‘Endorsement ads: Can they build up a brand’s image

Introduction:

When it comes to advertising a brand, it is rather accompanied by several strategies and techniques via which the process of marketing takes place, in order to depict the image of that certain brand being introduced (IAB 2009). Research has defined this term as the mode of communiqué to existing or prospective customers in which a registrar is sponsoring his/her run-through; a product or a service (IAB 2009). Due to an increase in the technological advancements and social network sites, the information regarding the promotion of the brand is transmitted through websites, campaigns, flyers, blogs, leaflets, brochures, newspaper articles, twitter or Facebook etc. However, it is indeed considered illegitimate to advertise any brand without copyrights; heavy penalty is charged in that case (IAB 2009). Endorsement advertisement on the other hand is one of the modes of marketing used by the marketers in order to promote their product, where celebrity endorsement is most commonly implemented which will be discussed in detail in our study, below.

Discussion:

Celebrities are those particular figures or personalities that are quite renowned in view of the public because of their integrity or their charm and desirability (Zipporah and Mberia 2014). From extensive research conducted by Zipporah and Mberia (2014), it has been inferred that advertisement in which celebrity endorsement is applied does seem to have an impact on the community overall. Basically, advertising also known as publicizing a brand is a fundamental portion of the community and economic scheme for both the consumers as well as the industries (Zipporah and Mberia 2014, pp.179). Its main purpose is to distribute wisely organized messages in order to aim spectators consequently enabling promotion packages of services or products of majority of administrations.

Khatri (2006) have stated that celebrities often offer their names for a particular advertisement in motive of depicting sheer prominence of that brand towards the audience. Consumers seem to become engrossed in advertisement where celebrities are involved in promoting a product or service’s worth (Khatri 2006). Companies often use a few strategies when implementing celebrity endorsement, which are as follows:

  • Declaration: Also known as testimonial, is used when the product has personally been used by the celebrity himself; the most example for instance is Aishwairya Rai in endorsing Lux and L’Oreal Paris.
  • Endorsement: this is used when the celebrities offer their own names for a particular brand where their experience may not count for example Julia Roberts has been asked to endorse Lancôme Paris products.

(Julia Roberts – Lancome La Vie Est Belle Perfume 2015)

  • Actor: Another type of promotion or advertising is the acting of a celebrity, s/he may be asked to simply present a brand as a part of charismatic portrayal instead of subjective endorsement.
  • Spokesperson: This type basically signifies a specific brand over a protracted duration of period, frequently in duplication as well as television advertisements, along with individual presences (Khatri 2006, pp.27).

The reason why celebrity endorsement is implemented world-wide is because of its profitability and money-making reliability. It seems to appeal the consumers acting as spectators (Khatri 2006, pp.28).

Jane Gu (2006) explains that celebrity endorsement can be executed as both long-standing as well as temporary strategies. The difference between both is when a company uses a long-term strategy; a better quality product is manufactured, provided that the impact of distribution of data and internal relationship request both are resilient (Jane Gu 2006, pp.2).

Coming to the dispersion of information via social networking sites, they are considered very vital in the business of advertising. If a buyer has consumed some product or service, chances are that he can spread awareness to others via social networks; especially to those who are not well-aware of that product (Jane Gu 2006, pp.4).

Jane Gu (2006) has also quantified through her research that there are two types of buyers who are prompted by celebrity endorsement:

  • Rational Buyers: these buyers are only concerned about the statistical features regarding the advertisement. Hence they purchase a product only if the appraisals of the product’s functionality as well as worth are extraordinary and valuable.
  • Fan Buyers: whereas, these type of consumers are rather concerned with the emotional appeal of the product along with the informational features and build up a vital emotional association with the celebrity endorsing the brand (Jane Gu 2006, pp.5).

A few examples celebrity endorsement are as follows:

1

(Taylor Swift, Cover girl 2012,)

2

(L’Oreal Posters 2011)

From the advertisement of ‘Stop Hunger Now’, various popular actors as well as actresses have addressed about the issue at hand, in the simplest yet modest way possible, which makes the advertisement acknowledgeable.

