Brand Management: Celebrity Value in Marketing - Essay Example

BRAND MANAGEMENT AND CELEBRITY ENDORSEMENT AN ASESSMENT OF THEIR VALUE IN MARKETING Introduction Marketing is the crux of business as this activity brings in revenue and profits on which the company survives. However this is the most ambiguous part of the business as there are no set rules for marketing. Marketing consist mainly of promotions that result in incremental sales. Branding has assumed a vital position in marketing as it has become a certain method to capture markets. The brand image of a product as well as that of a company has established itself in the minds of the consumer and the company needs to position itself in the market to take advantage of the brand image it has developed. But there is always a question about the extra sales these activities actually bring about. 2 Aims & Objectives This paper will attempt to answer the question whether Brands and Celebrities are important tools that need to be employed to ensure incremental sales. 3 Literature Review Marketing is all about customers. Their behaviour and attitude towards buying a product is of paramount importance. Therefore Marketing is all about understanding the customers and of finding ways and means to for providing product or service as per his requirements. Markets are heterogeneous and are created by reasons of different values, needs wants, constraints, beliefs and incentives. Customers differ in their values and perceptions and want to purchase things that have value for them. Value is not just the monetary part, but also the usefulness and emotions that with go with it. Their need and want play a great role in determining this value. For this reason customer satisfaction has long been considered as the ultimate measure of success for marketers. Organisations that can increase the satisfaction level of their customers can expect profitability in the longer run (Felton 1959; Houston 1986; Webster 1988). Satisfaction is the outcome of customer relationships. This has been explained as antecedents of customer satisfaction, customer loyalty, customer profitability, and a host of other concepts and variables. Customer satisfaction however remains the main concept and concern and has been the foundation of all marketing efforts (Drucker 1954; Levitt 1960; Ames 1970; Gronroos 1989). Measurement of customer satisfaction has always been the main focus of several studies (Myers 1991; Parasuraman et al 1988, 1994; Oliver 1996) as this helps the company to assess and develop marketing strategies that will ensure this satisfaction and creates customer loyalty. Often the customer is acquired for a single sale but it is more important to make him a returning or a lifetime customer. This is considered to be more critical and valuable for a company. Therefore it becomes an important objective, one that is ignored in the initial enthusiasm of planning a campaign. But in some quarters there is a doubt whether customer loyalty ensured profits despite the fact that it is been widely held for a very long time that customer satisfaction resulted in profits (Felton 1959; Bagozzi 1975; Webster 1988; Narver and Slater 1994). 3.1 Branding As a consequence it has been thought that branding will lead to loyalty and through this effort customers can be acquired and retained. Building a brand, whether of products or the organisation itself has become an important feature in the effort to attract customers. Brand equity is big on the agenda and companies are known to spend millions to build their image. The beauty of the brand is immediate recall and high calibre and high performance companies often enjoy a larger valuation of their brand than the value of their entire stockholding. During the last two decade it is established that the core of marketing is the brand. The customers are more aware and conscious of the brand and brand recall is so much easier that this has become the focus of marketing. In accounting terms the value of brand equity is based on the incremental discounted cash flow that accrues out of the sale of products or services; the cause of which is that the brand is directly associated with the product or service (Keller 1998). Brand management has become a core activity pursued by managers who now understand how brand equity affects buyer behaviour and its influence on corporate valuation (Aaker 1991; Keller 1998, 2002). For the first time brand became vital for customer recall and attention was focused on the organisation as brand equity in place of products ( Aaker and Jacobson, 1994). Greater exposure to the brand through promotions ensures brand recall, and providing a standard quality product along with after sales service build a platform of satisfied customers. This relationship builds on trust and is long lasting. The corporate goal is to retain customers and to add value with returning and loyal customers. This is well achieved through the above means. Finally there is a close relationship between developing brand values, building customer relationships, and satisfying corporate goals. (Aaker, 1991). Surprisingly very little attention was paid to whether there was any link between costs incurred and the profits obtained from such sales (Foster et al 1966). These days, profitable and successful companies perceive their share value in advance of making the offer to the market and market their shares according to this perception at high premiums. This is the brand equity in practice that offers the company greater value than it is committed to return. The shareholders too