Should The Hershey Company continue to use Celebrity Endorsements as a

Marketing Method?

IB Business & Management

Internal Assessment: Standard Level

Student: Becca Boulton

Candidate #:

International School Bangkok

Teacher: Mr. Lorence

Submitted: March 2, 2010

Word Count: 1, 133

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 Table of Contents:
1. Introduction

2. Findings and Analysis

3. Findings and Analysis

4. Findings and Analysis

5. Conclusion

6. Works Cited

7. – 18. Appendix

2
Introduction

The Hershey Company is a PLC which is headquartered in Hershey, Pennsylvania. Hershey is

involved with the manufacturing and distribution of its goods which puts the company into all three
business sectors. It is the largest producer of quality chocolate in North America and a global leader in
chocolate and sugar confectionary that has been around for more than 100 years. With approximately
13,000 employees around the world, Hershey distributes their goods internationally. Earning revenues
of $5 billion a year, Hershey has a large product range consisting of such iconic brands as Reese’s,
Hershey Kisses, Kit Kat and Ice Breakers.

Although, Hershey’s does have a number of competitors, such as Cadbury, Kraft and Nestle. As
these companies are also oligopolists it may be difficult for Hershey to market their products and
differentiate their goods from their competitors. Recently, The Hershey Company has invested in
celebrity singer and actress Ashlee Simpson as an endorsement for their new product line. On January
27, 2010 Ashlee Simpson distributed Hershey’s new product like ‘Pieces’ in Times Square, New York
(Cook). Depending on the results on this method of advertising, Hershey may want to consider using
celebrity endorsements for their marketing schemes.

In order to analyze and comment on Hershey’s marketing decision of using a celebrity to

promote their new line, the positive and negative impacts of celebrity endorsements will be considered,
along with the current state of Hershey’s current stock rate. The result of these findings should bring a
conclusion of whether or not The Hershey Company should continue marketing through celebrity
endorsements.

3
Findings and Analysis

Force Field Analysis for when deciding to use a Celebrity Endorsement when Marketing:

Driving Forces: Restraining Forces

 ‘Approval of a brand by a  Sometimes seen as ‘lazy
star fosters a sense of advertising’. ‘Inadequate
trust for that brand content masked by the
among the target usage of a celebrity’
audience’ (Kulkarni and (Kulkarni and Gaulkar).
Gaulkar).  ‘The Vampire Effect’, the
 Celebrities tend to celebrity overshadows
ensure the attention of the brand. Some viewers
the target consumer may forget the brand the
group by making the celebrity is promoting.
businesses  ‘Celebrity Trap’, when
advertisements stand The use of celebrity the celebrity becomes an
out from the endorsements for the marketing addiction for the
competition. of a product company to use for
 The celebrity looks as marketing they are then
though they prefer the not able to replace the
specific brand over celebrity and finding
others, therefore, sends other marketing
out a persuasive methods becomes
message to consumers harder.
that they will also  Celebrity credibility, if
benefit just as well from customers become
the brand. skeptical to the product
 ‘Celebrity endorsements promoted by the
affected product celebrity due to current
variables such as quality negative behavior or
and uniqueness and one press.
image variable, esteem’
(Kulkarni and Gaulkar).
 If a suitable celebrity
endorsement is used,
consumers tend to relate
to the celebrity by
buying the product.

Celebrity endorsements are used by many businesses in order to build their brand name and
differentiate themselves from their competing businesses. Although, it may be seen as a lazy marketing
method, the image of a universally known celebrity will stand out more to the consumer based audience
rather than the thought process of the companies marketing methods. For example, ‘there are around
130 television channels in India broadcasting over 3 million television commercials each year. The media
explosion can thus be easily demonstrated. More over, people forget 80% of the information in just 24

4
hours! Just imagine the plight of the marketer to make his brand shout out over the deafening clutter of
all the brands!’ (Kulkarni and Gaulkar). If the celebrity endorsement is ensured to capture the consumer
audiences attention by making the specific advertisement stand out from the rest, that advertisement
may be in the 20% of information remembered from the media broadcasted.

Celebrity endorsements may also give the brand added value simply by the recognition
consumers have when they associate a familiar celebrity face with the product. This value added
contributes to differentiating and standing out from competitors. A famous face associated with a firm’s
product may add glamour, likeability, attractiveness and trustworthiness which could immediately
create an increase in demand; simply because the product is associated with a celebrity icon.

