1

Project on

A STUDY ON THE IMPACT OF CELEBRITY ENDORSEMENTS AS A

SOURCE OF BRAND BUILDING AND BUYING BEHAVIOUR OF CONSUMERS

In the Subject

Marketing Strategies & Plans

Submitted to

University of Mumbai

For Semester II Of

Master Of Commerce

By

Shruti Vikram

(Management 166)

Under the Guidance of

Prof. Mistry

Year 2012 – 2013

2

INDEX

Chapter Topic Page No

1 Executive Summary 3

2 A. Introduction to the subject

B. Evolution of the subject

6

3 History Of Automobile 26

4 Review of Literature 37

5 A. Statistical Representation and Interpretations

B. Findings

39

6 1. Summary

2. Conclusion

3. Limitations

4. Recommendations

53

7 Bibliography 58

3

Chapter 1

Executive Sum m ary

India is a country where people love to live in dreams. They worship celebrities.

Celebrities may be Cricket stars like Sachin Tendulkar, Mahinder Singh Dhoni or film stars

like Salman Khan, John Ebrahim. They treat them as God. Marketers’ use this very

preposition so as to influence their target customers - may be existing or potential ones. For

this they rope in these celebrities and give them whopping amount of money. They believe

that by doing this they can associate their products with their target customers. This is

called celebrity endorsement.

But do these celebrity endorsements acts as a source of brand-building and have impact

over the purchasing behavior of customers in case of automobiles? For this I decided to

conduct this very research and objectives of my research are:

T o identify the influence of celebrity endorsement on consumer buying behavior.

T o study celebrity endorsement as a source of brand-building.

To find which type of celebrity persona is more effective.

4

Lot of researchers has done extensive research work regarding celebrity endorsement, its

influence over customers purchasing decisions. After studying the whole literature related

to celebrity endorsement I found a gap in the study. This gap was whether celebrity

endorsement acts as a source of brand-building. So I decided to undertake research on this

particular aspect.

This research is limited due to various constraints like time available, scarcity of resources

etc. From this we can make an attempt to generalize the result to the whole universe. After

conducting research it was found that brand name and celebrity endorser are the two key

factors that play an important role in affecting purchase intention. Majority of the people

want to see their favorite celebrity endorsing their brands.

During our research an important factor revealed that mostly people want to see male

celebrities endorsing automobile vehicles rather than female. This fact is also supported by

advertisement of glamour motorbike which have baseline “Definitely male. This particular

advertisement created hot spaces at Cannas festival. There are large no. of mediums of

persuasion but celebrity endorsement is an effective mode of persuasion.

People love to see sports stars endorsing automobile vehicles than that of bollywood stars.

This particular aspect is mainly supported by the fact that in India where Cricket is religion

and with the success of IPL-1 cricketers like Gautam Gambhir, Ishant Sharma are able to

displace big film stars like Hrithik Roshan for advertisements of Coca-Cola. Another

important fact which came into existence was majority of people follow their favorite

celebrity while making a new purchase every time.

5

Beside this one major factor come into existence that mostly respondents were able to

recognized the celebrity used in various advertisement. So in this brand recall test, mostly

positive results were found. One open-ended question was also included about suggestion.

From that it was concluded that mostly people want that instead of spending huge amount

of money onto celebrities, company should come out with some schemes so as to lure their

customers. So it can be concluded that for a small extent Celebrity endorsement acts as a

source of brand-building but company should follow integrative approach so as to build

strong brands. Beside celebrity endorsement they should run certain schemes so as to

provide value to the customer and to build strong brand.

6

Chapter 2

2.1.1Introduction to the subject

There are large no. of brands available in the market. Some are very familiar and rest are

somewhat. What are the things that distinguish those from rest? It may be brand name,

advertisement, royal heritage and may be celebrity endorser who endorses them. E.g. Raid

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

brand endorser and it has helped them strongly to build their brand. Businesses have long

sought to distract and attract the attention of potential customers that live in a world of

ever-increasing commercial bombardment. Everyday consumers are exposed to thousands

of voices and images in magazines, newspapers, and on billboards, websites, radio and

television. Every brand attempts to steal at least a fraction of an unsuspecting person's

time to inform him or her of the amazing and different attributes of the product at hand.

Because of the constant media saturation that most people experience daily, they

eventually become numb to the standard marketing techniques. The challenge of the

marketer is to find a hook that will hold the subject's attention.

Also from a marketing communications (marcoms) perspective, it is vital that firms design

strategies that help to underpin competitive differential advantage for the firm's product or

services. Accordingly, marcom activities back-up other elements in the marketing mix

such as designing, branding, packaging, pricing, and place The term Celebrity refers to an

individual who is known to the public (actor, sports figure, entertainer, etc.) for his or her

achievements in areas other than that of the product class endorsed (Friedman and

7

Friedman, 1979). This is true for classic forms of celebrities, like actors (e.g., Amitabh

Bachchan, Shahrukh Khan, Rani Mukherjee Aamir Khan and Pierce Brosnan), models

(e.g., Mallaika Arora, Lisa Ray, Aishwarya Rai, Naomi Campbell, Gisele Buendchen,

etc), sports figures (e.g., Sachin Tendulkar, Zaheer Khan, Sourav Ganguly, Anna

Kournikova, Michael Schumacher, Steve Waugh, etc), entertainers (e.g., Cyrus Broacha,

Oprah Winfrey, Conan O'Brien), and pop-stars (e.g., Madonna, David Bowie) - but also

for less obvious groups like businessmen (e.g., Donald Trump, Bill Gates) or politicians.

Celebrities appear in public in different ways. First, they appear in public when fulfilling

their profession, e.g., Vishwanathan Anand, who plays chess in front of an audience.