Another research by Mukherjee (2009) has quantifies that experimental findings sustain the statement that celebrities seem to have an encouraging impact on both the product’s attitude as well as the brand. A significant characteristic on celebrity endorsement is its integrity, worth and reliability. The mechanisms of the integral process are associated with other behaviors of the personality and the dimension of the appearance which reproduce better characteristics yield earnest and constructive perspective of the personage in the minds of the buyers (Mukherjee 2009, pp. 22-23)

However, there has been some negative connotation to celebrity advertisement as well; not all endorsement advertisements are taken as positively, depending upon its nature and value. A very common example to such disapproval is Shahrukh Khan endorsing ‘Fair’n Lovely MEN’ advertisement, which was found offensive by many consumers as well as a few other celebrities (PinkVilla 2013). It has been turned down as one of the stereotypes; because having a darker skin colour should not be prejudiced over fairer skin. It is rather considered off-putting and conceited to create disparity between both colours; it is rather an act of racism which should be excavated immediately.

3

(PinkVilla 2013)

Conclusion:

From the above study, it is derived that one of the key features of marketing is celebrity endorsement advertisement and it plays a major role in building up a product’s image, as long as that specific brand does not offend its consumers on the basis of discrimination.

 

References:

IAB 2009, ‘Social Advertising Best Practices’, Journal of Interactive Advertising Bureau, Viewed May 6th 2015, <from http://www.iab.net/media/file/Social-Advertising-Best-Practices-0509.pdf&gt;

Jane Gu, Z 2005, ‘Celebrity Endorsement Advertising and Product Adoption through Social Networks, Stern School of Business-New York University, pp.1-5, Viewed May 6th 2015, <http://bschool.nus.edu/Departments/Marketing/papers%20for%20seminars/jane%20paper.pdf&gt;

Julia Roberts – Lancome La Vie Est Belle Perfume 2012, ‘Celebrity Fashionation’, Daisy Development, Viewed May 6th 2015, from <http://www.celebrityendorsementads.com/celebrity-endorsements/celebrities/julia-roberts/&gt;

Khatri, P 2006, ‘Celebrity Endorsement: A strategic Promotion Perspective’, Journal of Apeejay School of Management, Dwarka, New Dehli, pp. 27-28, Viewed May 6th 2015, from <http://satishserial.com/issn0972-9348/finaljournal03.pdf&gt;

Loreal Paris 2011, ‘Aishwarya Rai Loreal Leading Lady’, Viewed May 6th 2015, from <http://forum.xcitefun.net/aishwarya-rai-loreal-leading-lady-t66359.html&gt;

Mukherjee, D 2009, ‘Impact of celebrity endorsement on brand image’, journal of Social Science Research Network Electronic Paper Collection, pp. 21-23, Viewed May 6th 2015, <http://usdrinc.com/downloads/Celebrity-Endorsements.pdf&gt;

Perkins, M 2008, ‘Stop Hunger Now’, Viewed May 6th 2015, from <http://www.dailymotion.com/video/x2m532l_stop-hunger-now-celebrity-endorser-2008_news&gt;

Pink Villa 2013, ‘SRK in trouble for endorsing a fairness cream-“Dark is Beautiful”, gains momentum’, Viewed May 6th 2015, from <http://www.pinkvilla.com/entertainment/discussion/srk-trouble-endorsing-fairness-cream-dark-beautiful-gains-momentum&gt;

Taylor Swift, Cover girl 2012, ‘Celebrity Fashionation’ Daisy Development Viewed May 6th 2015, from http://www.celebrityendorsementads.com/celebrity-endorsements/celebrities/taylor-swift/&gt;

Zipporah, M.M 2014, ‘the effects of celebrity endorsement in advertisements’, journal of Academic Research in Economics and Management Sciences’, Vol. 3, No. 5, pp. 179, Viewed May 6th 2015, from <http://hrmars.com/hrmars_papers/The_Effects_OF_Celebrity_Endorsement_in_Advertisements.pdf&gt;

Three is a crowd – The dynamic supermarket price paradigm.