According to the ‘Source Attractiveness Theory’, the acceptance of an advertising message

depends on familiarity, likeability and similarity. As a celebrity endorsement offers all three of these
aspects, they should increase the effectiveness of the firms marketing on their customers. The firm
simply needs to choose a suitable celebrity representative of their product in order to avoid restraining
forces such as ‘The Vampire Effect’, ‘Celebrity Trap’ and their consumers becoming skeptical of their
celebrity endorsements credibility.

5
 Graph of The Hershey Company’s stock progress in the last three months:

The graph above shows the progress The Hershey Company has made in the past three months
in the stock market. Stock has risen from 35.29 to 39.76 in the last three months showing a significant
increase. As this increase took place around late January, the assumption can be made that Hershey’s
decision to invest in celebrity Ashlee Simpson did have a positive impact on consumer awareness and
company sales because her promotion of Hershey’s new line began on January 27.

Due to the value added through this celebrity endorsement, demand for Hershey’s ‘Pieces’ line
may have gone up which increased sales and stock price drastically. Branding may also have been
created in the process of ‘Pieces’ being associated with a celebrity which may have made the product
more recognizable as it may stand out from its competing company product lines. This may have also
made the product more desirable as a research conducted by Synovate , a global market researcher says
‘47% of people would be more likely to buy a brand that was endorsed by their favorite celebrity’
(Kulkarni and Gaulkar).

6
Conclusion:

Overall, the marketing method of using a celebrity endorsement seemed to have a positive
impact on The Hershey Company’s sales and attention of consumers drawn through advertising. This
was all exemplified in the findings shown above how the use of celebrity endorsements had a positive
impact on The Hershey Company’s stock rate. Therefore, yes, The Hershey Company should consider
using suitable celebrity endorsements for their marketing methods.

If the personality of the celebrity matches the image The Hershey Company wants to give off
along with their product they are promoting, results should come back positively. Trust between
Hershey and the endorsed celebrity is what is needed in order to avoid negative celebrity credibility
perceived by their targeted consumer base. As long as the general public stays in awe of celebrity icons,
The Hershey Company should continue to benefit from this marketing method.

7
Works Cited

Supporting Documents:
1. "About The Hershey Company." Hershey's. N.p., 14 July 2009. Web. 1 Feb. 2010.
<http://www.thehersheycompany.com/about/index.asp>.

2. Cook, Jody. "Ashlee Simpson-Wentz Helps to Introduce New Pieces(R) Candies Flavors from
Hershey ." the Wall Street Journal 27 Jan. 2010: n. pag. Global NewsBank. Web. 2
Feb. 2010.
<http://online.wsj.com/article/PR-CO-20100127-908257.html?mod=wsjcrmain>.

3. "The Hershey Company Common Stock." Yahoo Finance. N.p., 1 Mar. 2010. Web. 2 Mar. 2010.
<http://finance.yahoo.com/echarts?
s=HSY#chart5:symbol=hsy;range=20091129,20100226;indicator=volume;charttype=
line;crosshair=on;o hlcvalues=0;logscale=off>.

4. Kulkarni, Sanyukta A, and Sahir U Gaulkar. "Impact of Celebrity Endorsement on Overall Brand."
Indian MBA. N.p., 2007. Web. 3 Feb. 2010.
<http://www.indianmba.com/Occasional_Papers/ OP88/op88.html>.

8
 Appendix

1.

The Hershey Company

Last Updated: Jul. 14, 2009

The Hershey Company (NYSE: HSY) is the largest producer of quality chocolate in North America and a
global leader in chocolate and sugar confectionery. Headquartered in Hershey, Pa., The Hershey Company
has operations throughout the world and more than 12,000 employees. With revenues of more than $5
billion, Hershey offers such iconic brands as Hershey’s, Reese’s, Hershey’s Kisses, Kit Kat, Twizzlers and Ice
Breakers as well as the smooth, creamy indulgence of Hershey’s Bliss chocolates. Hershey is a leader in the
fast-growing dark and premium chocolate segment, with such brands as Hershey’s Special Dark and
Hershey’s Extra Dark. In addition, Artisan Confections Company, a wholly owned subsidiary of The Hershey
Company, markets such premium chocolate offerings as Scharffen Berger and Dagoba. For more than 100
years, The Hershey Company has been a leader in making a positive difference in the communities where
we live, work and do business. The Milton Hershey School, established by the company’s founder in 1909,
provides a nurturing environment, quality education, housing, and medical care at no cost to children in
social and financial need. The School is administered by the Hershey Trust Company, Hershey’s largest
shareholder, making the students of Milton Hershey School direct beneficiaries of Hershey’s success.
Please visit us at www.hersheys.com.
Mission Statement
Bringing sweet moments of Hershey happiness to the world every day.

