LOVELY PROFESSIONAL UNIVERSITYDEPARTMENT OF MANAGEMENT

A STUDY ON THE IMPACT OF CELEBRITY ENDORSEMENT ON

BUYING BEHAVIOR

OF CONSUMERS AND AS A SOURCE OF BRAND-BUILDING

Submitted to Lovely Professional University

In partial fulfillment of the requirements for the award of degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by:Sandeep Sharma

Registration No.2020070484

Supervisor:Miss Yogita Sahni

Designation: Lecturer (LSB)

DEPARTMENT OF MANAGEMENTLOVELY PROFESSIONAL UNIVERSITY

PHAGWARA(2009)

LOVELY PROFESSIONAL UNIVERSITYDEPARTMENT OF MANAGEMENT

TO WHOMSOEVER IT MAY CONCERN

This is to certify that the project report titled” A study on the impact of celebrity

endorsement on buying behavior of people and as a source of brand-building carried

out by Mr. Sandeep Sharma, S/o Sh. Suresh Sharma has been accomplishned under

my guidance & supervision as a duly registered MBA student of the Lovely Professional

University, Phagwara. This project is being submitted by him in the partial fulfillment of

the requirements for the award of the Master of Business Administration from Lovely

Professional University.

His dissertation represents his original work and is worthy of consideration for the award

of the degree of Master of Business Administration.

___________________________________(Name & Signature of the Faculty Advisor)

Title: ______________________________

Dare: ______________________________

Date:

LOVELY PROFESSIONAL UNIVERSITYDEPARTMENT OF MANAGEMENT

DECLARATION

I, “Sandeep Sharma”, hereby declare that the work presented herein is genuine work

done originally by me and has not been published or submitted elsewhere for the

requirement of a degree programme. Any literature, data or works done by others and

cited within this dissertation has been given due acknowledgement and listed in the

reference section.

_______________________ (Student's name & Signature)

_______________________(Registration No.) 2020070484

Date:__________________

ACKNOWLEDGEMENT

It has been a great pleasure for me to work on this project. My sincere thanks to

Lect. Miss Yogita Sahni for giving me an opportunity to work on this project whereby I

was given an exposure to study the impact of celebrity endorsement as a source of brand-

building and on consumers buying behavior in automobile Industry which helped me to

increase the span of our knowledge and developed my thinking on more practical lines. I

thank her for her guidance and support throughout the time when I was working on this

project. I am also thankful to Mr. Varun Naiyer and Mr. Mandeep Singh Saini under

whose valuable guidance I learnt a lot and which will help me out in the coming days.

I express my sincere thanks to my parents, friends who encouraged me throughout

this project and always with me.

Executive SummaryIndia 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 this celebrity endorsement 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 vary research and objectives of my research are:

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.

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 to Jalandhar City only 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 everytime.

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.

Chapter-1

1.1.1Introduction 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 endorse them. e.g. Raid

and Taylor has the rich heritage of ropping in various cascades of James Bond 007 as

their brand endorser and it has helped them strongly to build there 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 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."

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 vary 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 an emotionale, 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.

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 fades 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.”

Celebrity endorsements are impelled by virtue of the following motives:

Instant Brand Awareness and Recall.

Celebrity values define, and refresh the brand image.

Celebrities add new dimensions to the brand image.

Instant credibility or aspiration PR coverage.

Lack of ideas.

Convincing clients.

Scope of Celebriity 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.

Impact Regions of Celebrity Endorsement

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.

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 cause he or she hopes to achieve a favourable 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.

Identification applies to the situation wherein the individuals emulate the attitudes or

behaviour 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 behaviour of another person because that behaviour 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 focussed 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.

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 attempts 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).

Despite the use of famous endorsers, there is little published evidence regarding

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 all that 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.

Before we can scrutinize the effects of celebrity endorsement on the overall brand, we

have to ferret 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, 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: -

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 emphasised 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.

Automobile marketing 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.

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.

1.1.2Evolution of subject:

The celebrities get huge amount of money to endorse the product which actually creats

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.