By Mary Ann Gitonga & Lachlan C

Pricing is one of the ways in which a company gains its value back from the customers. Pricing is influenced by a company’s costs, its competitors and what the company perceives the customers will be willing to pay for the product. Pricing is one of the 4 P’s in marketing that can easily be changed (along with Product, Promotion & Placement). As I am sure you have seen, milk prices at one of the supermarket giants (Woolworths, Coles & Aldi) can vary in price several times within a month.

Pricing can be divided into three main categories: Low, Middle & High.

Low

How do we determine costs are covered?

Are low prices a constant strategic choice? Or fluctuating low prices – in order to cover prices

  • Cost plus pricing
    • Mark up above average cost
    • Supermarkets use this technique to maintain competitive advantage. Keeping a small margin and as long as they break even, the supermarkets don’t mind. To be even more competitive they rely on reducing costs where possible.
  • Loss Leaders
    • Sell below cost to bring in customers to buy other products
    • Supermarkets have used techniques such as selling bread and milk at ridiculously low prices (possibly at a loss), and have uber confidence in their product placement and specials to get customers to buy more products than they initially intended.
  • Market Penetration
    • Low price to attract volume
    • This has been seen recently with the introduction of Coke’s new product Coke Life. They have hijacked the hype of this new product and reduce the price to get as many people interested in purchasing this product, so that they may continue to buy the product in the future.
    • Specials are often used to get rid of stock that is soon to expire. Woolworths even use the stickers Reduced to Clear to gain the last profits from the product before they expire.
  • Nearly Predatory
    • Price low enough to discourage competitors
    • Supermarkets are often being blamed for the closure of local businesses such as butchers and green grocers. The ACCC aims to take action against businesses that use predatory pricing, but admits it is hard to prove a business is involved in predatory pricing due to it appearing pro-competitive initially and there is often no clear evidence. – https://www.accc.gov.au/business/anti-competitive-behaviour/predatory-pricing

High

  • Willingness to pay
    • Pricing right below what a customer is willing to pay
    • This could be done to such products that are imported and have a special significance to a certain group of people. For example a South African may want to purchase Biltong Slices, and can only get it from a select few stores.
  • Market scheming
    • Pricing high to have most margin (often on the back of new product)
    • This technique could be used when offering a new product, such as the recent Woolworths campaign placing Channel 10’s ‘Recipe to Riches’ winners product on their shelves.
  • Prestige/Status pricing
    • Pricing high for image appeal
    • At Christmas, Coles had rights to sell a Christmas Pudding created by Heston Blumenthal. The high price of this product reflected the prestige of a Celebrity Chef such as Heston.
  • High prices due to real quality difference
    • Boutique products such as Maggie Beer’s Burnt Fig, Honeycomb & Caramel Ice Cream would be priced higher than say a Woolworths Select Honey, Caramel & Macadamia Ice Cream, due to the difference in Quality that is perceived by the name Maggie Beer.

Middle Pricing

  • Competitors dictate how much middle pricing occurs. Woolworths would identify how its competitors price their products, in the aim to provide a lower price. Woolworth’s competitors would also do the same in return. Therefore, the high prices are often unmanageable due to their desire to maintain competitiveness against the others.

When looking at price positioning the stand out company in this three-way battle is clearly Aldi. That being said Coles and Woolworths have provided that opportunity through the historical attitude of being able to shrug of competitors employing temporary price wars or buying out the competition It is an all to often sight to see two Woolworths in close proximity to each other.

As Nirmalya Kumar from the Harvard business review articulates poignantly, the strength of Aldi’s price positioning comes from it’s lean and agile business model which focuses on selling more of select segment of products at a consistent and competitive price. This enables better utilisations of quantity discounts for products research shows to be of equal quality and in some cases better quality.

https://hbr.org/2006/12/strategies-to-fight-low-cost-rivals

http://www.emeraldinsight.com/doi/full/10.1108/09590550610714639

The other big differentiation between Aldi and its competitors is they have consistent or linear pricing model, whereas Coles and Woolworths go on local pricing. This makes a substantial difference in the segment they target as it provides fiscal consistency, which is a wonderful Segway into the other aspect in which Aldi does extremely well, consumer psychological & economic behaviour.

