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Impact of celebrity endorsement on business

It is well-known that the best endorsements achieve a wide range of balance between the product and the celebrity. Giving a brand a 'face' is more than just a marketing strategy to increase sales or gain market share, it is a decision that can change the future of the brand forever. 

Choice of the celebrity, hence, is most important decision and is usually done on the basis of different parameters like appeal, looks, popularity or even just a fantasy figure to endorse a brand.

In today's highly competitive markets, big brands are at logger-heads when it comes to products, each having a similar product to that of a competitor. Where does one brand gain that quintessential advantage - advertising, service, promise of trust, or even the all important price factors? Advertising seems like the best platform where brands prefer to compete - right from hiring the best advertising agencies to getting the best celebrities. What would be the right formula to success then? Well, a good creative agency, a large enough promotional budget and a huge star to endorse your brand can definitely ensure a sense of security, success and triumph over competitors in the minds of a brand management team.

The general notion among advertisers is that brand communication messages delivered by celebrities and famous personalities generate a higher appeal, attention and recall than those executed by non-celebrities. The quick conveying of the message and impact are all too essential in today's highly competitive environment.

The different techniques applied by brands to achieve the full potential of such endorsements, accentuate the need for a convergence between the theoretical and pragmatic approaches of brand building and effective advertising. The importance of a celebrity-brand match and the various roles played by them as brand-associates show the momentum this strategy has gained in the last decade or so. Popularity of certain ideas like 'positioning by association', 'diminishing celebrity utility' and the Multiplier Effect which show the triangular relationship between the brand, the consumer and the celebrity.

India is a country where people are overwhelmed by film stars, cricketers, politicians, etc. This is the result of the humongous population that India constitutes. Celebrities bring a sense of security, admiration, comfort, familiarity, and above all, represent a role model they aspire to be at some hidden level in their lives. This very celebrity appeal is successfully being leveraged by the clever marketers to achieve targets in the form of profit, market share and even recall.

But how do we define a limit beyond which the brand endorsement becomes excessive? "Does Sachin really drink Boost," asked a 4 year old child to his mother. His mother smiles and says, "No, it’s just a gimmick." What does this do to the brand?

Now, in spite of the potential gains of celebrity endorsements, they multiply a marketer's risk many times and should be treated with full attention and aptitude. A brand should be careful when hiring celebrities to ensure credibility and delivery of the intended effect.

Definitions

Celebrity

Going by the dictionary meaning, a celebrity is a person who has excelled in his or her field of action or activity. But the action/activity considered over here refers to only something which is spectacular and is noticed by masses. A celebrity is like the almighty for the masses. People become fans of celebrities, copy their styles, eat what they eat, do what they do to the possible extent, etc. As a result, these celebrities have a deep impact on the decision making of the consumers.

Product Endorsement

Product endorsement is a kind of approval of a product by someone which is mentioned on the product or its advertisement. By endorsing the product the endorser intimates that he/she likes the product and gives an indirect message to the consumer that the celebrity would appreciate its usage by the consumer.

Celebrity Endorsement

In the product endorsement, if the endorser is a celebrity then it becomes a celebrity endorsement and it is highly likely that consumers would buy the product endorsed by their favorite celebrity. So, the celebrity instead of the product itself becomes the deciding factor for the consumer decision making.

How does the Celebrity Impact the Overall Brand

For the celebrity endorsement to be successful celebrity’s personality should be reflected in brand and brand’s personality should be easily associable with the celebrity. If this is not the case, then the consumer is likely to not be able to make a connection between the brand and the personality leading to a low brand recall value demolishing the whole objective of endorsing.

Celebrity endorsement needs a proper measurement and quantification analyses before initiation of the campaign. A proper primary and research is to be done to calculate the ROI (return on investment) to gauge the celebrity performance versus the business gains in terms of sales increase, brand recall/awareness, customer preference, etc. in short term and long term. A figure below shows the relationship between endorsement costs and business benefits where endorsement costs mainly consists of endorsement fees and promotion costs.

The benefits that accrue from such a relationship can be categorized into two components: -

Value of Hard Assets:

The benefits derived from the hard assets are those that have a clear market value such as increased sales and increase in brand equity. These are the tangible benefits that a company derives from its endorsement strategy.

 Value of Association:

Association value is derived from the target customers who associate the company / brand with the celebrity. These are the intangible benefits that the company will accrue in the long-term.

 There are ways to quantify the potential value of hard assets and association value against their impact on company's celebrity endorsement by looking at the following categories: -

 Incremental Sales 

Companies can quantify the effect of the celebrity programs on sales by performing year-to-year or quarter-to-quarter sales comparisons for targeted consumers, geographic regions, or specific product lines. Primary research can also be done to reveal the impact of the celebrity on target customer's propensity to purchase.

 Brand Recognition 

One of the objectives of celebrity endorsement is to increase brand awareness. However, the companies use popular, though incorrect, survey approach by asking the respondent which celebrity endorsed their brand. Instead, they should ask the respondent the brands associated with the celebrity. By gauging the top-of-mind recall can enable the company to find out if a connection is made between the brand and celebrity.