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 wining 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 loosing 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.

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 Amitah 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.

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.

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 endorsement have on people in case

of automobiles and whether it acts as a source of brand-building?

1.2.1 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.

1.2.2 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.

1.2.3 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. The study is limited to Jalandhar City only.

1.2.4 Research Methodology:

Research Design:

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.

Data Sources:

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) of Jalandhar 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.

Sampling Frame:

Frame is the list of respondents.

DATA PROCESSING

Daily data will be entered into MS-Excel sheets. After the exhaustion of the specified

geographical area this data will be analyzed using simple graphical and tabulation

techniques. The data sheets mentioned here will be attached in the annexure of the

report.

Analytical Tools

After collection of data another work necessary for any data collector is to correctly

analysis that data. So statistical tolls helps us to correctly analysis the data .As I will

using here the software named SPSS for analysis of the data XLSTAT. I will use

following statistical tools:

Hypothesis Testing

Chi-square test will be used when the set of observed frequencies obtained after

experimentation have to be supported by hypothesis or theory. The test is known as X2-

test of goodness of fit and is used to test if the deviation between observation

(experiment) and theory may be attributed to chance (fluctuations of sampling).χ2 also

enables us to explain whether or not two attributes are associated or related to each other.

To test the goodness of fit : It helps to test goodness of fit by using null and alternate

hypothesis.

STATISTICAL TOOLS TO BE USED

1. Chi –Square Test

Procedure:

(1) Set up the null hypothesis that there is no significant difference

between the observed and expected value.

(2) We compute the value of CHI- square by using the formula

CHI-square = ∑ χ2=Σ (( Oi- Ei)2/Ei)

O- Observed value

E- Expected value

Degree of freedoms=(R-1)(C-1)

Level of significance=5

Chapter-2

2.1 History of Automobile Industry:

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.

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 railroad

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 manufacturers 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.

1880's & early 1900's

About hundred years ago

-The first motor car was imported

-Import duty on vehicles was introduced.

-Indian Great Royal Road (Predecessor of the Grand Trunk Road) was conceived.

First car brought in India by a princely ruler in 1898.

Simpson & Co established in 1840.

-They were the first to build a steam car and a steam bus, to attempt motor car

manufacture, to build and operate petrol driven passenger service and to import

American Chassis in India.

Railways first came to India in 1850's

In 1865 Col. Rookes Crompton introduced public transport wagons strapped to

and pulled by imported steam road rollers called streamers. The maximum speed

of these buses was 33 kms/hr.

From 1888 Motors Spirit attracted a substantial import duty.

In 1919 at the end of the war, a large number of military vehicles came on the

roads.

In 1928 assembly of CKD Trucks and Cars was started by the wholly owned

Indian subsidiary of American General Motors in Bombay and in 1930-31 by

Canadian Ford Motors in Madras, Bombay and Calcutta In 1935 the proposals of

Sir M Visvesvaraya to set up an Automobile Industry were disallowed.

1942 Hindustan Motors Ltd incorporated and their first vehicle was made in 1950.

In 1944 Premier Automobiles Ltd incorporated and in 1947 their first vehicle was

produced.

In 1947 the Government of Bombay accepted a scheme of Bajaj Auto to replace

the cycle rickshaw by the auto and assembly started in a couple of years under a

license from Piaggio. Manufacturing Programme for the auto and scooter was

submitted in 1953 to the Tariff Commission and approved by the Government in

1959.

In 1953 the Government decreed that only firms having a manufacturing

programme should be allowed to operate and mere assemblers of imported CKD

units be asked to terminate operations in three years.

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. M&M was manufacturing jeeps. Few more companies came

up later.

Government continued with its protectionism policies towards the industry.

In 1956, Bajaj Tempo Ltd entered the Indian market with a programme of

manufacturing Commercial Vehicles, and Simpson for making engines.

1960's

In sixties 2 and 3 Wheeler segment established a foothold in the industry.

Escorts and Ideal Jawa entered the field in the beginning of sixties.