To our stakeholders, this means:

Consumers – Delivering quality consumer-driven confectionery experiences for all occasions

Employees – Winning with an aligned and empowered organization … while having fun

Business Partners – Building collaborative relationships for profitable growth with our customers, suppliers
and partners

Shareholders – Creating sustainable value

Communities – Honoring our heritage through continued commitment to making a positive difference
One Hershey: Our Values
Hershey's Values, "One Hershey," tell a powerful story: A global and diverse team, operating with integrity,
working together, determined to make a difference.

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Open to Possibilities

We are Open to Possibilities by embracing diversity, seeking new approaches and striving for continuous
improvement.

Growing Together

We are Growing Together by sharing knowledge and unwrapping human potential in an environment of
mutual respect.

Making a Difference

We are Making a Difference by leading with integrity and determination to have a positive impact on
everything we do.

One Hershey

We are One Hershey, winning together while accepting individual responsibility for our results.

To learn more about Our Values, please visit http://www.thehersheycompany.com/social-

responsibility/our-values.asp.

2.

10
Ashlee Simpson-Wentz Helps to Introduce New Pieces(R) Candies Flavors from Hershey
New Additions to Pieces Candies Line Offer Classic Flavors of Reese's(R), York(R), Almond Joy(R) and
Hershey(R)'s Special Dark(R) in Delicious Candy-Coated PiecesPieces Wrapper Reward Program to Give
Away 25,000 Bags of New Pieces Candies with the Help of Simpson-Wentz
HERSHEY, Pa., Jan 27, 2010 (BUSINESS WIRE) -- Singer, songwriter and actress Ashlee Simpson-Wentz,
who first achieved success in her music career with her debut song "Pieces of Me," celebrated another
"Pieces" debut today as The Hershey Company adds to its Pieces Candies line. Building off the success of
the popular Reese's(R) Pieces(R) Candy, thenew Pieces Candies offer snackable, bite-sized versions of
classic favorites including: York, Almond Joy and Hershey's Special Dark. Fans lined up at the Hershey's
Times Square store in New York City today for a chance to meet Simpson-Wentz and exchange wrappers
from their favorite Hershey's candy bars for free bags of the corresponding Pieces Candies flavor. The
event kicks off a two-week Pieces Wrapper Reward Program inviting consumers across the country to
visit www.piecescandies.com and mail in a full-size Reese's Peanut Butter Cup, York Peppermint Pattie,
Almond Joy Candy Bar or Hershey's Special Dark Dark Chocolate Bar wrapper in exchange for a coupon
good towards a free bag of the corresponding Pieces flavor.

"I have always loved Reese's Pieces Candy and was excited to learn that bite-sized versions of York,
Almond Joy and Hershey's Special Dark would be making their Pieces Candies debut. With my busy
schedule, I am constantly on the go and Pieces Candies are great for enjoying anytime," said Simpson-
Wentz.

Crunchy, candy shells in a resealable pouch perfect for any snacking occasion, Pieces Candies deliver the
delicious, classic tastes of Reese's, York, Almond Joy and Hershey's Special Dark. The new Pieces Candies
additions expand on the popularity of the beloved Reese'sPieces Candy, first introduced in 1978 and
later taking Hollywood by storm as it made its big screen debut in the 1982 film "E.T. - The Extra-
Terrestrial." Consumers can now enjoy more of their favorite candies in Pieces, in delicious and
snackable candy-coated bites.

Pieces Wrapper Reward Program

The two-week Pieces Wrapper Reward Program runs now through February 10, 2010. The first 25,000
consumers across the country to visit www.piecescandies.com, download and mail in a request form
with an accompanying wrapper from a full-size Reese's Peanut Butter Cup, York Peppermint Pattie,
Almond Joy Candy Bar or Hershey's Special Dark Dark Chocolate Bar will be mailed a coupon good
towards one free, full-size bag of Pieces.