Criteria for selecting a celebrity for endorsement

Celebrity endorsement though on one hand can skyrocket your business but it can even prove detrimental to the business if some mistakes are not avoided. The following points would be helpful in selecting a good endorsement strategy -

1.  Celebrity’s Current Image in media

The celebrity endorsing the brand should have a good image in the public, though a bad/jerky/criminal kind of image may also work in some ways depending upon the target segment. Eg. Teenagers would definitely be encouraged to buy beer if notorious party girl “Paris Hilton” endorses a beer brand. However, it usually doesn’t work

Besides, degrading of a celebrity’s image in public may hamper the brand image being endorsed by the celebrity as in case of gold player Tiger Woods who was immediately dropped as a brand ambassador by various companies like Accenture after his image got spoiled in the public.

2. The three things

Celebrity endorsements help if 3 things are present:

The celebrity is appreciated by the audience belonging to target segment.

The celebrity is well known and admired by the general public(like Shah Rukh Khan)

The product being endorsed by the celebrity makes sense for the celebrity to be related with (like Rooney and Nike Shoes)

Absence of even one of the above points may lead to an absurd endorsing

3. Elevating the brand

Celebrity could help in getting back and elevating the losing brand equity. Eg. When Cadbury was in its bad times due to worms found in a chocolate, it used Amitabh Bachan to communicate quality check system employed by the company. It helped them bounce back the sales.

4. Find a perfect match

It is very important to find a prefect celebrity match for the brand personality of the business. If one hires “Asha Bhonsle” to endorse “Tata Tea” , then it seems to match. But hiring “Rakhi Sawant” for endorsing tea would be a complete mismatch and project an obscene image of the brand.

5.  Message should be clear

Celebrities are usually badly matched based on price and availability and these days unless the celebrity is someone who is not being used by others (doubtful) or a completely tied-in product (for instance, why is John McEnroe selling car rentals??), it misses the point and usually means some marketer is just getting it off a list. That is why creative ads that use real people – hello, actors — usually work better than dropping Regis into the mix because you could “get” him. Particularly now, as most media users really don’t want hype; they’re looking for message.

The message should be clearly conveyed by the celebrity rather than creating hype or teaser marketing so that the public feels that the celebrity is serious about the product. Besides, celebrity selected should not be into other brands as that can create confusion in audience’s mind.

6. Does their brand align with yours?

Alignment of celebrity’s brand values with the company’s brand value is very important. What does celebrity stand for besides getting the company more looks from the people? If he/she leads to a positive, beneficial association of the product based on his/her brand then the endorsement deserves exploration.

It’s also important to analyze the fan base of the celebrity. Does the fan base fits with the target segment? Will the endorsement expand the customer base?

7. Establishing a human connection

Marketers aspire to take advantage from a human connection between the celebrity and the consumer by subconsciously connecting the positive feelings that consumers bear for the celebrity with the feelings for the product being endorsed. So, it is very important to chose a celebrity which strike consumer’s emotions.

8. Protect your brand

Any infliction to the celebrity could prove detrimental to brand’s health. So certain points need to be kept in mind while endorsing in order to protect the brand –

Stay away from overexposed celebrities. They are often vulnerable to media and are not worth the high fees they charge

Protect the brand with tight moral clause, exit strategy and various other contractual requirements in case some reputation harm or negative publicity inflicts. The company should always prepared with a crisis plan

While selecting the endorser, go beyond background check. Check whether the endorser treats the media, staff, sponsors and fans with respect.

Don’t invest in a single personality to represent your complete brand equity. Hire different endorsers for different products.

Look for other experts like authors or professionals in your area (finance, health etc.) to endorse brand instead of true celebrities. They would come cheap and would be more credible.

Strike a part cash part equity deal with the celebrity as it would ensure credibility and good behavior.

9. Image counts

When it comes to celebrity endorsements, it really depends on the product and the celebrity to determine if it will be a good fit. If the celebrity doesn’t have the best image when it comes to social issues, then you would probably not want to get them involved in events and causes where they could actually taint the work or product that is being promoted. If your product is alcohol, certain food or certain types of locations/getaways, I think that does give you more cover for the people who might do well to provide an endorsement.

I think at the end of the day it is about what will benefit the brand, not distract from it. If you feel the celebrity will get more attention than the product, than it could possibly be the wrong choice.

10.  Choose wisely

Celebrity endorsements can have positive and not so positive results. Small companies might want to look for positive people and sources to work with when promoting products and services that benefit consumers. An endorsement from a celebrity that is looked upon as a good person that consumers trust and want to compete, is a great thing for retailers.

Moreover some endorsements, whether they happen through celebrity or through major media, can bring a huge traffic spike right after they happen. So accuracy in the endorsement to what consumers are going to experience is the key focus. If an endorsement is misleading or just not accurate, the visitor may have a negative experience even though the intention was to do well.

Conclusion

The rising importance of celebrity endorsing and their control over the target segment choices are proof enough of public’s demand for popular icons to look up to. Though celebrities help improve the brand value immensely in terms of brand recall/awareness , sales and market share, they may sometimes even hamper the brand value. So, a company should be very careful while choosing a celebrity endorser for its brand.

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