Role of Celebrity Advertising in Consumer Brand Loyalty

ABSTRACT

The purpose of this study was to examine the role of Celebrity Advertising in Consumer brand loyalty. It was pertinent due to the prevalent use of celebrities (movie stars, comedians, musicians, footballers, fashion icons,etc) in recent times by GSM Telecommunications companies in Nigeria, considering the massive amount invested in celebrity endorsement practices in the telecommunication industry.The studyfocused on MTN subscribers. A total of 200 participants comprising of 121 male and 79 females between the age ranges of 16 years and above, were drawn from different parts of Ikeja Local Government Area of Lagos State Nigeria. The participants were selected using purposive sampling techniques. Two hypotheses were postulated, while the Ordinary Least Square (OLS) method was used to analyse the data obtained using SPSS.Results of the analysis showed that the use of celebrities has significant influence on consumer’s perception during advertisement. Thus the researcher recommended that that firms use celebrities in advertisements, but they must not do so to the detriment of quality of their products and services. Firms are also recommended to use celebrities that represent the essence of their brand.

TABLE OF CONTENTS

Title Page i

Certification Page ii

Dedication iii

Acknowledgement iv

Abstract Page v

Table of Content vi-viii

Chapter One: Introduction

1.1 Background of the Study 1-3

1.2 Statement of Problem 4-5

1.3 Purpose of the Study 5-6

1.4 Objectives of the Study 6

1.5 Research Questions 6-7

1.6 Research Hypotheses 7

1.7 Significance of the Study 7-8

1.8 Scope of the Study 8-9

1.9 Operational Definition of Terms 9-10

1.10 Structure of the Study 10

1.11 Company Profile of MTN Nigeria 10-11

References 12

Chapter Two: Literature Review

2.1 Literature Review 13

2.2 Concept of Celebrity 13-20

2.3 Celebrity Endorsement 20-25

2.4 Theoretical Constructs of Celebrity Endorsement 25-36

2.5 Empirical Review 36-38

References 39-40

Chapter Three: Methodology

3.1 Research Design 41

3.2 Restatement of Hypothesis 42

3.3 Research Population 42

3.4 Sampling Procedure/ Sample Size 43

3.5 Sources/Method of Data Collection 43

3.6 Validity and Reliability of Instrument 43-44

3.7 Limitations of the Study 44

Chapter Four: Data Presentation and Analysis

4.1 Method of Data Analysis 45

4.2 Presentation of Data 46-53

4.3 Test of Hypothesis 53-54

4.4 Model Estimation 54-55

4.5 Decision Rule 55

Chapter Five: Summary, Conclusion, Recommendation and Suggestion for further Study

5.1 Summary of Findings 56

5.2 Conclusion 56-57

5.3 Recommendation 57-58

5.4 Suggestion for further Study 58

Bibliography 59-62

Appendix 63-67

CHAPTER ONE

INTRODUCTION

1.1 Background to the study

In recent years, the preponderance of celebrities in advertisements has become more prevalent than ever in Nigeria in particular and the world in general. Marketers have the perception that this technique of persuasion is a winning formula to build up brand image, increase sales revenue and gain strong brand loyalty. Consumers are bombarded by a variety of advertisements every day. Celebrity endorsement is very popular and widely used in advertising from magazines toTV advertisements, from toothpaste to luxury goods, etc. Famous endorsers appear in approximately 25 percent of all kinds of television commercials to promote different products and brands, and roughly ten percent of advertisers’ budgets are spent on the use of celebrities (White, Goddard, & Wilbur,2009).

This phenomenon displays the popularity and importance of the practice on-communicating brand images, where the aim is to communicate the message to consumers in a suitable manner in order to achieve best results possible.A celebrity endorser can be described as follows:“Any individual who enjoys public recognition and who uses this recognition on behalf of a consumer good by appearing with it in an advertisement (McCracken, 1989, p. 310).”Strictly defining a celebrity, it refers to a movie star, TV star, singer, athlete, leader, etc. But in broader meanings,any individual who is successful in the world of sports, business, art, politics, and the military can be attributed into the group of celebrities (McCracken, 1989, p. 310). The celebrities themselves transfer their own personality and image to the brand and product they are representing, generating a related image between themselves and the brand or product. In order-for the endorsement to be successful, there are three different attributes the celebrity needs to communicate to the consumers. These are; credibility, attractiveness and power, where credibility is represented by knowledge, skills and expertise concerning the product(s),attractiveness includes like ability, familiarity and similarity and power enables the endorser to affect the consumer (Byrne, Whitehead & Breen, 2003 p.291).