Aldi’s Core Values

It is well established that humans are creatures of habit, who are by default reluctant to change or at a minimum are resistant to it until it becomes their new norm. This mesh of economic strategy that Aldi use;

  • Lean Supply Chain
  • Larger volume of fewer items
  • Efficient checkouts
  • National consistent pricing

Coupled with the psychological strategy;

  • Clustering
  • Recency Illusion

Make a fantastic mix and a more holistic approach to the way the positing differentiates their products and pricing. A solid example of this is for the price conscious consumer, if they can budget for the same products being the same price regardless of store then confidence can be gained in expenditure.

If the consumer is the water running down a waterfall and the supermarkets are the rocks directing the flow of that water what happens when flow of water subsides or changes direction? Think of the rocks as the investment put into pricing/marketing and the exposure that leaves when the products quality are the same.

“Competition is the keen cutting edge of business, always shaving away at costs” – Henry Ford

References

Broadbridge, A., 2005. Retailing and producer-retailer relationships in food chains. [Bradford, England]: Emerald.

Harvard Business Review, 2006. Strategies to Fight Low-Cost Rivals. [online] Available at: <https://hbr.org/2006/12/strategies-to-fight-low-cost-rivals&gt; [Accessed 6 May 2015].

Iacobucci, D., 2013. MM. Mason, Ohio: South-Western.

How much is the price of water?

Is the water in a 350ml bottle better than water in a 600ml bottle or even a 1.5l bottle? You would hope so considering in some cases you are paying 50% more for this convenience.  Let’s looks at the price of buying water at Coles in Australia at the moment. A 600ml is twice as much per litre as a 1.5l, yes double the price for a lesser quantity.

bottle image one

And yes it doesn’t stop there. Packaging in smaller quantities increases the price further with the most expensive bottle for standard natural spring water being sold for nearly 15 times the price of a 1.5l bottle.

So why do we buy for convenience and how do retailers get away with charging so much?

When choosing products consumers make a decision between functionality and usage convenience. This is interesting as those who are focused on the health benefits of water care about the functionality of a product while those who are simply thirsty are buying for convenience.  A further willingness to pay a price premium for water being chilled, a matter of convenience or just taking advantage of the Queensland summer heat?

bottle image'

So what would you pay more for?

When consumers buy for convenience they are not giving much consideration to the purchase process. They are not interested in the best deal or negotiating, some buy impulsively and some on regular basis. Some research even suggests that for convenience items, consumers pick the store to buy from then decide what to buy afterwards (Feichtinger, Luhmer and Sorger, 1988). Is this why retailers can get away with charging so much for so little and are they taking advantage?

One could argue the company is there to make a profit and provided there is consumer demand, no advantage is being taken. It is the consumer’s choice to buy the product after all. At what point does demand decrease as price increases, how much are you really prepared to pay for convenience?

The other side of the argument could conclude that organizations are explicitly building their advertising and pricing strategies to take advantage the ‘psychology’ of consumers. They know that convenience is a growing trend and they exploiting this by market skimming simply to make more margin.

Are you prepared to pay more for convenience items if so why? What do you think about the pricing strategies for convenience products, should we really be paying more for less?