Reese's, York and Hershey's Special Dark Pieces Candies flavors are available in 10.5 oz. packages and
Almond Joy Pieces Candies are sold in 10 oz. packages. The portable, resealable bags are perfect for
snacking on-the-go, in the car, at the office, with friends - anytime, anywhere - just pour 'em, pop 'em,
seal 'em. The new Pieces Candies are available nationwide at mass, grocery, drug and convenience
stores. For more information, visit www.PiecesCandies.com or www.facebook.com/piecescandies.

About Ashlee Simpson-Wentz

Ashlee Simpson-Wentz rose to fame when her debut album "Autobiography" was released in July 2004
and topped the Billboard album charts, selling more than four million copies worldwide. In January 2005,
her No. 1- hit single, "Pieces of Me," was certified platinum. Simpson-Wentz is the proud recipient of two

11
Teen Choice Awards and was the 2004 BillboardArtist of the Year. Most recently, Simpson-Wentz starred
as Violet Foster on The CW's updated "Melrose Place," and she continues to steal the spotlight with her
Broadway role as Roxie Hart in the musical "Chicago." Simpson-Wentz currently resides in Los Angeles
with her husband, musician Pete Wentz and son Bronx Mowgli Wentz.

3.

12
The Hershey Company Common Stock

Real-Time: 39.88 0.12 (0.30%) 2:24PM ET

Last Trade: 39.90

Trade Time: 2:09PM ET

Change: 0.15 (0.36%)

Prev Close: 39.76

Open: 39.91

Bid: N/A

Ask: N/A

1y Target Est: 38.40

Day's Range: 39.79 - 40.21

52wk Range: 30.27 - 42.25

Volume: 984,004

13
Avg Vol (3m): 1,675,350

Market Cap: 9.10B

P/E (ttm): 20.96

EPS (ttm): 1.90

Div & Yield: 1.28 (3.20%)

4.

Impact of Celebrity Endorsement on Overall Brand

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By
Sanyukta A. Kulkarni
Sahir U. Gaulkar
Welingkar Institute of Management Development & Research

Synopsis

Today 'Celebrity Endorsement' has attracted immense debate on whether it really contributes to the
brand building process or whether it is just another lazy tool to make the brand more visible in the
minds of the consumers. Although it has been observed that the presence of a well-known personality
helps in solving the problem of over-communication that is becoming more prominent these days, there
are few undesirable impacts of this practice on the brand. The theories like 'Source Credibility Theory,
Source Attractiveness Theory and Meaning Transfer Theory' provide a basis on which the methodology
of celebrity endorsement works and also explains how the process of the celebrity endorsement
influences the minds of the consumers. Firms invest huge amounts as advertising expenditure for hiring
the right celebrity. However there lies uncertainty with respect to the returns that the company might
be able to garner for the brand. The issue of matching the values of the celebrity with the brand values
is also very important, i.e. getting the right celebrity to endorse the right brand. Consumers perceive the
brand as having superior quality because it has been endorsed by a credible source. This makes
endorsement as one of the indictors of quality for any brand. Corporate credibility along with endorser
credibility plays a significant role in the attitude of the consumer towards the brand and the
advertisement respectively. On the other hand, the over popularity of the celebrity sometimes
overshadows the brand. If the celebrity is involved in multiple endorsements, it tends to create
confusion among consumers and hence negatively affects the perception of the advertisement and the
brand. Hence, to say clearly whether the practice of celebrity endorsement impacts positively or
negatively to the brand still remains a debate.

Introduction

The society that we live in can not only be called secular or democratic, it should be more appropriately
termed as over-communicated these days. A typical super-market in USA displays more than 12000
brands, an American family has at least one television set and a consumer is exposed to around 1000
ads per day1. Likewise, there are around 130 television channels in India broadcasting over 3 million
television commercials each year in India. The media-explosion can thus be easily demonstrated. More
over, people forget 80% of the information in just 24 hours! Just imagine the plight of the marketer to
make his brand shout over the deafening clutter of all the brands! Some where in the 80's, Indian
marketers found the solution, 'Celebrity Endorsement' for the brand!

Firms endorse celebrity for a variety of reasons. It might be the life experience of the celebrity that fits
the advertising message or the endorser's high appeal with the firm's consumer target group. Studies
associated with the market effect of celebrity endorsement suggest that consumers positively value the
use of celebrity endorsers in the advertisements. Firms invest significant money in putting together
brands and organisations with endorser qualities such as attractiveness, likeability, and trustworthiness.
But today's dynamic market conditions make these investments unviable. In this paper we are
attempting to discuss the positive and negative effects of celebrity endorsement with few examples.