Furthermore, celebrities appear in public by attending special celebrity events, e.g., award

ceremonies, inaugurations or world premieres of movies. In addition, they are present in

news, fashion magazines, and tabloids, which provide second source information on

events and the 'private life' of celebrities through mass-media channels (e.g., Smriti Irani

being regularly featured in various publications). Last but not least, celebrities act as

spokes-people in advertising to promote products and services, which is referred to

celebrity endorsement.

'Celebrity Endorsement'

McCracken's (1989) definition of a celebrity endorser is, "any individual who enjoys

public recognition and who uses this recognition on behalf of a consumer good by

appearing with it in an advertisement (marcoms), is useful, because when celebrities are

depicted in marcoms, they bring their own culturally related meanings, thereto,

irrespective of the required promotional role."

8

Friedman and Friedman (1979) found empirical evidence that, in the promotion of

products high in psychological and/or social risk, use of celebrity endorser would lead to

greater believability, a more favorable evaluation of the product and advertisement, and a

significantly more positive purchase intention.

Thus, companies use celebrities to endorse their products; however, there are deeper

attributes that are involved in celebrity endorsement. Celebrities might endorse as a brand

ambassador or a brand face. Some time people have this habit of relating this very term of

celebrity endorsement with brand face. But this is not so.

Difference between Brand Ambassador & Brand Face

A Brand Ambassador would be one who is not only a spokesperson for the brand or is just

appearing as a testimonial for the brand's benefits. He/she is an integral part of the brand

persona and helps to build emotion ale, which goes beyond just appearing on TV

commercials.

He takes up the cause of a Brand Champion and is associated with every aspect related

with the brand. What is more, there is a significant difference between making just an

endorsement for say, a shampoo or an automobile, and being that brand's alter ego. Both

parties take the latter far more seriously to the deal. So a brand ambassador would be

involved in press releases, he/she would be actively participating in any sales promotion,

sporting the Brand all the while. For example, Fardeen Khan is the brand ambassador for

Provogue while he remains a brand face for Lux Body Wash.

9

On the other hand, a Brand Face would be the current celebrity who is just used as a tool

to increase brand recall and is only appearing in the advertisement. It is usually seen that a

brand face is a temporary contract and is very short term at times. An example would be

Sona Chandi Chawanpryash using Sourav Ganguly for a while in its commercials. Brand

faces are easily forgotten and fade away with the campaign's end.

The motive behind total branding may be decocted as an attempt to amalgamate diverse

activities to win customer preference. Apropos to this context, the topic “Impact of

celebrity endorsement on overall brand”, is a significant one. The crescendo of

celebrities endorsing brands has been steadily increasing over the past years. Marketers

overtly acknowledge the power of celebrities in influencing consumer-purchasing

decisions. It is a ubiquitously accepted fact that celebrity endorsement can bestow special

attributes upon a product that it may have lacked otherwise. But everything is not hunky-

dory; celebrities are after all mere mortals made of flesh and blood like us. If a celebrity

can aggrandize the merits of a brand, he or she can also exacerbate the image of a brand.

If I may take the liberty of rephrasing Aristotle’s quote on anger, “Any brand can get a

celebrity. That is easy. But getting a celebrity consistent with the right brand, to the right

degree, at the right time, for the right purpose and in the right way... that is not easy.”

10

Celebrity endorsements are impelled by virtue of the following motives:

Ins tant Brand Awareness and Recall.

Celebr i ty values define, and refresh the brand image.

Celebr i t ies add new dimensions to the brand image.

Ins tant credibility or aspiration PR coverage.

Lack of ideas.

Convincing clients.

Scope of Celebrity Endorsement:

The use of testimonials by advertisers dates back to the 19th century when medicines were

patented. Firms have been juxtaposing their brands and themselves with celebrity

endorsers (e.g., athletes, actors) in the hope that celebrities may boost effectiveness of

their marketing. The increasing number of endorsements throws a valid question to the

consumers. Is there a science behind the choice of these endorsers or is it just by the

popularity measurement? What are the reasons which lead to impact of celebrity

endorsement on brands? The success of a brand through celebrity endorsement is a

cumulative of the following 14 attributes. Greater the score of the below parameters,

greater are the chances of getting close to the desired impact.

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Impact Regions of C elebrity Endorse m ent

While brand marketers with positive experiences would tend to believe that celebrity

endorsements work and some would disagree, but one would be sure that the magnitude of

its impact is difficult to measure even if sales figures are at our disposal. However, we can

understand why it works and the impact regions of celebrity endorsement.

12

The illustrations below explain the same: -

How Celebrity Endorsements Influence the Consumer

The basis for the effectiveness of celebrity-endorsed advertising can be linked to Kelman's

processes of social influence as discussed by Friedman and Friedman. According to

Kelman, there are three processes of social influence, which result in an individual

adopting the attitude advocated by the communicator:

Compliance, Identification & Internalization

These latter two processes are particularly applicable to celebrity-endorsed advertising.

Compliance infers that another individual or group of individuals influences an individual

because he or she hopes to achieve a favorable reaction from this other group. This

process of social influence is not directly applicable to celebrity advertising because there

is little, if any, interaction between the celebrity and the consumer.

13

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

behavior of another person or group, simply because they aspire to be like that person or

group. This process is the basis for referent power. It was found that celebrities are more

commonly liked than a typical consumer spokesperson.

Internalization as a process of social influence is said to occur when individuals adopt

the attitude or behavior of another person because that behavior is viewed as honest and

sincere and is congruent with their value system. The effectiveness of celebrity

advertising traditionally has not been strongly linked to this process, as a celebrity's

reason for promoting a product can just as easily be attributed by the consumer to an

external motive (i.e., payment of fee) as to an internal motive (i.e., the celebrity's true

belief in the value and benefit of the product). An important issue of concern relates to the

development of a strategy for use in Celebrity Advertising, which benefits from the

dramatic impact of dual support of both the identification and internalization processes of

social influence. Celebrities are well-liked, but the techniques that can be used to enhance

their credibility as spokespeople, and therefore, tie-in more closely with the internalization

process needs to be looked into.

