6f53-42b6-a47b- 72e34341cfe1&&Headline
http://www.businessweek.com/innovate/content/feb2008/id20080227_377233_pa ge_2.htm
http://www.telegraphindia.com/1081007/jsp/opinion/story_9933949.jsp