respond as they know the potential to earning ratio is very high. This is the way to leverage, enhance and accelerate current cash flows and this in turn is likely to enhance the sustainability of the firm (Srivastava et al 1997, 1998, 1999). As a result there is a growing demand for assessing performance with the objective of enhancing marketing productivity (Clark, 2001; Morgan et al., 2002). This measure has assumed importance due to increasing competition in the market and it is the brand equity that is the subject f this measure. Side by side financial accountability is also gaining importance (Webster et al 2003) as the main concern for the marketer is to justify the return on investment (ROI) (Ambler, 2003) especially due to the exorbitant values that are given to brand equity by accountants. Indeed Ambler (2003) was of the view that above all brand equity measurement was important for firms to understand long and short term perspectives of marketing performance. It was realized that consumer behaviour was a reasonable and reliable means to understand and measure the marketing performance. 3.2 Celebrity Endorsements Once it has been understood and established that Brands attract people the next logical step is to initiate brand building exercises. People are naturally attracted to celebrities and for this reason companies use them as brand ambassadors. It has been estimated by Millward Brown Survey (2006) almost 25% of advertisements use celebrities in all kinds of media particularly print and TV. They are dynamic and likeable persons with qualities appreciated by people and have a certain reputation to which people are attracted and that increases their endorsement value (Atkin and Block 1995). Their public recognition is used for recognition of consumer products when they appear with it in advertisements (McCracken 1989). The advertisement becomes more enjoyable and worthwhile when endorsed by a celebrity and people tend to relate the product and the person and recall one with the other. The higher the popularity of the celebrity, the better is the brand recall. Celebrity endorsements increase the awareness of the products they appear for and create a positive feeling for it (Solomon 2002). As it is the lifestyle of the celebrity is glamorous and attractive to the consumer, so his association with a product glamorises it and makes it desirable. Although any celebrity could represent the brand, the selection of a celebrity for a brand must be chosen made with care as the person, his lifestyle and mannerisms should match the product or the value will be lost. Belch and Belch (2001) are of the opinion that celebrities can enhance the perception of the product and through them the targeted audience target audience sees the relevance of the image and performance. The ultimate test is that such a combination of celebrity and the product should create confidence in the consumer and induce him to buy the product. Such an association also raises the credibility of the product, although sometimes the product is so well known that it can enhance the credibility of the celebrity too. This is the reason that companies often choose brand ambassadors for a long term. Trust in the celebrity is another cause for the consumer to accept the product as genuine, useful and correctly priced. Kelman (1961) says once the consumer is able to adopt an attitude or form an opinion about the product after associating it with the image of the celebrity, he is likely to integrate with the product to the extent that he will recall it and make use of it long after the celebrity is gone or ceases to endorse the product. Therefore the celebrity acts as a trigger for the initial introduction to the product and then the product itself becomes the focus because of its utility value to the customer. However it is important for the celebrities to maintain his image for a positive effect on the consumer. If for any reason, the celebrity falls into disrepute it will harm the image of the product. Therefore companies are very careful to select those persons who have an impeccable reputation and are likely to remain so while their campaign is on. Such is the power and influence exercised on the minds of the consumers, especially the younger set, that they become almost slave like in their following. Strategic value targeting, customer insight, whole brand positioning, implementation and integrating the whole range of “brand communications” are the next rational steps to follow in the communication process. Strategies for harmonizing human resources, business strategy, and organization structure with the brand are the crux of marketing communication. An integration of all these activities shall indeed ensure that the communications will be effective and purposeful. Communication plays an important role in marketing and connecting with the customer is part of the brand building exercise. Celebrities are known to be a bridge between products and customers who like to copy or imitate their idols. Hence creation of Brand Ambassadors needs to be considered for effective communications. An attempt should me made to use Celebrities to convert customers in to fans of the product or service and by default they will in turn also serve as brand ambassadors of the product or service. This is the method of building compelling brands. This is how a relationship is developed between the product or service and the customer utilising the Celebrity as the conduit. The relation of marketing activities is for long-term effects (Dekimpe and Hanssens 1995). Unless there is a long term perspective, the promotion will lack depth. This is the reason for creating Brand Ambassadors. A promotion may appear to be an isolated, an activity that is the result of an event or circumstance, but such events are repeated at regular or irregular intervals and therefore the life of a promotion may be small but in reality its impact should carry over to the next event or period where it will be renewed with some differentiation but with same vitality. 