Effectiveness of Celebrity Endorsers

A study conducted by Charles Atkin and Martin Block focused on alcohol advertising and

young audience to examine the impact of celebrity advertising in terms of social effects of

advertising. The sponsoring Company is the underlying source of any advertising

message, but the individual models depicted in the advertising serve as the more visible

communicator in many cases. The most thoroughly studied source quality is credibility.

14

Research conducted by social psychologists over the past 30 years demonstrates that a

source perceived as highly credible is more persuasive than a low credibility sender

(Hovland and Weiss, 1951; McGuire, 1969; Hass, 1981).

The sources that companies use to present their advertising message typically attempt to

project a credible image in terms of competence, trustworthiness or dynamism. Celebrity

endorsers are considered to be highly dynamic, with attractive and engaging personal

qualities. Audience may also trust the advice given by some famous person, and in certain

cases, celebrities may even be perceived as competent to discuss the product. Friedman,

Termini and Washington cite a 1975 study showing that celebrities are featured in 155 of

prime-time TV commercials. A later survey reported that this proportion was up to 20%

(Advertising Age, 1978). The most widely used celebrities are sports figures, actors or

other types of entertainers. There are several reasons why a famous endorser may be

influential: -

They attract attention to the advertisement in the cluttered stream of messages

They are perceived as being more entertaining

They are seen as trustworthy because of apparent lack of self-interest.

The final element is due to the wide-spread attribution that major stars do not really work

for the endorsement fee, but are motivated by genuine affection for the product (Kamen et

al, 1975).

15

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

effectiveness. In one experiment, an advertisement for a fictitious brand of Sangria wine

featured an endorsement attributed to either a celebrity (actor - Al Pacino), a professional

expert, the Company President, a typical consumer and no source (Friedman, Termini and

Washington, 1977). College students read the ad and gave the ad 0-10 scales of

believability, probable taste, and intent to purchase. Across these three measures, the

celebrity condition produced the highest scores.

While the 'no-source' control group had a purchase intention rating of 2.7, the subjects

exposed to the actor scored 3.9. Believability was rated 2.8 by control subjects versus 4.1

by those seeing the celebrity endorsement. For taste, the baselines of 4.0 compares to the

celebrity group score of 5.6. None of the other three endorsers were as influential as the

celebrated person

Brand Image Formation & Brand Preference

Having a congruent image between the brand and celebrity does not guarantee any

positive effect on consumers' brand preferences. The fundamental question is - what a

brand image really does to consumers? Baran and Blasko explained, "Since most products

aren't special, most advertising does that entire so-called image stuff... There's no

information about the product, there's only information about the kind of people who

might be inclined to use the product." (p.13). This view is echoed by Feldwick (1991) who

has suggested that the subjective experience of using a brand can be different from the

subjective experience of using an identical product without the brand reassurance. In the

case of using celebrity advertising to build brand image, the effects are examined with a

social psychological framework.

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

have to look at the implicit nuances that act as sources of strong brand images or values: -

Experience of Use: This encapsulates familiarity and proven reliability.

User Associations: Brands acquire images from the type of people who are seen

using them. Images of prestige or success are imbibed when brands are associated

with glamorous personalities.

Belief in Efficiency: Ranking from consumer associations, newspaper editorials,

etc.

Brand Appearance: Design of brand offers clues to quality and affects

preferences.

Manufacturer’s Name & Reputation: A prominent brand name (Sony,

Kellogg’s, Bajaj, and Tata) transfers positive associations.

The celebrity’s role is the most explicit and profound in incarnating user associations

among the above mentioned points. To comprehend this, let us analyze the multiplier

effect formula for a successful brand: -

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S=P* D*AV -- the multiplier effect

Where

S is a Successful Brand

P is an Effective Product

D is Distinctive Identity

AV is Added Values

The realm of the celebrity’s impact is confined to bestow a distinctive identity and provide

AV to the brand; the celebrity does not have the power to improve or debilitate the

efficiency and features of the core product. Thus, we are gradually approaching an evident

proposition claiming, "The health of a brand can definitely be improved up to some extent

by celebrity endorsement. But one has to remember that endorsing a celebrity is a means

to an end and not an end in itself."

An appropriately used celebrity can prove to be a massively powerful tool that magnifies

the effects of a campaign. But the aura of cautiousness should always be there. The fact to

be emphasized is that celebrities alone do not guarantee success, as consumers nowadays

understand advertising, know what advertising is, and how it works. People realize that

celebrities are being paid a lot of money for endorsements and this knowledge leads them

to cynicism about celebrity endorsements.

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Automobile m arketing in India:

The competitive nature of the automobile industry has prompted the companies to take up

new and innovative marketing strategies to thwart the competition. The B segment of cars

is the segment which sees maximum competition as the consumer has a number of models

to choose from and it's the volumes which drive the margins.

All the companies as a part of their marketing strategy offers a range of vehicles in all the

segment to make sure that the customer is driving one of their vehicles only.

Advertisements on the Audio visual medium are a rage as it gives the car makers an

opportunity to flaunt their cars. Flashy cars can be demonstrated on television but when it

comes to the finer prints of the cars, print and online media comes to the rescue.

The online medium offers a greater flexibility to the car companies since they come with a

lot of interactive features like demonstrating the interiors of the car with its salient

features. The print medium on the other hand provides an opportunity to the car makers to

explain the function of a car in detail.

Celebrity endorsements and testimonial advertisements have come a long way and they

are also doing their bit to sell the cars. Super star Shahrukh Khan has been associated with

Hyundai Motor Company for a long time and he comes regularly on television to promote

the Santro car. Similarly Ford has roped in Junior Bachan for the promotion of the latest

offering from the company Ford Fiesta. On a similar note Saif Ali Khan and Rani

Mukherjee is shown chasing each other with a Chevrolet aveo.