15
History

Celebrities are involved in endorsing activities since late nineteenth century 2. The advent of celebrity
endorsements in advertising in India began when Hindi film and TV stars as well as sportspersons began
encroaching on a territory that was, until then, the exclusive domain of models 3. One of the first sports
endorsements in India was when Farokh Engineer became the first Indian cricketer to model for Bryl
cream. The Indian cricket team now earns roughly Rs. 100 crore through endorsements. There was a
spurt of advertising, featuring stars like Tabassum (Prestige Pressure Cookers), Jalal Agha (Pan Parag),
Kapil Dev (Palmolive Shaving Cream) and Sunil Gavaskar (Dinesh Suitings).

Mechanism and Theories of Celebrity Endorsement

Celebrity endorsements give a brand a touch of glamour and the hope that a famous face will provide
added appeal and name recognition in a crowded market. In the battle for the mind, you get the
customer excited by showing him a known face, and an effective demand is created. In short it helps
increase the recall value of the brand. A piece of research states that the target audience age group of
15-30 gets influenced first by cricketers, then Bollywood stars and only then music, festivals and food 4.

According to Source Credibility Theory5, acceptance of the message depends on 'Expertness' and
Trustworthiness' of the source. Expertness is defined as the perceived ability of the source to make valid
assertions. Trustworthiness is defined as the perceived willingness of the source to make valid
assertions. Audience acceptance increases with the expertness of the source and the ability of the
audience to evaluate the product.

According to Source Attractiveness Theory, which is based on social psychological research, the
acceptance of the message depends on familiarity, likeability and similarity. Familiarity is the audience's
knowledge of the source through exposure; likeability is the affection for the source's physical
appearance and behavior while similarity is the resemblance between source and receiver. This theory
explains the message acceptance in two ways: Identification and Conditioning. Identification is when the
receiver or the target audience of the communication begins to identify with the source's attractiveness,
and hence tends to accept his opinions, beliefs, habits, attitudes etc. On identification, a quote from
Bijou Kurien, COO, Titan, "We decided on Aamir because we wanted someone who is a biticonic, who is
style-conscious himself, and somebody who cuts across both sex and age group, between urban and
rural India. A celebrity who is mouldable and who is not over-exposed". Conditioning is when the
attractiveness of the source is supposed to pass on to the brand after regular association of the source
with the brand.

Grant McCracken6 has criticized the previous two theories and proposed the Meaning Transfer Theory.
The theory explains that a celebrity encodes a unique set of meanings which if well used can be
transferred to the endorsed product. Such a transfer takes place in three stages – encoding meanings,
meaning transfer, meaning capture (Figure 1).

I. Encoding Meanings: Each celebrity has a unique set of meanings, which can be listed by age, gender,
race, wealth, personality or lifestyle. In this way, the celebrities encode a set of meanings in their image.
For example Preity Zinta can be seen as a lively, charming, bubbly, witty and enthusiastic.

16
II. Meaning Transfer: This stage transfers those meanings to the product. When skillfully portrayed,
celebrities can communicate this image more powerfully than lay endorsers.

III. Meaning Capture: This assumes that consumers purchase products not merely for their functional
value but also for their cultural and symbolic value. The theory says that consumers buy the endorsed
product with the intention of capturing some of the desirable meanings with which celebrities have
passed on to the product. This is more eminent in lifestyle products like clothes, perfumes, cell phones
etc.

Discussion

Does celebrity endorsement really work? Theoretically yes, because the qualities associated with the
endorser are associated with the brand and the brand therefore remains at the top of the consumer's
mind. However one needs to realize that the impact of an endorser cannot be sustainable in all product
categories and in all the stages of brand life cycles. It really depends upon the type of product. If it is a
'functional brand', then the product itself is the hero. Here any celebrity association with the brand
without corresponding performance of the product will not be sustainable. While incase of 'image
brands', like the categories of soaps, soft drinks, cigarettes etc., where it is difficult to distinguish
between the products, celebrity endorsements help to distinguish between the brands at an emotional
level. A research conducted by Synovate 7, a global market research firm, revealed that 47% people
would be more likely to buy a brand that was endorsed by their favorite celebrity.

