Influence of celebrity brand endorsement on buying behavior of the indian soft drink consumers Acknowledgment
I am highly grateful for the help and support provided to me for the duration of the completion of my dissertation. I would like to first thank my instructor, who provided me this opportunity to conduct dissertation and guided me at every step of the dissertation. Additionally I also want to thank my team members who helped me in the collection and analysis of data, for research in order to have relevant results for the dissertation.
Table of Contents
List of figures and tables………………………………………………………………………ii
CHAPTER 1 INTRODUCTION 1
1.1 Introduction 1
1.2. Research Aim 3
1.3 Research questions 4
1.4 Research Objectives 4
1.5 Research Methodology 5
1.6 Contribution of the Study 5
1.7 Structure of the Dissertation 6
CHAPTER 2: LITERATURE REVIEW 7
2.1. Who is a Celebrity? 7
2.2. Concept of Celebrity Endorsement 8
2.3 Reasons for using celebrity endorsers 11
2.4 Threats of celebrity endorsement 12
2.4.1 Pros and Cons of celebrity brand endorsement 14
2.5 Selecting of celebrity endorsers 15
2.6 Brand Celebrity Endorsement 15
2.7 Consumer Buying behavior 17
2.7.1 Consumer Buying Process 18
2.7.2 Types of Consumer Buying Behavior 19
2.8 Impact of Celebrity Endorsement on buying behavior of the consumer 20
2.9 Indian Soft Drink Industry 22
2.9.1 Industry overview 23
CHAPTER 3: METHODOLOGY 28
3.1 Research Methods 29
3.2 Research Motives 31
3.3 The Population 31
3.4 The Sample 31
3.5 Tools for Data collection 31
3.6 Data collection 32
3.7 Validity and Reliability 33
3.9 Limitations 33
3.10 Celebrity Endorsement Strategy: Case of Coca Cola India 34
CHAPTER 4: DATA ANALYSIS AND FINDINGS 40
4.1 Data Analysis 41
4.2 Findings 51
CHAPTER 5: DISCUSSION OF FINDINGS 54
CHAPTER 6: RECOMMENDATIONS AND LIMITATIONS 58
APPENDIX A 65
LIST OF TABLES AND FIGURES
Figure 1 Buying process. 18
Figure 2 Demand of Aerated Sort Drink over time. 24
Figure 3 Market Share 25
Figure 4 Market Growth over time 25
Figure 5 Geographic Distribution of the market 25
Figure 6 Category-Wise Off-Trade Sales of Carbonated Drinks In India Between 2005-10 (In Rs. Million) 26
Figure 7 Spending for Celebrity Endorsement by Coca-Cola India. 39
Table 1 Pros and cons of celebrity endorsement. 14
Table 2 Category-Wise Off-Trade Sales of Carbonated Drinks In India Between 2005-10 (In Rs. Million) 25
Table 3 Different brands of Coca cola and their marketing USP. 35
It is a routine for us to encounter with number of commercials endowed with well known persons, in either electronic media or paper media. Such commercials, endowed with famous personalities, are the part and parcel of company’s promotion mix strategies. This concept, in general, is known as Celebrity endorsement. Believing that celebrities are the effective spokespersons for the company, marketing persons spend enormous fund for such contracts (Katyal, 2007). Celebrity choice for endorsement is very critical by nature, as it involves significant fund along with the reputation of the firm. Choice of celebrity is done based on two parameters. One of these is ‘compatibility index’ and another is ‘trait fit index’. By compatibility index, we mean the match between the celebrity and the brand. Whereas the trait fit index is defined as conformity of brand personality traits to the celebrity personality traits (Sengupta, 2005).
A radical increase in the use of celebrity endorsement as a tool for advertising strategy has been noticed in the last few years. Celebrities were used to promote almost every kind of products or services, let it be sports to beverages or beauty to luxury. This drastic increase of celebrity endorsers is just not limited to any specific sector of the economy. Companies use celebrity endorsement for all industry categories inclusive of packaged goods, automobile industries telecommunication and financial services (Okorie, 2010; Okorie & Aderogba, 2011). According to the study of White (2000), in the US, 25% advertisements in paper media employ the use of endorsers. As a result, The hypothesis that celebrity endorsement positively affect the consumers’ attitudes and buying behaviors, is accepted by many US firms (Okorie & Aderogba, 2011).The motive behind the celebrity endorsement in the brand communication strategies is just not to increase income, but is to add value to a company, brand or product. Celebrity endorsement strategy is more likely to be pragmatic for those products, which are having a high price-production cost margin with a larger customer base (Amos, Holmes & Strutton, 2008). Or in general, the celebrity endorsements are the characteristic for nationally marketed products rather than for local or niche market products. The conglomerates tend to invest enormous amounts of money for matching its products and the celebrity believing that this is going to catch the attention towards the endorsed products or services and assist in transferring the image to products or services in the course of the fame of a celebrity (Meenaghan and O‟Mahony, 1998).