Association of Indian Automobile Manufacturers formally established in 1960.

Standard Motors Products of India Ltd. moved over to the manufacture of Light

Commercial Vehicles in 1965.

1970's

Major factors affecting the industry's structure were the implementation of MRTP

Act, FERA and Oil Shocks of 1973 and 1979.

During this decade there was not much change in the four wheeler industry except

the entry of Sipani Automobiles in the small car market.

Oil Shock of 1973 quickened the process of dieselization of the Commercial

Vehicle segment.

Three other companies, namely, Kirloskar Ghatge Patil Auto Ltd, Indian

Automotive Ltd and Sen & Pandit Engg products Ltd entered the market during

1971-75. They ultimately withdrew in early eighties.

During the seventies the economy was in bad shape. This and many specific

problems affected the Automobile Industry adversely.

1980's - The period of liberalized policy and intense competition

First phase of liberalisation announced.

Unfair practices of monopoly, oligopoly etc slowly disappeared.

Liberalisation of the protectionism policies of the Government.

Lots of new Foreign Collaborations came up in the eighties. Many companies

went in for Japanese collaborations.

Hindustan Motors Ltd. in collaboration with Isuzu of Japan introduced the Isuzu

truck in early eighties.

ALL entered into collaboration with Leyland Vehicles Ltd. for development of

integral buses and with Hino Motors of Japan for the manufacture of W Series of

Engines.

TELCO after the expiry of its contract with Daimler Benz, indigenously improved

the same Benz model and introduced it in the market.

Government approved four new firms in the LCV market, namely, DCM, Eicher,

Swaraj and Allwyn. They had collaborations with Japanese companies namely,

Toyota, Mitsubishi, Mazda and Nissan respectively.

In 1983 Maruti Udyog Ltd was started in collaboration with Suzuki, a Japanese

firm.

Other three Car manufacturers namely, Hindustan Motors Ltd., Premier

Automobiles Ltd., Standard Motor Production of India Ltd. also introduced new

models in the market.

At the time there were five Passenger Car manufacturers in India - Maruti Udyog

Ltd., Hindustan Motors Ltd., Premier Automobiles Ltd., Standard Motor

Production of India Ltd. and Sipani Automobiles.

Ashok Leyland Ltd. and TELCO were strong players in the Commercial Vehicles

sector.

In 1983-84 Bajaj Tempo Ltd. entered into a collaboration with Daimler-Benz of

Germany for manufacture of LCVs.

Important policy changes like relaxation in MRTP and FERA, delicensing of

some ancillary products, broad banding of the products, modifications in licensing

policy, concessions to private sector (both Indian and Foreign) and foreign

collaboration policy etc. resulted in higher growth / better performance of the

industry than in the earlier decades.

1990's

Mass Emission Norms were introduced for in 1991 for Petrol Vehicles and in

1992 for Diesel Vehicles.

In 1991 new Industrial Policy was announced. It was the death of the License Raj

and the Automobile Industry was allowed to expand.

Further tightening of Emission norms was done in 1996.

In 1997 National Highway Policy has been announced which will have a positive

impact on the Automobile Industry.

The Indian Automobile market in general and Passenger Cars in particular have

witnessed liberalisation. Many multinationals like Daewoo, Peugeot, General

Motors, Mercedes-Benz, Honda, Hyundai, Toyota, Volvo and Fiat entered the

market.

Various companies are coming up with state-of-art models of vehicles.

TELCO has diversified in Passenger Car segment with Indica.

Despite the adverse trend in the growth of the industry, it is resolutely trying to

meet the challenges. Various issues of critical importance to the industry are being

dealt with forcefully.

2.1.1 Growth and Landmarks of automobile industry 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.

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.

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

approvalAllocations to automotive cess fund created for R&D of automotive industry

shall be increased and the scope of activities covered under it enlarged.

2.1.2 Sturcture of Indian automobile sector 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 (upto Rs

0.25mn)

Maruti Omni, Maruti 800 etc.

