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Impact Of Celebrity Endorsement

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Question:

Discuss abouts the Impact of Celebrity Endorsement on the Business Performance of Retail Industry.

 

Answer:

Introduction

Celebrity endorsement in the business is a crucial strategy of the business that is adopted by the business owner in order to promote their product or service. However, in the recent years the celebrity endorsement highly influences the business promotion during the advertisement process. People are easily influenced by their favorite celebrity when they see to advertise them any products. As a result the customers purchase the product, which increases the sales of the organization. This study deals with impact of celebrity endorsement on the business performance and negative and positive aspects of the celebrity endorsement in the business is also addressed in this section.

Aim of the Research

This current study aims to analyze the impact of celebrity endorsement on business performance of the retail industry

Objectives of the Research

  • To understand the factors influencing celebrity endorsement
  • To identify the importance of the celebrity involvement in the advertisement process in context of retail sectors
  • To critically evaluate the impact of celebrity endorsement on the business performance of retail sector
  • To recommend the ways to bring improvement in the celebrity endorsement in the retail sectors

Questions of the Research

  • What are the vital areas of celebrity endorsement that need to be considered during business?
  • Why celebrity endorsement has been using rapidly in the business?
  • What are the effects of celebrity endorsement on the business performance of the retail sectors?
  • What are the suggestions to enhance the celebrity endorsement in the retail industry?

Literature review

Introduction

This literature review portion focuses on the critical analysis of the potential factors of celebrity branding and its impact on the performance of the retail sectors. Therefore, different articles have been reviewed in this section regarding the selected topic. However, literature review provides a brief description of the each variable of the selected topic that gives the learner a broad knowledge regarding the research topic.

Conceptual Framework

Figure 1: Conceptual Framework

(Source: Created by Author)

Concept of celebrity endorsement

Celebrity endorsement refers to the involvement of the famous persons in the advertising process in the context of business organizations (Reimann, Wagner & Reisinger, 2017). However, the marketers have often used celebrity branding as a marketing strategy in order to enhance their business promotion. Celebrity branding is applied in the fashion industry as it allows the marketers to attract the customer attention through such process. However, marketers believe that celebrity involvement in the advertisement process improves the brand image and it leaves a positive impact regarding the product on the customer domain. Celebrities act like a brand ambassador for an organization who uses their social status to maximize the business promotion for a service or product (Akram et al., 2017).

Factors influencing celebrity endorsement

Expertise

Celebrities are considered as the expertise as they include huge knowledge regarding fashion. However, in the fashion marketers in the retail industry hire the famous persons for advertising the fashion products. However, people feel that products that are advertised by the famous persons should be good as celebrity possesses huge knowledge (Prentice et al., 2017). Hence, marketers use such concept and appoint the celebrity for the advertisement of their product.

Trustworthiness

Trustworthiness is a vital factor that influencing the celebrity endorsement in the advertisement process. However, consumer trusts their favorite celebrity and they can be easily influenced by them. People think that product that is advertised by their famous person is valid and with high quality (Muda, Musa & Putit, 2017). Hence, the retail marketers are well aware of such fact and they hire celebrities with the high price for the advertisement of their products.

 
Attractiveness

Famous persons are always the part of the attraction for their fans. Hence, people have a common tendency to look like their famous one. Therefore, if they see the advertisement of the products through the celebrities they are easily attracted towards the products and purchase it. This is a big factor that leads the retail sectors especially the fashion retailer to involve the celebrity in the advertisement process of their product, which can easily grasp the customer attention and build the customer loyalty (Chung & Cho, 2017).

The meaning transfer model of celebrity endorsement

This transfer model focuses on the endorsement process. However, endorsement, consumption, and culture are the three different components of such model (). Celebrities are generally used for bringing the meaning of the advertisement process. On the other hand, celebrities are considered as more powerful endorsers in comparison to other anonymous actors. According to Muda, Musa and Putit, (2017), a sophisticated plan for marketing is based on the choice of celebrity. After selection of the celebrity, the advertisers should detect and deliver the meanings to the product. Therefore, consumption refers to the searching process of the consumer for object world regarding the products with proper meaning. Hence, by applying such model the retail marketers are able to choose celebrities those are appropriate for the advertising of the products and are able to deliver the meaningful messages to the consumers regarding the product.