4 Discussion During the last two decade it is established that the core of marketing is the brand. The customers are more aware and conscious of the brand and brand recall is so much easier that this has become the focus of marketing. In accounting terms the value of brand equity is based on the incremental discounted cash flow that accrues out of the sale of products or services; the cause of which is that the brand is directly associated with the product or service (Keller 1998). The remarkable values that have been put on brands, of both consumer products as well as the companies, have resulted in realization that this concept is worthy of paying attention and it implication spread far and wide. Brand management has become a core activity pursued by managers who now understand how brand equity affects buyer behaviour and its influence on corporate valuation (Aaker 1991; Keller 1998, 2002). As a corollary even the distribution channels are positively affected by their association with brand equity. A further concept has evolved out of this and it is consumer equity (Blattberg and Deighton 1996; Rust et al 2000). Under this the customer’s perspective gains importance, just as the firms perspective is considered under brand equity. This may also be defined as the value of the firms customers expected lifetime value and is measured as the discounted profit expected to be earned from the customer. This concept has become a valuable measure especially in the case of service oriented firms where the relationship oriented marketing has replaced the transaction oriented marketing (Hogan et al 2002). The aggregation of customer lifetime value across current and future customers thereby becomes a key metric for calculating the customer equity. Both the brand equity and customer equity metrics are now increasingly used by marketers particularly in case of direct marketing firms like financial services and mobile phone services. The measurement and monitoring has become so advanced and popular that other industrial sectors are fast catching up to it. 5 Research Methodology Research is a systematic inquiry reported in form of Analysis and Predictions. Quantitative and Qualitative research are strategies. Method refers to the research tactics used in the conduct of a research effort. Together they validate the data and bring forth true fact about the subject under enquiry. In this research, the qualitative data collection has been employed. Qualitative data collection is done in cases where it is not possible to obtain information that can be quantified and can be used for analysis purposes thereon. This is typical in case social issues that have only preferences and not any quantitative data. Since interviews are qualitative in nature, it is important that the questions bring out as many direct an answer as possible (William Trochim, 2006). . Data collected should be sharp and to the point and the directing central questions should be clearly identified and followed. Bogdan and Biklin (1998) suggest practical steps for data analysis of the interview information. . Coding of the researched data is to be done for all analysis. Berkowitz (1997) suggests that coding can be done after considering six questions, namely, common themes among the answers, common causes for any deviations, environments or past experiences of the respondents, any specific answer or story on the central questions, is there any need to revise the questions, is this similar to what other studies have concluded or varying. All these questions could help in coding the answers and trying to streamline them. 6 Limitations A research can be conclusive when it is carried out over a large number of people and over a period of time to cover the depth and width of the research questions. A representative research conducted as a pilot study can be misleading due to paucity of information and limitations of the exposures of the subjects involved. The firm and the individuals chosen may be having an impaired or a biased view of the subject and no validation is possible with a limited number of interviews and consequent analysis. The conclusions drawn from such analysis will also remain inconclusive and subjective and severely limited to the view of a small number of sample data. In fairness therefore such a research will give a general overview of the situation and while it offers broad points it cannot be relied upon to be a conclusive finding that can be applied with confidence of the subject. However considering the literature available on the subject it will help in assessing the situation in general and can guide in further research by pointing out anomalies as well as shortcomings that do not appear in consonance with accepted literature. Bibliography Aaker, David (1991), Managing Brand Equity. New York: The Free Press. Aaker, David., and Robert Jacobson (1994), “The Financial Information Content of Perceived Quality,” Journal of Marketing Research, 31 May, 191–201. Ambler, T. (2003), Marketing and the Bottom Line, FT Prentice Hall, London. Ames, B. 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