19

Aamir Khan who is considered to be one of the most talented actors in the industry is

frequently seen changing roles on screen to promote the Toyota Innova, a car which is

generations ahead of its predecessor Toyota Qualis.

Cricketers haven't been left behind in the race of promoting cars; Fiat Palio had received a

great thrust when the promotion of the car was taken up by the batting maestro Sachin

Tendulkar. In addition to the publicity and advertisement which is done by the companies

there are certain innovative strategies which are taken up by the companies to beat the

competition from time to time.

2.2Evolution of subject:

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

recall-value for the product like

Coca Cola Aamir Khan

Tag–Heuer Shahrukh Khan

Cadbury chocolate Amitabh Bachan

The adding up of any celebrity with any brand may not always increase the sales volume

but if somehow the image of the product damaged, celebrity endorsing helps in recovering

the image. Like when Cadbury India’s reputation as a safe chocolate was almost gone due

to the worm controversy, they used Amitabh Bachan in a commercial assuring the

audience about the quality of the Cadbury. Similarly when Pepsi & Coke was infected by

the Pesticides controversy, Pepsi used both SRK & Sachin Tendulkar for damage control

& coke used Aamir Khan for image recovery.

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Not all products go with the image of all celebrity. It depends on the matching of attributes

between the product & the celebrity. In the age of Sunil Gavaskar & Kapil Dev, Gavaskar’s

attributes matched with the products which were being used by the higher society people &

Kapil dev’s attributes matched with products that were for common man. This means

Gavaskar was much trustworthy for the advertisement of pen & cans and Kapil Dev had

gone for shaving cream & bicycles. Kapil’s advertisement of Palmolive Ka Jawab nahi in a

slightly hariyanvi style is still a legend among the Indian advertisements. Sachin Tendulkar

is the first celebrity in India whose mass appeal is so high that he can endorse product for

any section of the society. The filmstars before year 2000 has limited endorsement and

didn’t explore the advertising market of India but post 2000 the scenario has changed.

Amitabh Bachan after KBC got huge popularity among the masses & his popularity is

being used by various products from Reid & Taylor to Parker. But during his hay day as a

superstar in the ‘80s, he never endorsed anything. Another success story is SRK who is

currently endorsing more than 35 products & earned more money from endorsement than

his last 2 super hit films CHAK DE INDIA & OSO. The cricketers are also not in the

backyard. After winning the T-20 World Cup Indian cricket players also got few numbers

of endorsements Dhoni, Yuvraj & Zaheer Khan grabbed few endorsements but in terms of

numbers they are much less than the actors. With the change in strategy of PepsiCo India

to promote their ‘Youngistaan’ campaign they didn’t renew their contract with players like

Sachin and Sourav. Instead they have taken rising actors like Ranbir Kapoor and Deepika

Padukone to promote their product. This incident also indicates that the cricketers are

losing their endorsed products to the filmstars. One exception is Sania mirza, in spite of

all controversies, off-form and injuries she is able to survive in the advertisement world.

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Apart from Big B, SRK and Aamir Khan some other stars also make their own mark in the

endorsement market like Hrithik Roshan, Saif Ali Khan, Kareena Kapoor, Priyanka

Chopra and Katrina Kaif.

The problem in the endorsement market is that here glamour plays a big role. That is why

Abhinav Bindra, the only Indian to win a Gold Medal in the Olympics gets only Samsung

as the only product to endorse whereas filmstars gets offers from various companies to

endorse their products.

Brand V/s Celebrity

Sometimes the celebrity is more highlighted than the products, making no recall value of

the product. When Rahul Dravid advertised for Castrol, the brand gets overshadowed by

the celebrity & that is also a wrong choice of celebrity. Dravid is never famous for racing

& when he promotes the product, if gives a wrong signal to the customers. The product

can use Narain Karthikeyan to endorse it which will give some reliability to the product.

Some success story

Cadbury India used Amitabh Bachan not only to recover their image from worm

controversy but also to establish itself as the leading company in the Indian chocolate

market.

Aamir Khan’s ad campaign ‘Thanda Matlab Cocacola’ was also a huge hit. Not only that

the company uses the superstars to come out from the pesticides controversy.

Dabur brings in Amitabh Bachan in the stagnant chawanprash market which brings in

boost in market and helps Dabur to remain the market leader.

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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.

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So the product and the celebrity remain good as long as both of them remain individually

good. The main problem of celebrity branding is that when a particular product is known

to the common people with the effect of the celebrity, it is very difficult to separate the

product from the star. Like Coca-Cola - Aamir Khan, Cadbury- Amitabh Bachan, Santro-

SRK. Now, if any one of the company want to change their endorser they have to redesign

the product to let out their product from the shadow of the old campaign. In case of

celebrity marketing another problem also arise, that no separate brand value grows up for

the product unless and until the product is extraordinary. The product is known in the

name of the celebrity. Sometimes if the attributes of the celebrity doesn’t matches with the

product, it also gives a negative attribute to the product endorsed. Like in a Survey study it

is found that people locates Amitabh Bachan with Asian Paints the most but in reality

Amitabh endorsed Nerolac paints and Nerolac’s biggest competitor is Asian paints. So

there are certain positive as well as negative points in celebrity branding in India. As a

producer of the product the company always wants to minimize the negative sides of the

celebrity endorsement and maximize the positive impact of the celebrity endorsement.

This clearly raises a question what impact celebrity endorsements have on people in case

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

2.2.1 Objectives of study:

The objectives of the study are as follows:

To identify the influence of celebrity endorsement on consumer buying behavior.

To study celebrity endorsement as a source of brand-building.

To find which type of celebrity persona is more effective.

24

2.2.2 Need of the study:

After going through various sources like magazines, newspapers, websites I found that lot

of research work has undertaken by researcher regarding impact of celebrity endorsement.

But there was a gap in the research regarding whether celebrity endorsement act as a

source of brand-building. So there is a need to discover this fact. So I decided to work on

this particular aspect.