Impact of celebrity endorsement on the business performance in context of retail sectors

Impact on the buying behavior of the consumers

According to Chan, Leung Ng and Luk, (2013), advertisement process influences the people by changing their buying behavior. Celebrity branding is a well-known marketing strategy that has been widely used in the global market. Advertising through the celebrity enables the retail organization to overcome the challenges in the recent market. However, in the recent years, the consumers have a tendency to avoid the commercial advertisements those come through the magazine, TV and the social networking sites. Hence, the involvement of the celebrities in the advertising of the products influences the people as consumers treat their famous person as a god. The retail sectors like food and Drinks Company, clothing sectors and beauty products sellers are used such celebrities in their branding who give them the huge amount of money by influencing the purchasing behavior of the consumers regarding a product or service.

 
Impact on sales

Celebrity involvement in the subcontinent in the current years has been increasing rapidly despite the rising cost as the social media is the main factor, which influences this trend (Francis & Yazdanifard, 2013). However, according to the research, it has been found that the organizations hire the celebrities for their business promotion that also increase the demand of the celebrities for a specific brand, which leads the business organization to high-cost expenditure. Celebrity acts as the media between the product and the consumer. Hence, advertisement of the products or service by the celebrity easily achieves the consumer’s attention, which increases the sales of the product. The attractiveness of the celebrity helps them to make a strong connection with the target market, as a result, the number of consumption increases, which also maximize the sales revenue generation of the particular brand.  

As argued by Dwivedi, Johnson and McDonald, (2015), the marketers often face issue to hire the best celebrities as they are not always available. As a result, the retail marketers have to pay the high price to hire such celebrities for their brand advertisement. Hence, this often affects the sales revenue of a particular brand as the operation cost is high than the profitability in this case. On the other hand, if a retail sector wants to innovate new product in the market then advertisement through the celebrity catches the consumer's attention, as a result, the sales of such new product or brands increases.

Impact on the brand image

Celebrity endorsement in the business promotion is a useful approach for the retail marketers. Retail industry refers to fashion products, foods, beverages, households, and the beauty products those are the daily need of the customers. However, it is well known that there is a strong relationship between the celebrity and the fashion market (Ong & Ong, 2015). Fashion retailer and other retail sectors use celebrity branding as a promotional strategy in their business. Involvement of the famous persons during the sales promotion gives maximum profit to the organization. Besides that celebrity endorsement enhances the trustworthiness of the customers, which improve the brand image. Celebrity makes the company popular and generates buzz, which also leads the brand to be famous in the consumer domain. Therefore, advertisement through the celebrity regarding a product maximizes the consumer expectations by delivering the organization promise, which is associated with the brand image of a company.

Challenges associated with the celebrity endorsement in context of retail industry

Celebrity changes their image or sometimes they become less popular that affects the brand image of a product. On the other hand, sometimes the consumers do not believe that the celebrity uses the particular brand that they advertise, which hampers the sales revenue of the retail sectors. As criticized by Mikuláš & Sv?tlík, (2016), often the cost of the celebrity that they want can be astronomical. Hence, the company needs to sure about that they are able or not to afford such price. Therefore, it is not necessary that a famous person should fit with a particular brand. Hence, such situation brings a big challenge to choose the celebrity for a particular brand who can be appropriate for this brand.

As argued by Bhargava, (2015), in the recent year's celebrities work with so many brands that leave a negative impact on the consumer's mind that the celebrity can endorse any products to develop a buck. On the other hand, the celebrities may overshadow the brands. As for example, People often focus on the celebrity rather than the product. This creates a specific severe situation for the retail marketers while one celebrity is associated with the endorsement of multiple services or products. The popular image of the celebrity decreases the value of the product that affects the growth of the business. Therefore, it is difficult for the small retail organization to afford the high price that they have to pay for the celebrity branding (Schnittka et al., 2017). Such challenges are very common while the retail industry uses the celebrity in their business promotion, which may affect the business performance.

 

Summary

The entire study highlights on the different aspects of the celebrity endorsement and its impact on the business performance of the retail sectors. However, different factors including attractiveness, trustworthiness, and expertise enhance the celebrity endorsement process. However, celebrity branding leaves both positive and negative impact on the business growth of the retail sectors. This enhances the sales revenue while the rising price of the celebrity endorsement increases the operation cost of a business.