A huge range of publically recognized celebrities are used by food advertisers to endorse or act as spokespersons for a product and also to recommend it to the public. After 1920, the relationship between celebrities and their audiences came to the notice of the advertisers. Popular entertainers and the movie stars were the early endorsers. This list later on extended to embrace TV stars and persons from specific occupations like politics, sports, arts, and business etc.
By an endorsement, an endorsing icon makes the product much recognizable to the target public. This can be made by a number of ways. Like:
Explicitly: Here the endorser directly made declaration for endorsing the product.
Implicitly: Here endorsement is done by implying the use of product by the endorser.
Imperatively: Here the endorser suggests the use of the product.
Co-presently: Here the endorsement is done by endorsers’ presence with the product.
Celebrities are selected to stand for values, which are embodied in the endorsed product. Bill Cosby, the comedian, endorsed the soft drink Coca-Cola. Though there exist a close association between the star and the product yet use of celebrity endorsement does not guarantee the increase in product sales. John Houseman, was not successful as an endorser for McDonald's but fared well in other endorsement campaigns. An endorsement fails when actually they fail to transfer meaning.
In Indian advertising industry, the first celebrity endorsement ad was carried by LUX, the star bathing soap. Subsequently, it came into the trend of attaching celebrity credibility to the products through an endorsement stunt (Belch et al, 2009). Today strategic positioning along with effective communication has become the formula for the success in this competitive market. Both the above objectives can be achieved through endorsement strategy. Shifting our discussion to the Indian markets, this concept of celebrity endorsement has become so popular among the marketing person that, for an ad of Eclaires toffee, which cost one rupee to the consumer, Kareena Kapoor is approached for the advertising campaign. Celebrity endorsement gives a touch of glamour to the brand (Reynolds, 2000). Celebrity endorsement is a billion dollar industry today worldwide (Kambitsis et al, 2002).
In India, bollywood stars, such as cricketers, players, singers, athletes etc. have a huge fan following. This fact provides all these famous personalities the celebrity status. According to a research paper, bollywood viewers counts to be 3.6 billion worldwide which is quite high from the viewership of the Hollywood, which is 2.6 billion in numbers. This statement strengthens the success of celebrity endorsement strategy in Indian markets.
The Soft-Drink Industry of India amounts to be 3500 crore rupees, comprising of consumer’s right through the country, andof all age groups. Major players of the industry are Coca-cola India Pvt. Ltd., Dabur foods Ltd., Parle Agro Ltd., Parle Bisleri Ltd., Pepsico India Holdings Ltd., Pioma industries Ltd., Mount Everest Mineral waters Ltd., Navarangs Hospitality Service Pvt. Ltd. etc. PepsiCo India entered the Indian Soft Drink industry in 1989 and became a leading name within a few years. Their popular products are Slice, Pepsi, Nimbooz, Mountain Dew, Mirinda and 7UP.
Coca-Cola India and PepsiCo India are the two popular giants in the Indian Soft Drink market. Launched in 1993, Coca-Cola India is a leading soft drink producer in India which has more than 1.3 million retailers and more than 7000 distributors in India. Thums up, Limca, Fanta and Coca-Cola are some of their popular brands. With the rising growth of soft drink industry, both the manufacturers adopt strategies to expand their sales through advertisements.
Very first, Babe Ruth, the great baseball player endorsed Red Rock Cola soft drink brand in the late 1930’s and since then companies all over the world inclined towards celebrity’s endorsement for their products as an integral part of the promotional campaigns. Sports icons and film stars were being associated with soft drinks for their promotion. E.g. Akshay Kumar is associated with Thumbs Up brand, Shahrukh is being associated with coca cola also Ranbir Kapoor for promoting Pepsi. This kind of endorsement campaigns helps the corporate to reap quantity profits.