2.2.3 Scope of the study:

As due to time constraint it is very difficult to cover the entire sectors so I decided to cover

automobile sector. I am covering automobile sector as whole and not concentrating on any

particular category.

2.2.4 Research Met h odology:

Research Desig n :

A research design is an arrangement of conditions for collection and analysis of Data in a

manner that aims to combine relevance to the research purpose with Economy in

procedure. It constitutes the blueprint for collection, measurement and analysis of data.

My research design will be exploratory research design.

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Data Source s :

In dealing with any real life problem it is often found that data at hand are inadequate,

and hence, it becomes necessary to collect data that are appropriate. The researcher can

collect data either through primary source or secondary source.

a) Primary data: These are those data which are collected afresh and for the first

time, and thus happen to be original in character. I will be using the structured

questioners.

b) Secondary data: These are those which have already been collected by someone

else and which have already been passed through the statistical process. I will

collect it from the sources like internet, published data etc.

Population of the study

Youth (Male) will be included in population.

Sampling Size:

It is the total number of respondents targeted for collecting the data for the research.

Sample size of 100 persons will be taken for this research.

Sampling Technique:

Random sampling technique will be used in this research project.

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Chapter 3

3.1 History of A utomobile Industr y :

The automobile as we know it was not invented in a single day by a single inventor. The

history of the automobile reflects an evolution that took place worldwide. It is estimated

that over 100,000 patents created the modern automobile. However, we can point to the

many firsts that occurred along the way. Starting with the first theoretical plans for a motor

vehicle that had been drawn up by both Leonardo da Vinci and Isaac Newton.

In 1769, the very first self-propelled road vehicle was a military tractor invented by

French engineer and mechanic, Nicolas Joseph Cugnot (1725 - 1804). Cugnot used a

steam engine to power his vehicle, built under his instructions at the Paris Arsenal by

mechanic Brezin. It was used by the French Army to haul artillery at a whopping speed

of 2 1/2 mph on only three wheels. The vehicle had to stop every ten to fifteen minutes to

build up steam power. The steam engine and boiler were separate from the rest of the

vehicle and placed in the front (see engraving above). The following year (1770), Cugnot

built a steam-powered tricycle that carried four passengers.

In 1771, Cugnot drove one of his road vehicles into a stone wall, making Cugnot the first

person to get into a motor vehicle accident. This was the beginning of bad luck for the

inventor. After one of Cugnot's patrons died and the other was exiled, the money for

Cugnot's road vehicle experiments ended.

27

Steam engines powered cars by burning fuel that heated water in a boiler, creating steam

that expanded and pushed pistons that turned the crankshaft, which then turned the

wheels. During the early history of self-propelled vehicles - both road and rail

vehicles were being developed with steam engines. (Cugnot also designed two steam

locomotives with engines that never worked well.) Steam engines added so much weight

to a vehicle that they proved a poor design for road vehicles; however, steam engines

were very successfully used in locomotives. Historians, who accept that early steam-

powered road vehicles were automobiles, feel that Nicolas Cugnot was the inventor of

the first automobile.

The automotive industry has certain trends it has to follow, just like fashion designers

and musical composers. In times of recession and decreasing sales there is less room to

take chances and manufacturer are prone to follow the common pattern as a safer bet rather

than releasing a controversial product or idea that might or might not be successful.

However throughout the automotive industry's history, great innovators have "boldly gone

where no man has gone before" to set new trends which have dynamically altered the

industry as a whole.

28

3.1.1 Growth and Land m arks of automobile indust r y in India :

The automobile industry, one of the core sectors, has undergone metamorphosis with the

advent of new business and manufacturing practices in the light of liberalization and

globalization. The sector seems to be optimistic of posting strong sales in the next couple

of years in view of a reasonable surge in demand.

The Indian automobile market is gearing towards having international standards to meet

the needs of the global automobile giants and become a global hub. Players are

strategizing to consolidate their position and gradually increase market penetration with

the launch of new models, targeting different segments. Since the sector is price driven,

huge investment is envisaged to remain competitive through cost advantage, for which

indigenization is highly important. The product becomes dearer if it is manufactured using

imported parts. IT in the automobile sector plays a crucial role.. Some players are working

towards development of efficient production systems that control the entire production

process with high precision and accuracy. Such systems working on real time operating

systems allow efficient control of different parts of manufacturing and production. It is

essential to leverage skills of different engineering disciplines to build these kinds of

integrated systems.

Analysts foresee high scope in the electronics for auto sector and expect the retailing of

such electronics products to contribute a major chunk of future revenues. The government

is increasing the research and development (R&D) fund for the automobile industry over

and above the Rs 1400 crores earmarked for eight years. All laboratories in the country

researching on automobile technology, such as BHEL which is developing cell technology

as alternative fuel, have also been brought together through the setting up of a national R

& D working group. The group is working out a plan to link all major laboratories across

the country to give a thrust to automotive research.

29

Indian automobile sector being a driver of product and process technologies, and has

become a excellent manufacturing base for global players, because of its high machine tool

capabilities, extremely capable component industry, most of the raw material locally

produced, low cost manufacturing base and highly skilled manpower Not only a large

number of world manufacturers have set up production bases in India but also a large

number of foreign companies are collaborating with the auto component suppliers and

vendors.

Indian Automobile Components Industry has been making rapid strides towards

achievement of world-class Quality Systems by imbibing ISO 9000/QS 9000 Quality

Systems whereby the Indian Automotive industry has become more competitive in the

export market due to its technological and quality advances, so much so that in quality

conscious markets such as Europe and America, it is emerging as a major player, based on

its performance. India today exports: Engine and engine parts, electrical parts, drive

transmission & steering pats, suspension & braking parts among others.

The sector is striding inroads into the rural middle class after its inroads into the urban

markets and rural rich. It is trying to bring in varying products to suit requirements of

different class segments of customers.