Mid-size segment (Rs 0.25-0.45

mn)

Fiat Uno, Hyundai Santro, tata

Indica, Maruti Alto etc.

Luxury car segment (Rs 0.45- 1mn) Tata Indigo, Honda City,

Mitsibushi Lancer, Ford Ikon, Opel

Astra, Hyundai Accent & others

Super luxury segment (above Rs

1mn)

Mercedes Benz & other imported

models

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 urbanisation, 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.

Figure -Structure of Passenger Vehicle Market (India)

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.

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

2.1.3 The Landmark of Indian automobile 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.

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”.

2.1.4 Major player in Indian automobile sector:

Jagdish Khattar. Y.S. Kim. Ratan Tata. S.G. Awasthi. The four men are peers. Each has

unequivocally established himself as one of the winners in the first round of the car wars.

Between them, they control almost 80% of the Rs 30,500-crore Indian automobile

market.

The battle royale in the Indian car market has entered the next phase. As the dust and

excitement of the dozens of new models introduced in the past one year settles down, the

winners have pulled way ahead of the also-rans. One old assumption has been vindicated

-- that over 80% of the Indian car market is still confined to the small, sub-Rs 4 lakh

models. And those mid-size and bigger models can only provide the icing on the cake,

not the cake itself to any manufacturer.

Maruti found out that price is no longer the most important factor in winning car battles.

Daewoo's Awasthi admits candidly that he learnt precisely the opposite lesson -- that

price does matter. Kim of Hyundai found out the hard way that you could get your

pricing and value equation just right and still land up with egg on your face if you tried to

cut corners in the technology game. Ratan Tata learnt that providing an internationally

designed car with a great value proposition didn't get you far if you couldn't provide

global quality standards. Both the Indica and the Matiz had to upgrade their engines in

less than one year after launch, the Honda City had to bring in both a new body and a

more powerful engine, and Hyundai had to start offering a new variant with the power

steering option barely a year after it hit the market.

From now on, the battle is expected to get more vicious. In 1999-2000, the car market

bounced back from the recession by showing a 55.83% growth! But now, no one expects

the market to grow by more than 10-15% per annum. The really big volume gains will

come from wresting market share away from rivals rather than because the market itself

is growing exponentially. These are the major players in Indian automobile sector:

Maruti Udyog Ltd.

Hyundai:

Daewoo Motors India

Telco

Hindustan Motors

Mitsubishi Motors

Ashok Leyland

Swaraj Mazda

Mahindra & Mahindra

Tata Motors

Chapter -3

1. Philip A. Stroke (2009): The use of celebrity endorsement as a part of marketing

communication strategy has been gaining popularity over the past years. Monies paid out

by firms on endorsement contracts are estimated to be 10% to 25% of total advertising

expenditures. However, empirical evidences on the effect of endorsement announcements

on the stock prices performance of frims has been mixed at best. We analyze the share

market perception of celebrity endorsement using a unique sample of 102

announcements. Stock returns and trading volumes depends upon the level of press

attention. Endorsements that appear in a major newspaper show higher average return

and larger trading volume changes at announcement date than those announced on the

corporate website only.

2. Subhadip Roy (2007): This study raises three questions and attempts to provide

tentative explanations for them. The first two questions relate to locating, in the

consumer's perceptual space, the relative position of Indian celebrities and brands on a set

of personality attributes. The third question relates to determining the fit between the

celebrity and the brands endorsed by her/him. The results suggest that consumers

differentially rank both celebrities and brands. Specifically, Amitabh Bachchan ranks

high on five personality attributes, and brands such as Pepsi and Coke rank high on four

personality attributes. The study further shows that although celebrities may endorse

several brands, their personality does not fit well with the personality of the brand they

endorse. Evidence offered here supports the basic assumptions of the celebrity–product

congruence model.

3. 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.

4. Goldsmith et al.(2002): They assessed the impact of endorser and corporate

credibility on attitude toward-the-ad, toward –the-brand and purchase intention. 152

adults consumers were surveyed who viewed a fictitious advertisement for Mobil Oil

company. They rated the credibility of the ad’s endorser, the credibility of the company

and attitude towards –the-ad, attitude towards brand and purchase intention. It was

observed that endorser credibility had its strongest impact on advertisement while

corporate credibility has its strongest impact on brand.