Sharon Jones and Helen Drijfhout

References

Feichtinger, G, Luher A and Sorger, G (1998) Marketing Science, Optimal Pricing and Advertising Policy for a convenience goods retailer 7(2)(P 187- 201)

Iacobucci, D.F (2014), Market Management (MM), Student Edition, South-Western Cengage Learning

Airline price discrimination

Price discrimination involves charging different prices to different sets of consumers for the same good. Firms can charge different prices depending on several criteria:

Quantity bought (e.g. lower unit price when higher quantity is bought)

Time of use (higher price at peak times)

Age profile (e.g. discounts for OAPs)

When unit is bought (e.g. discounts for buying early)

The main principle behind price discrimination is that a firm is trying to make use of different price elasticities of demand. If some people have a very inelastic demand, it means they are willing to pay a higher price. If the firm can set higher prices for these consumers it can increase its revenue and profits. Other consumers will be more sensitive to prices (elastic demand) and so will respond to special offers and price discounts. The firm can benefit if it can separate these consumers and therefore reduce their consumer surplus.

In the real world, price discrimination might involve charging a different price for a slightly different good.

How does an Airline practice price discrimination?

Time of buying ticket. There is no hard and fast rule, but if you buy a ticket several months in advance it tends to be cheaper. If demand for the particular flight is high, then the airline starts putting up the price of that flight. It means that the remaining tickets will only be bought by people willing to pay a higher price (inelastic demand). If a particular flight is not selling very well, the airline will do the opposite and reduce price. This lower price attracts more people who are sensitive to prices and ensures that the flight will fill up.

Ideally, the airline would like to fill up the plane with passengers paying the most they are willing to pay. There is no point in selling very cheap tickets and having the flight sold out many weeks in advance.

Why does the price of an airline ticket change from hour to hour?

You may have had experience of looking for airline ticket and seeing a flight for $200. The next day, you return to buy ticket, but see it has gone up to $220. This is very annoying, but is due to price discrimination. The airline will reserve a certain number of economy tickets at a low price (to attract early customers more sensitive to price. But, if the tickets for flight are selling well, it can afford to charge higher prices for the remaining few tickets. The airline is trying to capture as much consumer surplus as possible)

Unsocial hours cheaper. Because some flight times are less popular, these flights will tend to be cheaper. For example, if you take a weekend break. Most people would prefer to come back late on Sunday. These late Sunday flights tend to be more expensive than early morning Sunday flights.

When you travel. Travelling at peak times will be much more expensive. One good example is travelling during the week. I was once looking at airfares from Australia to Dubai  in October. From Monday to Friday, the cheapest fare was over $1,000 – I was shocked at the cost. But, when I changed the date to Saturday to Saturday, the price fell to $650. The reason is that the customers travelling Monday to Friday are businessmen. Their demand tends to be more inelastic (because it is paid by company expenses). If you are more flexible and willing to travel at the weekend, you are more sensitive to price and have a more elastic demand. Airfares also vary depending on the time of the year. During peak summer holidays, airfares are more expensive. Parents have more inelastic demand because they can’t go on holiday during term time.

The Price of Water

In the United Arab Emirates fresh water is not a natural resource.  Water is either desalinated or imported.   May is here and we are heading into the heat of Summer (or alternatively known as the heat of Spring, Summer and Autumn….and a bit of Winter).  The car temperature today was 41◦C, soon it will be a daily 50◦C.  Water is such an important product and so bottled water is a highly demanded product.

Task Spotting and The National newspaper has uncovered some interesting information on bottled water from both a qualitative and quantitative perspective:

From a qualitative perspective,  92% of those surveyed, pay for bottled water while eating out and 94% felt it was overpriced.  However from a quantitative perspective, there is a price variation of up to 900% for 500ml and 500% for 1500ml, inferring the product is selling at these prices.  How does this strong customer opinion have no impact on the price?

  • In most countries, bottled water has a high elasticity of demand because there is availability of substitute goods such as tap water and home rain water tanks.
  • Water is a necessary good and the higher the necessity, the lower the elasticity.