States like Rajasthan, Uttar Pradesh, Maharashtra, Andhra Pradesh and West Bengal are

vying to woo global players with proposals including heavy tax exemptions and to create a

more investor friendly regime, each state is proposing to provide all regulatory clearances

at express speed.

The Government should promote Research & Development in automotive industry by

strengthening the efforts of industry in this direction by providing suitable fiscal and

financial incentives.

30

The current policy allows Weighted Tax Deduction under I.T. Act, 1961 for sponsored

research and in-house R&D expenditure. This will be improved further for research and

development activities of vehicle and component manufacturers from the current level of

125%.

In addition, Vehicle manufacturers will also be considered for a rebate on the applicable

excise duty for every 1% of the gross turnover of the company expended during the year

on Research and Development carried either in-house under a distinct dedicated entity,

faculty or division within the company assessed as competent and qualified for the purpose

or in any other R&D institution in the country. This would include R & D leading to

adoption of low emission technologies and energy saving devices.

Government will encourage setting up of independent auto design firms by providing them

tax breaks, concessional duty on plant/equipment imports and granting automatic approval

Allocations to automotive cess fund created for R&D of automotive industry shall be

increased and the scope of activities covered under it enlarged.

31

3.1.2 Structure of Indian automobile se c tor and some facts:

Structure:

The Indian automobile industry can be broadly classified into:

2 /3 Wheelers

Passenger Cars

Commercial Vehicles (LCV/HCV/MCV)

UV (Utility vehicles)

Tractors

The models in the car market can be fitted to different segments as given below:

Category Models

Economy segment Maruti Omni, Maruti 800 etc.

Mid-size segment Fiat Uno, Hyundai Santro, Tata

Luxury car segment Tata Indigo, Honda City, Astra,

Hyundai Accent & others Super luxury segment Mercedes Benz & other imported

32

The economy segment has a very large foothold over the Indian automobile

market as compared to the mid-size and luxury segment.

Segment Market Share (%)

Economy 90.2

Mid-size and luxury 9.8

Source: SIAM/ Auto Car India

Increased urbanization, low pricing policies, improvement in products and technology

have fuelled demand for 4-wheelers. The markets are clearly segmented between

economy models and premium models. The easy availability of finance and increased

levels of disposable incomes has led to higher demand for premium models. Rural areas

have also become an exciting market to cater to.

The growth of the economy has also resulted in a shift in consumer preferences in each of

the segment. Gradual shift can be seen in buyers from mopeds to economy scooters, from

economy scooters to premium and from premium to motorcycles.

The passenger car segment has seen rapid growth on the back of rise in disposable

income, increased availability of consumer finance, and reduction in excise and customs

duties. Post-1991, this segment has seen maximum foreign investment. There is a clear

segmentation of passenger cars based on price and size. While the lower and medium

range cars (Maruti, Ford, Cielo) have been moderately successful, luxury cars such as

Mercedes have found the going tough.

33

The CV segment is directly linked to industrial production and foreign trade and

is therefore subject to cyclical fluctuations of the economy. The demand for CVs

is related to growth in movement of goods transported and freight rate levels, both

of which are linked to level of production.

Demand for utility vehicles and tractors come from rural India. These vehicles

have witnessed steady demand growth over the past few years due to successive

monsoons, better procurement prices, improved irrigation facilities, and

availability of finance.

A strong in-house R&D capability allows a manufacturer to develop and

introduce products at lower prices, thus saving costs of importing technology.

However, Indian companies spend very little on R&D.

Availability of quality components is another factor that determines smooth

production without bottlenecks. High rejection rate of auto components has

prompted several global majors like Ford, to get their international suppliers

34

3.1.3 The Land m ark of Indian auto m obile sector:

1928- The first imported car was seen on Indian roads

1942- Hindustan Motors incorporated

1944- Premier automobiles started

1948- First car manufactured in India

1953- The Government of India decreed that only those firms which have a

manufacturing program should be allowed to operate

1955- Only seven firms, namely, Hindustan Motors Limited, Automobile Products of

India Limited, Ashok Leyland Limited, Standard Motors Products of India

Limited. Premier Automobiles Limited, Mahindra & Mahindra and

TELCO received approval.

1960 - 1970 - The two, three wheeler industries established a foothold in the Indian

scenario.

1970 - 1980 - Not much change was witnessed during this period. The major factors

affecting the industry were the implementation of the MRTP Act (Monopolies

and Restrictive Trade Practices Act), FERA (Foreign Exchange Regulation Act)

and the Oil Shock of 1973 and 1979.

1980 - 1990 - The first phase of liberalization was announced by the Govt. -With the

liberalization of the Government's protectionist policies, the advantages hitherto

enjoyed by the Indian car manufacturers like monopoly, oligopoly, slowly began

to disappear.

35

1991 - Under the Govt.'s new National Industrial Policy, the license raj was dispensed with,

and the automobile industries were allowed to expand freely.

1993 - With the winds of liberalization sweeping the Indian car market, many

multinationals like Daewoo, Peugeot, general Motors, Mercedes-Benz and Fiat came

into the Indian car market.

1997 - The National Highway Policy was announced which will hopefully have a positive

impact on the automobile industry. The Government also laid down the emission

standards to be met by car manufacturers in India in the coming millennium. There

were two successively stringent emission levels to be met by April 2000 and April 2005,

respectively. These norms were benchmarked on the basis of those already adopted in

Europe, hence the names Euro I (equivalent to India 2000) and the Indian equivalent of

Euro II.

1999 - The Hon’ble Supreme Court passed an order directing all car manufacturers to comply

with Euro I emission norms (India 2000 norms) by the 1st of May, 1999 in National

Capital Region(NCR) of Delhi. The deadline was later extended to 1st June, 1999

2004 - Tata Motors becomes the first Indian auto company to be listed on the New York

Stock Exchange

2008- Tata Motor becomes the first auto company to produce world’s smallest car “ Nano”.