The most important aspect when practicing celebrity endorsement is the choice of celebrity, to see that the image and personality projected on the brand and its existing image is suitable and enhancing. The impact on and the outcome of the endorsement have to be well evaluated before,during and after it takes place, with the intention of generating customers and creating brand loyalty. In addition to like ability and recognition, celebrity endorsement can create new segments of customers with a connection of some sort to the celebrity but with no previous attitude or preference towards the brand (Byrne et al., 2003).

The use of celebrity endorsement is not a new innovation in the advertising industry, an industry involving massive money investments. Marketers do certainly expect returns from their investments, not only by increasing sales revenues but by something even more important in the long run- brand loyalty. Till (1998) mentioned that celebrity endorsement can provide a great value in building strong brand equity, but also improving a brand’s market position if the endorsers are used wisely. This marketing strategy is a swift and valuable way to build up instant brand recognition. It saves marketers a lot of time when trying to attain consumers’ awareness and draw attention to the brand.

Why is brand loyalty so important to marketers? A variety of instruments are used in order to capture consumers’ attention, interests and loyalty. As Trout (2001) stated, “Marketing battles takes place in the mind of a consumer or prospect. That is where you win. That is where you lose.”

Therefore, brand loyalty makes consumers deeply committed to a specific brand. This is something marketers are constantly searching for by running a vast amount of different marketing campaigns.This leads us to the question of what brand loyalty really is and how it is constituted. Many researchers have suggested that brand loyalty is a conscious reflection of a repetitive purchasing behavior of the same brand.

1.2 Statement of the Problem

If there is an inherent fit or consistency between a celebrity and a product, the endorsement is in fact perfectly matched with the purpose of celebrity endorsement (Till &Busler, 1998). However, there is no evidence proving that the usage of celebrity endorsement will achieve stronger brand loyalty in comparison to endorsement by an ordinary person. In fact, consumers might pay more attention to celebrities in advertisements than the actual product endorsed, which is not the marketers intention. For instance,in most cosmetics advertisements, physically attractive celebrities are especially-recognized. They might exert a magnetic power to consumers resulting in a behavioral purchase instead of true brand commitment. But whether or not the purchase behavior will become repetitive is less clear (Byrne, Whitehead & Breen, 2003).

Heavy use of celebrities in advertisements might create a paradox, because consumers cannot identify whether they like the celebrity in the advertisement or if it is the actual product they like. The ultimate goal of marketers is making consumers focus most of their attention to the products. But whether this goal can be accomplished by using celebrities is unsure. “Attractiveness remains important but the attraction of the celebrity is not the best way to build a positive benefit for the brand (Till &Busler, 1998, p.585)”.

Celebrities, as a person or as a character, do convey a profound meaning in our life, but to many ordinary people, the celebrity’s unreal attractiveness has fewer connections with the situation in reality. Many prior researches have been done regarding celebrity endorsement and brand loyalty separately. However, there is no connection between a celebrity endorser and its effectiveness increasing brand loyalty as yet. We do not know whether the prevalent usage of celebrities as endorsers especially in cosmetics advertising has an effect on creating brand loyalty or not. Even ifit is effective, what kind of loyalty can it create? As we have discussed earlier, brand loyalty should not only be defined by behavioral loyalty, it should also include attitudinal loyalty.

Therefore, this research aims to explore the connection between using celebrities and its effectiveness in order to create brand loyalty in the Telecommunication industry advertisements in Nigeria.

1.3 Purpose of the study

The main purpose of this study is to examine the role of celebrity advertising in consumer brand loyalty.Considering the massive amount invested yearly on celebrity advertising in the GSM Telecommunications industry in Nigeria, the study explores the effectiveness of the use of celebrity advertisements and its influence on consumers’ behavioral and attitudinal loyalty. Although there is not a direct way to test the relationship between the effectiveness of advertisements and consumer behavior, nor the effectiveness of advertisement and consumers’ attitudes, this research applies to advertisement influence, behavioral loyalty attributes and attitudinal loyalty attributes separately. By utilizing all previously gained knowledge, the results shall be able to serve the research purpose.

1.4 Objectives of the study

The specific objectives of this study include:

1. To examine the relationship between the use of celebrity endorsement in GSM network service advertisements and the creation of brand loyalty.

2. To examine the influence celebrity endorsement inGSM network service advertisements have on brand loyalty.

3. To examine other factors consumers take into consideration when making their choices in GSM network service purchase other than celebrity endorsement.