5. Solomon et al. (2002) also talk about celebrities being most effective in situations

involving high social risk, where the buyer is aware of the impression peers will have of

him or her. According to him, a celebrity endorser is relatively more effective for

products high in psychological or social risk, involving elements as good taste, self-

image, and opinion of others, compared to a “normal” spokesperson. Expert opinions

were considered most useful when the product endorsed was perceived to involve high,

financial, performance, or physical risk.

6. 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 involves its potential to create awareness,

positive feelings towards their advertising and brand. Advertisement featuring celebrity

endorsement is often also perceived to be entertaining.

7. 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.

8. McGuire et al.(1999): Expertise is the perceived knowledge that the source possesses,

while trustworthiness is the degree to which the source is considered to be honest, ethical

and believable. Both components are positively related to credibility, but the influence of

one component can offset the effects of the other. For example, a spokesperson that is

viewed as knowledgeable will be ineffective if he or she is perceived as lacking

trustworthiness.

9. Henry(1999): Henry indicates that good PSAs are ones that are empathetic, “meaning

they build trust with their audience or a sense of caring about the problem”. He goes on to

say that a good radio PSA is one that creates a mental picture of the subject with sound

effects and a strong, credible spokesperson. In another article, he mentions that more than

11,000 radio stations in the USA, and around two-thirds of them use PSAs. It is also in

accordance with Bonk et al. (1999).

10. Dwane Hal Dean (1999): He studied the effects of 3 extrinsic cues viz. Third party

endorsement, event sponsorship and brand popularity on brand/manufacturer evaluation.

It was observed that endorsement significantly affected only product variables (quality

and uniqueness) and one image variable (esteem). The third party endorsement hence

may be preceived as a signal of product quality.

11. Sheth et al. (1999) argue that perception is shaped by the stimulus characteristics

(objects, brands, stories etc.), the context in which it is delivered (social, cultural), and the

customer characteristics (knowledge, experience, expertise). It is within these stages that

a consumer will either recognize a fit between a celebrity and a product/brand, or reject

this connection on different grounds. Memory is structured as an associative network.

When this happen the brand and the celebrity become parts of each others association set

.

12. Till and Shimp(1998): Other research suggests that celebrity endorsements might

vary in effectiveness depending on other factors like the “fit” between the celebrity and

the advertised product.

13. 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.

14. Lang and Goodwill (1997): PSAs are broadcasted by media outlets in the public

interest at no cost to nonprofit organizations. According to them, “Public service

announcements are a vital tool in generating awareness for critical issues while

dispensing important information for many non-profit organizations”. If produced

correctly and distributed to the appropriate media outlets, PSAs help educate, inform, and

motivate various publics on a variety of topics and issues (PSAs: Do They Really Work?).

They,wrote that PSAs “deal with life-and-death issues. They urge us to think about

people with desperate conditions, act to help those in need and support causes that can

change the world”.

15. 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.

16. King (1991) argues that a good strategy to build strong brand equity is to create an

“original metaphor for the brands’ personality”They talk about the factors involved in

building a brand such as: Presence, Relevance, Differentiate, Credibility, and Imagery.

The credibilityfactor especially has been looked at by several researchers in celebrity

endorsement The same has presence and also to some extent imagery and differentiate.

Relevance in this context can be looked at as a result of success in the other areas, as it

concerns being perceived as relevant for the consumer.

17. Obanian(1990): developed a source credibility measure that operationalizes

credibility as consisting of the underlying dimensions of expertise, trustworthiness and

attractiveness. The expertise and trustworthiness dimensions are essentially identical to

those identified in previous research and discussed above. However, the attractiveness

dimension, unlike previous conceptualizations, is defined as the “… physical

attractiveness of the source to the listener, and to a lesser extent, the emotional

attractiveness of the source” (Bearden and Netemeyer, 1999, p. 301). The advantage of

this conceptualization lies in part in the extensive scale validation procedure undertaken

by Ohanian.