36

3. 1.4 Major player in Indian auto m obile sector:

These are the major players in Indian automobile sector:

Maruti Udyog Ltd.

Hyundai

Mitsubishi Motors

Mahindra & Mahindra

Tata Motors

37

Chapter 4

Review of Literature

1. Kambitsis et al., (2002) Celebrity endorsement is a billion dollar industry today with

companies signing deals with celebrities hoping that they can help them stand out from the clutter

and give them a unique and relevant position in the mind of the consumer. The reasons for using

celebrity endorsement involve its potential to create awareness, positive feelings towards their

advertising and brand. Advertisement featuring celebrity endorsement is often also perceived to be

entertaining.

2. Pettitt (2000): Advertising is heavily used in process of personality creation. This follow

logically from the fact that personalities are particularly important for brand building. They

provide unique associations with the brand and these associations’ acts as a stimulus for the

customer to link their personality with the brand.

3. Tellis (1998) argues that consumers in a high-involvement situation might actually be offended

by the use of celebrity to endorse the brand. He also suggests that when there seem to be perceived

high differences among competing brands, the consumer will perceive it as a high-involvement

situation and put extra emphasis on information about the product more than being influenced by

celebrity endorsers.

38

4. Freiden (1994): He concluded that celebrities are particularly effective spokespersons because

they are viewed as highly trustworthy, believable, persuasive, and likeable. A credible

spokesperson is, other things being equal, more effective than a less credible spokesperson.

5. Shimp (2007): A recent estimate indicates that almost 20 percent of all advertisements

worldwide use celebrity spokespersons. The general belief among advertisers is that messages

delivered by celebrities provide a higher degree of appeal, attention, and possibly message recall

than those delivered by non-celebrities. Marketers also claim that celebrities affect the credibility

of the claims made, increase the memorability of the message, and may provide a positive effect

that could be generalized to the brand.

39

Chapter 5

Statistical Representation and Interpretations

1. Occupation of respondent:

Occupation Percentage

Business Class 25

Service Class 25

Student 30

Others 20

Interpretation:

From this pie-chart it is clear that majority of the respondents are students and rest of the share is

occupied by service and business class.

40

2. Age of the respondent:

Age Percentage %

18-25 30

26-32 20

33-39 30

Above 40 20

Interpretation:

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

41

3.Gender of the respondent:

Gender Percentage %

Female 65

Male 35

Interpretation:

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

42

4. Type of Vehicle:

Vehicle Percentage %

Two-wheeler 45

Four-wheeler 35

Both 20

Interpretation:

This pie-chart depicts that 45% of the people have two-wheeler and 35% of the people have four-

wheeler and rest 20% have both two-wheeler and four-wheeler.

43

5. Factors affecting purchase intention:

Factor Percentage %Price 20

Opinion-leader 15 Celebrity endorser 35

Brand name 30

Interpretation:

This pie-chart depicts that 35% of the people consider celebrity endorser while going for the

purchase, followed by brand name-with 30%.,opinion leader 15% and 20% people consider price.

Brand name usually covers all aspects like functional aspects viz. mileage, speed etc. As people

usually are more interested towards well known brands and if these brands are advertised by

famous celebrity it creates an huge impact.

44

6. Like to see any celebrity endorsing your brand:

Preference Percentage %

Yes 55

No 25

Can't say 20

Interpretation:

This pie-chart clearly indicates that 55% of the respondents want their products to be advertised by

celebrities, 25% don’t want and 20% of the respondents weren’t sure. So, this clearly shows how

much important these celebrities are in the daily life of common man.

45

7.Male v/s Female celebrity endorser:

Preference Strongly

Agree

Agree Indifferent Disagree Strongly

Disagree

Male 25 05 10 5 10

Female 5 15 10 10 5

Interpretation:

It is confirmed after the analysis that male celebrity endorser are more effective than that of female

celebrity.

46

8. Celebrity endorser as an effective method of persuasion:

Preference Percentage %

Strongly Agree 45

Agree 15

Indifferent 10

Disagree 20

Strongly Disagree 10

Interpretation:

This chart depicts that mostly people agree that Celebrity endorsement is an effective tool of

persuasion. 45% of people strongly agree that celebrity endorsement is an effective tool of

persuasion and 20% of people disagree that it is one of the tool.

Hence it can be concluded that celebrity endorsement is an effective tool of persuasion to

facilitate customer to go for purchase.

47

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

of automobile products.

Preference Percentage %

Strongly Agree 30

Agree 15

Indifferent 10

Disagree 35

Strongly Disagree 10

Interpretation:

This chart depicts that 45% of the people agree strongly or simply on the fact that their

automobile purchase is being affected by celebrity endorsement,10 % of the people

remain indifferent and 45% of the people disagree with this fact.

48

10. Celebrity persona you like most:

Celebrity persona Percentage %

Bollywood stars 55

Sports star 25

None of the above 20

Interpretation:

This pie-chart depicts that majority of people like to see

bollywood stars to endorse their brands and 25% of them sports

star. While remaining 20 % don’t want to any celebrity endorsing

their brand.

Hence it can be concluded that people like to see sports stars

endorsing their products rather than bollywood stars.

11. You follow your favorite celebrity while purchasing new automobile every time:

Response Percentage %

Every time 40

Rarely 25

Never 35

Interpretation:

This pie-chart depicts that 40% of people follow their favorite celebrity every times while

going for the purchase of new automobiles. That means frequency is pretty large. On the

other hand 25% of the people rarely follow their favorite celebrity. While 35% of the

people doesn’t follow any celebrity for purchasing any of the automobile vehicle

every time.