So we are confronted with no substitute and a highly necessary good, it truly is a captive market.

http://www.thenational.ae/opinion/feedback/the-survey-says-price-of-bottled-water-in-hotels-and-restaurants

http://www.thenational.ae/uae/bottled-water-prices-at-selected-cafes-and-restaurants—graphic

http://www.thenational.ae/uae/uae-consumers-complain-of-inflated-water-prices-when-eating-out

http://www.thenational.ae/news/uae-news/environment/angry-at-cost-of-bottled-water-in-the-uae-youre-not-alone

To Occupy Your Market Share? – Don`t Forget Pricing Strategy

Image

http://study.com/academy/lesson/pricing-strategy-in-marketing-definition-types-examples.html

Have you ever noticed the price of the goods while going to the supermarket? have you ever thought about what`s the differences between $ 0.99 and $ 1.00? Have you ever confused about  why there are always many products are in discount from day to day?

In general, it`s hard for boys spending a lot of time in shopping, but I get the chance to that cause I have a best female friend whose interest is going to the supermarket even though she does not want to buy anything else. For me, I just go with her without purchase anything as well. Therefore, I always check the price label of different kind of goods and think about what kind of pricing strategy the marketer has done to attract customers.

As we known, price is the most important factor in determining profit and normally countless businesses fail to get their pricing strategy right. The price that one company charges for tis products or services is a major way to communicate the firm’s value in the marketplace.

Is there any significant effect by slightly changing the price?

The answer might be yes. For instance, if you might get a large percentage possible increase of your operating profit  by increasing 1% of your price gain. However, this profit can not be achieved by simply reducing 1% variable or fixed costs. but an increase in price goes right to the bottom line.

What kinds of pricing strategies normally utilized in price setting?

There are some common pricing strategies as shown blow:

  1. Penetration Pricing
  2. Optional Pricing
  3. Premium Pricing
  4. Competition Pricing
  5. Value Pricing
  6. Bundle Pricing
  7. Skimming Pricing

I prefer skim pricing  most. the practice of selling a product at a high price, usually during the introduction of a new product when the demand for it is relatively inelastic. This approach is used to generate substantial profits during the first months of the release of a product, usually so that a company can recoup its investment in the product. However, by engaging in price skimming, a company is potentially sacrificing much higher unit sales that it could garner at a lower price point.

For example, ABC International has developed a global positioning system that can lock onto GPS satellite signals even from several feet underwater. This is a substantial improvement over existing technology, so ABC feels justified in pricing the product at $1,000, even though it only costs $150 to construct. ABC holds this price point for the first six months, while it earns back the $1 million development cost of the product, and then drops the price to $300 to deter competitors from entering the market.

Which pricing strategies you prefer best? How do they working in pricing network to increase companies` profits? Can you share you knowledge with us, lets have a discuss.

 

 

 

 

 

‘Tidal’ wave or crash?

Post by Johnno Wong & Veronica Sabo

Last year Jay Z purchased the company ‘Tidal’ for a reported $56 Million. This streaming company is a rival to Spotify however unlike others it does not provide a ‘free’ service which members can access music with adverts. Conversely, artists like Taylor Swift are pulling out from ‘free stream’ music companies and signing onto ‘Tidal’.

What is their reason? Purely to preserve the integrity of their music to combat their industry pressures of illegal downloads and losing profit to main stream sites. Jay Z has agreed to pay 75% royalties to the artists who sign onto the company which is above industry standards. One would argue that they make enough money already so what is the big deal? Surely the money make in records and endorsements alone would be enough? Would the profits from Tidal be a pinch of salt compared to how much money they make?

Artists such as Alicia Keyes,  Daft Punk , Rihanna, Beyonce, Madonna and others are relaying together to fit for their music. The company claims to offer higher sound quality music compared to its competitors, provides videos and insights into the creative genius of the artists along with tapping into the public’s sense of compassion for these artists whose music is being given for ‘free’ or illegally downloaded.

For the common day person who may not be an expert in music and sound quality – why would we pay for a streaming service when we could opt for a free option such as Spotify? Looking back in the history of music production one would have argued why one should buy records when you could listen to music for free on the radio or with the access to illegal downloads people would still buy CDs. However we find people are still willing to pay the price for high quality accessible music. The big question amongst this stream of questions is: Are the music lovers and music lay people of the world feel bad for these artists losing out amidst industry pressures or will we continue to opt for free means of streaming?