Pepsi Co. has used a variety of celebrities including Aishwarya Rai, Hrithik Roshan, Amitabh Bachchan,
Kareena Kapoor, Rahul Khanna, Fardeen Khan, Sachin Tendulkar etc. Amongst advertisements featuring
celebrities, Pepsi tops the heap with the highest recall of 70%, while arch rival Coke is lower across all
markets with 52% recall. This proves that Pepsi has really exploited the use of celebrities in their
advertisements and has worked8.

Hindustan Lever's 'Lux' soap in India has been using popular film actresses to endorse the soap since its
launch four decades ago implying that they owe their stunning looks to the brand. This consistent
message hence reinforces the brand values and has been successfully able to position the soap rightly as
the 'beauty soap'9 .

17
It would be difficult to judge the direct effect of celebrity endorsement on the sales or profits of the
company. On Amitabh Bachchan endorsing RIN, an HLL spokesperson says that it was too early to gauge
the success of 'Rin' in terms of sales and that though Dabur healthcare products' sales had improved,
the increase could not be solely attributed to him 10. Similarly, there are also cases wherein there was a
dramatic change in the sales figure after the endorsements. For example Rahul Malhotra, Associate
Director Marketing, P&G India quotes "Certainly, it has helped us promote our brand 'Head &
Shoulders'. Last year, we were ranked as No. 2 and this year we are market leaders in this segment with
over 45% market share".

D. Garg, Vice-President (Marketing), Dabur India Ltd quotes, "A celebrity does help in increasing brand
sales, but only if he/she is selected carefully and used effectively. The personality of the brand and the
celebrity have to complement each other and the selection of the celebrity is, therefore, very
important."

Positive Impacts of Celebrity Endorsement on the Brand

Approval of a brand by a star fosters a sense of trust for that brand among the target audience. This is
especially true in case of new product 11. Celebrities ensure attention of the target group by breaking the
clutter of advertisements and making the advertisement and the brand more noticeable. A celebrity's
preference for a brand gives out a persuasive message and hence, because the celebrity is benefiting
from the brand, the consumer will also benefit. There is a demographic and psychographic connection
between the stars and their fans. Demographic connection establishes that different stars appeal
differently to various demographic segments i.e. age, gender, class, geography etc., while psychographic
connection establishes that stars are loved and adored by their fans. Some stars have a universal appeal
and therefore prove to be a good bet to generate interest among the masses. Another invaluable
benefit from celebrity endorsements is the public relation opportunities.

Dwane Hal Dean12 studied the effects of three extrinsic advertisement 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 perceived as a signal of product quality.

Goldsmith et al.13 assessed the impact of endorser and corporate credibility on attitude-toward-the-ad,
attitude-toward-the-brand, and purchase intentions. 152 adult 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-toward-the-ad (Aad), attitude-toward-the-brand (AB), and
purchase intentions. It was observed that endorser credibility had its strongest impact on Aad while
corporate credibility had its strongest impact on AB. The findings suggest that corporate credibility plays
an important role in consumers' reactions to advertisements and brands, independent of the equally
important role of endorser credibility.

Looking at the effect of celebrity endorsement on the wealth of a company a classic example of Michael
Jordan can be used. At the time of rumors of Michael Jordan returning to NBA in 1995, he was endorsing
products of General Mills (Wheaties), Mc'Donalds (Quarter Pounders, Value Meals), Nike (Air Jordan),
Quaker Oats (Gatorade) and Sara Lee (Hans Underwear). Study conducted by Mathur et al.14 associated
with Jordan's endorsements shows that the anticipation of Jordan's return to NBA, and the related
increased visibility for him resulted in increase in the market adjusted values of his client firms of almost

18
2 percent, or more than $1 bn in stock market value. From this study one can observe that the major
celebrity endorser with rumors or otherwise has a tremendous potential to influence the profitability of
endorsed products.

Semi-partial endorsement indicates that when a company uses famous characters from any TV soaps for
brand endorsements, consumers tend to relate to the character that he or she plays in the soap and
hence can attract more credibility. For example, Smriti Irani who plays 'Tulsi' in a famous soap has
garnered a lot of support from the middle-class housewife today. If she would endorse a brand, there
would be more relativity and credibility. Same can be said about Priya Tendulkar who used to play the
character of Rajani.