12. Identify the following ads regarding various automobile products:

1. “More Car per car…………………”2. “The sun-shine car ……………….”3. “Why should boy have all the fun?…………………..”4. None

Option Percentage

1 15

2 20

3 40

4 15

Interpretation:

Out of 100 respondents, 40 were able to identify the celebrity in ad 3 , 20 were able to

identify ad 2, 15 were able to identify 1 and 15 people were there who weren’t able

to identify even a single celebrity. Majority of the respondent were quite familiar with

Priyanka Chopra’s “Why should boy have all the fun?” So majority of the respondents

were able to recognize the celebrity used in the advertisement so it clearly tells that

celebrity endorsement act as source of brand-building.

Findings:

After completing survey I found that:

Brand name and celebrity endorser are two factors that people consider before

making a purchase intention of automobile vehicle.

Maximum number of people wants to see celebrity endorsing their automobile

vehicles that means they have high involvement with the celebrities.

One of the abstract finding of the survey was regarding people’s orientation

towards gender biasness. This finding clearly indicated that people like to see male

celebrities endorsing automobiles than that of female celebrities.

Most no. of people believe that celebrity endorsement is an effective mean of

persuasion i.e. it convey the message clearly to the target audience regarding

product offerings and persuade them to go for the purchase.

It was found that celebrity endorsement have an impact over the purchase of

automobile products. As large no. of people surveyed confirmed this fact.

In country like India were Cricket is a religion and cricketers are worshiped as

God. One of the finding revealed that people admire sports player as better

celebrity persona than that of bollywood actor/actress.

It was found that while making every new purchase of an automobile most no. of

people follow celebrity endorser while rest of them denied this fact.

The results of brand recall were astonishing most no. of people were able to

recognize the celebrities endorsing the given advertisement. So it showed that

celebrity endorsement is a source of celebrity endorsement.

Chapter 6

6.1 Summary:

Celebrity endorsement is a method employed by marketers as a promotional tool so that

people can associate themselves with the product as they associate themselves with the

celebrity endorser. Companies spend huge amount of money to rope in such celebrities so

as to endorse their brands. They generally determine their effectiveness by measuring

ROI. Lot of studies conducted on celebrity endorsement but no one clearly indicated

whether it can act as a source of brand-building. So a research was conducted on this

particular aspect. It wasn’t possible to concentrate this study on the entire sectors so

automobile sector was selected.

Primary data was collected through structured questionnaire. Secondary sources were also

used in the beginning so as to gain an insight of the problem.

After carrying it was found that male celebrities are better than that of female celebrities.

People love to see sportsperson endorsing automobile than that of bollywood stars. It was

found that celebrity endorser affects people intention regarding purchase of the automobile

and celebrity endorsement acts as a source of brand-building.

6.2 Conclusio n :

Despite the obvious economic advantage of using relatively known personalities as

endorsers in advertising campaigns, the choice of celebrities to fulfill that role has become

common practice for brands competing in today's cluttered media environment. There are

several reasons for such extensive use of celebrities. Because of their high profile,

celebrities may help advertisements stand out from the surrounding clutter, thus improving

their communicative ability. A brief assessment of the current market situation indicates

that celebrity endorsement advertising strategies can, under the right circumstances, indeed

justify the high costs associated with this form of advertising.

But it would be presumptuous to consider celebrity endorsement as a panacea for all

barricades. Celebrity endorsement if used effectively, makes the brand stand out,

galvanizes brand recall and facilitates instant awareness. To achieve this, the marketer

needs to be really disciplined in choice of a celebrity. Hence the right use of celebrity can

escalate the Unique Selling Proposition i.e. it can act as a source of brand-building of a

brand to new heights; but a cursory orientation of a celebrity with a brand may prove to be

claustrophobic for the brand.

It was found that people love to see celebrities endorsing their brands so the involvement

of common man is pretty high with these celebrities. So marketers should use the right

celebrity matching with the product. During survey it was found that male celebrities are

considered to be better celebrity endorser than that of their female counterparts. This is

because lots of research regarding consumer’s behavior towards automobile indicates that

people view automobile as female so in order to attract the attention of target customers

they preferably use male celebrity endorser. Also it was found that people love to see

sports stars endorsing their automobile than bollywood stars.

This is because of the fact in India Cricket is very famous and people worship players like

Sachin Tendulkar, Kapil Dev, Sourav Ganguly etc. So they love to see these players

endorsing their automobiles. At last I just want to say A celebrity is a means to an end, and

not an end in him/her.

6.3 Limitation:

There are following constraints of the study which can be explained as:-

The time of research was short due to which many fact has been left untouched

The Area undertaken in research in limited only. But to do a complete research a

wide area is required, so the area is also a constraint of the study.

Sample for the study taken is of only 100 consumers. Which can also act as a

constraint in the study.

While collecting data some of the respondents are not willing to fill the

questionnaire, so they might not fill their true behavior. This can also be a

constraint of the study.

6.4 Recommendations:

After studying impact of celebrity endorsement on buying behavior of customers in

automobile sector and as a source of brand-building I want to suggest following

recommendations:

From study it was found that respondents were able to recognize the Priyanka

Chopra’s advertisement “Why should boys have all the fun” This advertisement

was designed on such an idea that everyone can recognize the brand of Scotty

Pepp easily. So instead of hiring any celebrity companies should try to create such

nice innovative idea and then match the suitability of celebrity with the idea. This

is also supported by the fact that Today’s era is of Gen X their taste changes very

fast and wants fresh material.

This study reveals that celebrity endorsement act as a source of brand-building but

it isn’t the complete solution. Company can’t rely only on celebrity endorsement

to sell their products but they should follow an integrative approach so as to

generate good sales volumes. They should provide more schemes to their

customers in order to sell their products.

One of the important recommendations that I want to give is that during this

slowdown period companies are cutting their advertisement expenditure but they

shouldn’t do this. This is because this slowdown provide them an opportunity to

differentiate themselves from their competitors. This is also supported by the

researches. One of the research explained that during 1960’s recessions 290

global companies increased their advertisement expenditure and their sales

increased by whopping 300%. Some of the companies are well established brand

name todays like IBM, Microsoft, 3M etc.

Chapter 7

Bibliography:

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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