1.5 Research Questions

1. What is the relationship between the use of celebrity in GSM network service advertisements and the creation of brand loyalty?

2. To what extent does celebrity endorsement in GSM Advertising induce brand loyalty?

3. What factors do consumers take into consideration when making their GSM network service purchase decisions other than celebrity endorsement?

1.6 Research Hypothesis

H0a: There is no significant relationship between the use of celebrity in GSM network advertisements and the creation of consumer brand loyalty

H1a: There is significant relationship between the use of celebrity in GSM network advertisements and the creation of consumer brand loyalty

H0b: The use of celebrity endorsement in advertisements has no significant influence on brand perception.

H1b: The use of celebrity endorsement in advertisements has significant influence on brand perception

1.7 Significance of the study

In spite of a vast amount of previously published research papers dedicated to the field of celebrity endorsement and brand loyalty separately, there are few studies which specifically focus on identifying or establishing a relationship between the two thus far. Celebrity endorsement is a conventional marketing instrument used by marketers to communicate brand images and information to consumers. Brand loyalty is the main effect marketers expect from consumers as the final goal of all marketing campaigns, including TV advertisement, magazines, radio, etc(Emma, 2010).

Considering the massive amount of celebrity endorsement practices in the telecommunication industry advertising, this study is an effort to examine the link between celebrity endorsement and its effectiveness in attaining consumers’ brand loyalty. Brand loyalty, as stated earlier, should take both behavior and attitude into consideration.Many previous studies have provided solid theoretical foundations in the fields that are covered in the study, which are all essential to the undertaking of this research study. From a researcher’s point of view, this research study will contribute to the field of branding and marketing management. It will also help companies in the Telecoms industry to better grasp consumers’ opinions concerning celebrity endorsement. Most importantly, this research can aid marketers to identify a more efficient way to gain brand loyalty and thereby also to keep it.

1.8 Scope of the Study

The focus of this study on role of celebrity advertising on consumer brand loyaltyis restricted to the survey of MTN GSM network subscribers in Ikeja Local Government Area of Lagos State, Nigeria. Data for this study was sourced primarily and generated through the administration of questionnaire to the target audience while the ordinary least square statistical method was used foranalysing the data.

1.9 Operational Definition of Terms

Brand: A name, term, sign, symbol or design or a combination ofthem, intended to identify goods or services of one seller or a group of sellers and to differentiate them from those of competitor

Brand Loyalty: A consumer’s commitment to repurchase or otherwise continue using the brand and can be demonstrated by repeated buying of a product or service or other positive behaviors such as word of mouth advocacy

Celebrity: Any individual who enjoys public recognition and who uses this recognition on behalf of aconsumer good by appearing with it in an advertisement.

Celebrity Endorsement: Marketing communication technique of using a person who is publicly known to appear in advertisement with a product with the purpose of promoting the product. It is also the use of celebrities in order to increase the sales and/ or the recall value of a brand

Advertising: Any paid form of non-personal presentation of idea, goods or services by an identified sponsor

Consumer: This is the person or persons to which the advertisement and products/services are directed

1.10 Structure of the study

The study is structured into five chapters as follows:

Chapter one covers the background to the study, statement of the problem, objective of the study, research questions, purpose of the study, research hypothesis, scope and methodology and plan of the study. Chapter two comprises literature review and theoretical framework. Chapter three addresses the research methodology and sources of data, model specification, re-statement of hypothesis, method of analysis and decision criteria. Chapter four contains the presentation and analysis of data while chapter five covers summary of findings, conclusion and recommendations.

1.11 Company Profile of MTN Nigeria

MTN Nigeria Communications Limited, a mobile operator, provides digital global system for mobile telecommunications services for customers in Nigeria and West Africa. Its products and services include various packages, value added services, Internet services, international roaming, and phones and devices. The company was founded in 2001 and is headquartered in Lagos, Nigeria. MTN Nigeria Communications Limited operates as a subsidiary of MTN International (Mauritius) Ltd.

With over 45 million subscribers and counting, MTN Nigeria Communications Limited is the biggest mobile operator in Nigeria and West Africa. It is also the largest subsidiary in the MTN Group – a multinational telecommunications group offering world-class cellular network access and business solutions to over 182 million subscribers in 21 countries across Africa and the Middle East.In Nigeria, MTN provides network coverage to 88.8% of Nigeria’s land mass, while 86.2% of the population have access to their services.