Negative impacts of Celebrity Endorsement on the brand

More often talked about is the extreme usage of a celebrity called 'lazy advertising', that is inadequate
content masked by usage of a celebrity 15 . A good example is the use of Boris Becker by Siyaram and
Steve Waugh by ANP Sanmar. Also as said earlier, associating with a star, in itself does not guarantee
sales. There is also the fear of Brand-celebrity disconnect which points out that if the celebrity used
represents values that conflict with the brand values, the advertising would create conflict in the minds
of the target audience.

Clutter in brand endorsements is very prominent these days and such kind of over-exposure can be bad
for the brand as the recall value drops by a huge margin. A popular drawback of celebrity endorsement
is the 'Vampire Effect' or the celebrity overshadowing the brand 16. Some viewers forget the brand that a
celebrity is approving. Others are so spellbound by the personality of the celebrity that they completely
fail to notice the brand being advertised. Two new drawbacks can be seen these days what marketers
call Celebrity Trap and Celebrity Credibility 17. Celebrity trap is when the celebrity becomes an addiction
for the marketing team and the task to find substitutes becomes more and more difficult, leading to
surfeit of celebrities. Celebrity credibility refers to skepticism by the consumers regarding the celebrities,
especially when there is anything negative regarding the celebrity associated with the brand in the
news, then brand is bound to be affected. For example, Air Jordan's generated revenue sales of $130
million in the first year. The sales dropped miserably in the second year when Jordan missed 62 games
due to a broken foot18. Another main worry of the advertisers is that their celebrity endorser would get
caught in a scandal or an embarrassing situation.

Multiple product endorsement also has a negative impact on customers' purchasing intentions. Tripp et
al.19 investigated the effects of multiple product endorsement by celebrities on customers' attitudes and
intentions. They found that the number of products a celebrity endorses negatively influences consumer
perception of the endorser and the advertising itself. It was suggested that when as many as four
products are endorsed, celebrity credibility and likeability, as well as attitude towards the ad, may
attenuate.

Superstar Amitabh Bachchan endorses multiple brands like Pepsi, Mirinda, ICICI, BPL, Parker pens,
Nerolac, Dabur, Reid & Taylor, Maruti Versa, Hajmola, Tide, Cadbury and a few social messages. It has
worked in some cases, while in some cases it has not. D. K. Jain, Chairman and President, Luxor Writing
Instruments Pvt. Ltd, the marketer of the Parker brand said, "Using Amitabh Bachchan as our brand
ambassador has helped in strengthening our brand image and recall within the target audience". Tarun
Joshi, Communications Custodian, Reid & Taylor said, "Amitabh Bachchan is an icon with universal

19
appeal and has helped us to reach out to the real 'Bharat.' In fact, agents and retailers have told us that
already customers have started asking about the 'Amitabh wali suiting.'" Incase of Nerolac Paints, which
was endorsed by Amitabh Bachchan, around 80% of the respondents when asked to associate Bachchan
with any paint, did so with Asian Paints, which is the biggest competitor of Nerolac 20.

The budget or cost is an important factor for celebrity endorsement 21. Depending on the status of the
celebrity, remuneration could run into millions of rupees for several years or may also include a profit
sharing plan. For example when S. Kumar's used Hrithik Roshan for their launch advertising for
Tamarind, they reckoned they spent 40 - 50 per cent less on media due to the sheer impact of using
Hrithik. Sachin's endorsements got him $18 million over five years. When Aamir first endorsed Pepsi in
1995, he received Rs 17 lakh for it; his Coke commercials in 1999 got him Rs 2 crore. Hrithik Roshan in
his highflying days reportedly made over Rs. 20 crore in endorsements and events by 2001 22.

However, a number of brands have been built without celebrity endorsement. For some of their brands,
Hindustan Lever and Procter & Gamble do not believe in celebrity endorsement because they think that
consumers, especially housewives, are more likely to identify with a lay person on screen than a
celebrity. Procter & Gamble launched its 'Rejoice' brand in India with testimonials from ordinary women
in their TV advertising. Few more examples of this will be Lifebuoy, Wheel, Dettol, Close Up, Fevicol etc.

Conclusion

Whether Celebrity endorsement has a positive or a negative impact on the brand is a debate that is
open to interpretation. But till the time the corporate world continues to foot fancy bills of celebrity
endorsers and till consumers continue to be in awe of the stars, the party is not likely to break up.

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