18. Friedmen et al.(1976):Using advertisements with celebrities and non-celebrities for a

fictitious brand of sangria wine, found that the celebrity version of the advertisement had

higher scores on probable taste, advertising believability, and purchase intention – the

three dependent variables. However, the wine was a fictitious brand, and the celebrity

simply brought recognition to the name.The paucity of research comparing celebrity with

non-celebrity spokespersons highlights the need for continued investigation into this area.

It is important for advertisers to clearly understand both the pros and cons of using such

individuals to represent their products, causes, or organizations; and ultimately the

advertisers must assess the effectiveness of such a message.

19. Triandis (1971): Attractiveness has been conceptualized in terms of similarity,

familiarity, and likeability. Similarity refers to the perceived resemblance between the

spokesperson and the audience. Familiarity represents the amount of knowledge that the

audience has about the spokesperson. Likeability refers to affection for the spokesperson

based on physical appearance, behavior or other personal traits.

20. Hovland et al. (1953): In encoding the message in the context of celebrity

endorsement, perhaps the most important decision to be made, besides choosing whether

or not to use celebrity endorsers at all, is the choice of celebrity. Much research has been

made in this area and several models have been made to explain and assist in the celebrity

endorsement selection process.

Chatpter-4

Data analysis and interpretation:

1.Occupation of respondent:

Occupation %tage

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.

2. Age of the respondent:

Age %tage

18-25 30

26-32 20

33-39 30

Above 40 20

%tage

25%

25%30%

20%Business Class

Service Class

Student

Others

No. of respondent

0

5

10

15

20

25

30

35

18-25 26-32 33-39 Above 40

No. of respondent

Interpretation:

This pie-chart depicts that mostly respondents are young and while rest are above 25

years.

3.Gender of the respondent:

Gender %tage

Female 65

Male 35

65%

35%

Female

Male

Interpretation:

This pie-chart depicts that 65% of the respondents are female and 35% are males.

4.Type of Vehicle:

Vehicle %tage

Two-wheeler 45

Four-wheeler 35

Both 20

45%

35%

20%

Two-wheeler

Four-wheeler

Both

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.

5.Factors affecting purchase intention:

Factors %tage

Price 20

Opinion-leader 15

celebrity endorser 35

Brand name 30

Factor

20%

15%

35%

30%

Price

Opinion-leader

celebrity endorser

Brand name

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.

6.Like to see any celebrity endorsing your brand:

Preference %tage

Yes 55

No 25

Can't say 20

55%

25%

20%

Yes

No

Can't say

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.

7.Male v/s Female celebrity endorser:

HYPOTHESIS TESTING

Step1: State Hypothesis:

Ho: Female celebrity endorser is more effective than that of male. .

Ha: Female celebrity endorser isn’t more effective than that of male.

Step 2: Set the Rejection criteria:

DF = 5-1 = 4

At alpha .05 and 4 degrees of freedom, the crtitical value from the chi square distribution

table is 9.49

Frequency Observed

Preference Male Female Row Total

Strongly Agree 25 5 30

Agree 05 15 20

Indifferent 10 10 20

Disagree 5 10 15

Strongly Disagree 10 5 15

Column Total 55 45 100

Frequency Expected

Preference Male Female Row Total

Strongly Agree 55*30/100=16.5 45*30/100=13.5 30

Agree 55*20/100=11 45*20/100= 9.0 20

Indifferent 55*20/100=11 45*20/100= 9.0 20

Disagree 55*15/100= 8.25 45*15/100=6.75 15

Strongly Disagree 55*15/100= 8.25 45*15/100=6.75 15

Column Total 55 45 100

Χ²-Calculation

Preference Male Female

Strongly Agree (25-16.5)2/16.5 (5-13.5)2/13.5

Agree (5-11)2/11 (15-9)2/9

Indifferent (10-11)2/11 (10-9)2/9

Disagree (5-8.25)2/8.25 (10-6.75)2/6.75

Strongly Disagree (10-8.25)2/8.25 (5-6.75)2/6.75

Chi-Square

Preference Male Female

Strongly Agree 4.38 5.35

Agree 3.27 4

Indifferent 0.09 0.11

Disagree 1.28 1.56

Strongly Disagree 0.37 0.45

Χ²= 20.85

Interpretation:

As the Chi-square test statistics 20.85 exceeds the critical value of 9.49 hence null

hypothesis is rejected and hence we reached at the result that our alternative hypothesis is

accepted. It is confirmed after the analysis that male celebrity endorser are more effective

than that of female celebrity.

8.Celebrity endorser as an effective method of persuasion:

Preference %age

Strongly Agree 45

Agree 15

Indifferent 10

Disagree 20

Strongly Disagree 10

Degree of preference

45%

15%

10%

20%

10%

Strongly Agree

Agree

Indifferent

Disagree

Strongly Disagree

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.

HYPOTHESIS TESTING

Step1: State Hypothesis:

Ho: Celebrity endorsement is not an effective tool of persuasion to facilitate

customer to go for purchase. .

Ha: Celebrity endorsement is an effective tool of persuasion to facilitate customer to go

for purchase.

Step 2: Set the Rejection criteria:

DF = 5-1 = 4

At alpha .05 and 4 degrees of freedom, the critical value from the chi square distribution

table is 9.49

Step 3: Compute the Test Statistics: χ² = ∑ (O-E)2/E

Preference Observed Expected O-E (O-E)² (O-E)²/E

Strongly

Agree

45 20 25 625 31.25

Agree 15 20 -5 25 0.25

Indifferent 10 20 -10 100 5

Disagree 20 20 0 0 0

Strongly

Disagree

10 20 -10 100 5

χ²= 41.5

Interpretation:

As the Chi-square test statistics 41.5 exceeds the critical value of 9.49 hence null

hypothesis is rejected and hence we reached at the result that our alternative hypothesis is

accepted. Hence it can be concluded that celebrity endorsement is and effective tool of

persuasion to facilitate customer to go for purchase.

9.Celebrity endorsement affects my purchase decision while going for the purchase

of automobile products.

Preference %age

Strongly Agree 30

Agree 15

Indifferent 10

Disagree 35

Strongly Disagree 10

Degree of Preference

30%

15%10%

35%

10%

Strongly Agree

Agree

Indifferent

Disagree

Strongly Disagree

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.

HYPOTHESIS TESTING

Step1: State Hypothesis:

Ho: Celebrity endorsement doesn’t affect purchase decision of automobile products. .

Ha: Celebrity endorsement affects purchase decision of automobile products.

Step 2: Set the Rejection criteria:

DF = 5-1 = 4

At alpha .05 and 4 degrees of freedom, the critical value from the chi square distribution

table is 9.49

Step 3: Compute the Test Statistics: χ² = ∑ (O-E)2/E

Preference Observed Expected O-E (O-E)² (O-E)²/E

Strongly

Agree

30 20 10 100 10

Agree 15 20 -5 25 1.25

Indifferent 10 20 -10 100 5

Disagree 35 20 15 225 11.25

Strongly

Disagree

10 20 -10 100 5

χ²= 32.5

Interpretation:

As the Chi-square test statistics 32.5 exceeds the critical value of 9.49 hence null

hypothesis is rejected and hence we reached at the result that our alternative hypothesis is

accepted. Hence it can be concluded that celebrity endorsement affects purchase decision

of automobile products.

10.Celebrity persona you like most:

Celebrity persona %tage

Bollywood stars 55

Sports star 25

None of the above 20

Degree of preference

55%

25%

20%

Bollywood stars

Sports star

None of the above

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.

HYPOTHESIS TESTING

Step1: State Hypothesis:

Ho: People like to see bollywood stars endorsing their brand than sports star. .

Ha: People like to see sports stars endorsing automobile products than that of bollywood

stars.