Organization of the project

Chapter 1: This chapter includes the background of the research, problem statement, aims, objectives and the questions of the research project. However, a clear idea about what will be done in this project has been found in this chapter.

Chapter 2: This chapter consists of the literature review over the selected topic. Therefore, a broad description and critical analysis have been done regarding the effect of celebrity endorsement on the business performance of the retail sectors.

Chapter 3: Proper methodology will be taken in this chapter to carry out the research. Each and every aspect of the research methodology will be addressed properly in this chapter.

 


Chapter 4: The collected data or information from the valid sources will be analyzed in this chapter. Hence, data will be represented through using graphs, charts, and tables.

Chapter 5: This is the last chapter the research project includes the conclusion and the recommendations regarding the selected topic. However, future scope of the research and research limitations are also discussed in this chapter.

Project Time Frame

Activities

1-2 weeks

2-5 weeks

5-9weeks

9-11 weeks

11-12 weeks

Setting of research aims and objectives

 

 

 

 

 

Literature review

 

 

 

 

 

Data collection

 

 

 

 

 

Data Analysis

 

 

 

 

 

Research presentation

 

 

 

 

 

Table 1: Project time frame

(Source: Author)

 

References

Akram, S., Nazam, M., Mubeen, R., & Ch, S. R. (2017). FACTORS INFLUENCING EFFECTIVENESS OF CELEBRITY ENDORSEMENT IN ADVERTISING. British Journal of Marketing Studies, 5(1), 1-16.

Bhargava, A. (2015). Proliferation of the Role of Celebrity Endorsement on Consumer Buying Behaviour: A Descriptive Study. Imperial Journal of Interdisciplinary Research (IJIR).

Chan, K., Leung Ng, Y., & Luk, E. K. (2013). Impact of celebrity endorsement in advertising on brand image among Chinese adolescents. Young Consumers, 14(2), 167-179.

Chung, S., & Cho, H. (2017). Fostering parasocial relationships with celebrities on social media: Implications for celebrity endorsement. Psychology & Marketing, 34(4), 481-495.

Dwivedi, A., Johnson, L. W., & McDonald, R. E. (2015). Celebrity endorsement, self-brand connection and consumer-based brand equity. Journal of Product & Brand Management, 24(5), 449-461. Dwivedi, A., Johnson, L. W., & McDonald, R. E. (2015). Celebrity endorsement, self-brand connection and consumer-based brand equity. Journal of Product & Brand Management, 24(5), 449-461.

Francis, D., & Yazdanifard, R. (2013). The Impact of Celebrity Endorsement And Its Influence Through Different Scopes On The Retailing Business Across United States and Asia. International Journal of Commerce, Business and Management, 2(1), 35-40.

Mikuláš, P., & Sv?tlík, J. (2016). EXECUTION OF ADVERTISING AND CELEBRITY ENDORSEMENT. Communication Today, 7(1).

Muda, M., Musa, R., & Putit, L. (2017). Celebrity endorsement in advertising: A double-edged sword. Journal of Asian Behavioural Studies, 2(3), 21-32.

Ong, Z. Q., & Ong, D. L. T. (2015). The impact of celebrity credibility on consumer’s purchase intention toward the footwear industry in Malaysia: The mediating effect of attitude toward advertisement. Information Management and Business Review, 7(4), 55-63.

Prentice, C., Prentice, C., Zhang, L., & Zhang, L. (2017). Celebrity endorsement and stock market return. Marketing Intelligence & Planning, 35(4), 529-543.

Reimann, O., Wagner, U., & Reisinger, H. (2017). The Impact of Celebrity Endorsement and Celebrity Co-branding on Perceived Quality: The Role of Celebrity Application Frequency Within a Brand. In Advances in National Brand and Private Label Marketing, 55-63.

Schnittka, O., Hofmann, J., Johnen, M., & Erfgen, C. (2017). Sponsorships vs. celebrity endorsement: Analyzing mediators for their different impact on brand image. In 46th Annual European Marketing Academy Conference: Leaving FootprintsEuropean Marketing Academy Annual Conference.

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