Step 2: Set the Rejection criteria:

DF = 5-1 = 4

At alpha .05 and 4 degrees of freedom, the critical value from the chi square distribution

table is 9.49

Step 3: Compute the Test Statistics: χ² = ∑ (O-E)2/E

Celebrity

persona

Observed Expected O-E (O-E)² (O-E)²/E

Bollywood

stars

55 33.3 21.7 470.89 14.14

Sports star 25 33.3 -8.3 68.89 2.06

None of

the above

20 33.3 -13.3 176.89 5.31

χ²= 21.51

Interpretation:

As the Chi-square test statistics 21.51 exceeds the critical value of 9.49 hence null

hypothesis is rejected and hence we reached at the result that our alternative hypothesis is

accepted. 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 %tage

Every time 40

Rarely 25

Never 35

Response

40%

25%

35%

Every time

Rarely

Never

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

everytime.

12. Identify the following ads regarding various automobile products:

� “More Car par car…………………”

� “The sun-shine car ……………….”

� “Why should boy have all the fun?…………………..”

� “ What role you goanna play?……………………………”

Interpretation:

Out of 100 respondents, 30 were able to identify the celebrity in whole 4 ads, 30 were

able to identify 3, 20 were able to identify 2 and 10 were there who identified only 1 of

the ad. 10 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-5

5.1 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 and sampling unit was

Jalandhar city. 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.

5.2 Conclusion:

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 Tendhulkar,

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.

5.3 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 Jalandhar only. But to do a completer 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.

5.4 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-6

Bibliography:

REFERENCES:

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Roy, Shubhadip (2007), "Consumer’s perceptual space and Indian celebrities in

relation to brand attributes", Journal of Business Research, Vol. 37 No.1, pp.71-

84.

Shimp (2007), "Celebrities as spokesperson", Journal of Retailing, Vol. 76 No.2,

pp.175-91.

Goldsmith et al.(2002): “Celebrity endorser vis-à-vis corporate credibility,”

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56.

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

APPENDIX

Questionnaire

Dear Respondents,

I, Sandeep Sharma, student of MBA, am conducting a survey on “Impact of

celebrity endorsement on buying behavior of customers and as a source of brand

building”. For this purpose I need your cooperation in fulfilling this questionnaire. It will

take few minutes of your precious time. It is make sure that information obtained is for

general purpose only.

1) Name of the respondent……………………

2) What is your occupation?

� Business Class

� Service Class

� Student

� Others

3) What is your age?

� 18-25

� 26-32

� 32-39

� More than 40

4) What is your gender?

� Male

� Female

5) What type of vehicle do you currently own?

� Two-wheeler

� Four-wheeler

� Both

6) What factor affects your buying behavior toward this purchase?

� Price

� Opinion-leader

� Celebrity endorser

� Brand name

7) Do you like to see any celebrity endorsing your brand on television?

� Yes

� No

� Can’t say

8) “Celebrity endorsement is an effective tool of persuasion of buying vehicle” Rate

this statement.

� Strongly agree

� Agree

� Indifference

� Disagree

� Strongly disagree

9) “Male endorser is more effective as compared to female endorser.” Rate this

statement.

� Strongly agree

� Agree

� Indifferent

� Disagree

� Strongly disagree

10) “Celebrity endorsement affect my purchase decision while purchasing automobile

vehicles” Rate this statement.

� Strongly agree

� Agree

� Indifference

� Disagree

� Strongly disagree

11) Out of the following celebrity persona whom do you like most?

� Bollywood Stars

� Sports star

� None of above

12) Do you follow your favorite celebrity while purchasing a new vehicle every time?

� Every time

� Rarely

� Never

13) You are required to identify the following ads regarding various automobile

products:

� “More Car par car…………………”

� “The sun-shine car ……………….”

� “Why should boy have all the fun?…………………..”

� “ What role you goanna play?……………………………”

14) Any suggestion…………………………………………………………..

…………………………………………………………………………….

…………………………………………………………………………….

“ Thanks for your valuable Contribution”