‘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;

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

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

Increase Price Increase Profits ! – We are Louis Vuitton

Featured

Louis Vuitton

 

For high end market with greater disposable income purchase decisions aren’t just about the functional requirements from the product but also its perceived market value or Brand equity.The luxury item adds to the buyer’s image based on the perceived value.

An assessment of what the customer gets compared with what the customer gives up – Value (Dr. Ho, Deakin)

Purchasing a product of higher cost (sometimes crazy ones) has two reasons

  1. Higher costs are associated with better quality
  2. A status symbol that signifies your ability to afford costly products which psychologically boosts self-confidence & ego adding to higher self-esteem.

This has been an accepted social norm since royalties and the basis for pricing strategies of luxury brands.

Way to create a luxury brand is very difficult. It requires huge investments in communications, excellent product / service quality and always being fashionable. However to maintain these elements at a high level is not easy. Gucci, Louis Vuitton and Chanel are considered three successful luxury brands in the fashion sector, which hit premium class customers.

Compared with other competitors, LVMH was founded early in 1854 with focus mainly on trunks and handbags. The turning point in the history of Louis Vuitton which made them become a luxury brand is the appearance of Monogram Canvas product line.  To face high competitive environment, famous brands need to adopt innovative marketing strategies to create the appeal. The traditional marketing mix strategies gradually transitions into experiential marketing to create emotional factors for customer. The luxury brands seem to focus heavily on creating for their customers a memorable experience when they are using the product, creating linkages in the emotions of users. These factors would help build customer loyalty to the brand. Like the group of luxury brands, Louis Vuitton focuses on providing this experience through product quality, the brand’s history, quality of service, pricing and their distinct packaging. There are many factors that are needed to ensure the success of the brand, however in the scope of this article we will only focus on Louis Vuitton pricing strategy which makes their success.

 About Louis Vuitton products, the high price of their products creates a high quality image and has be seen as a confirmation of product quality. These different strategies in pricing have helped Louis Vuitton attract high-end market. In the history of Louis Vuitton, sale prices were never offered. No one can see LV bag in reduced price, there are no sale periods! Same prices for all group which is considered as confirmation of Louis Vuitton.

Louis Vuitton products are extensively tested to ensure that our quality is always at the highest level and has no flaws. Their products are produced by a combination of manual and mechanized, retains the beauty of handmade products while maintaining high levels of product quality. Therefore, Louis Vuitton has overcome many peers to become one of the most luxurious brands in the world.

Louis VuittonFigure 1: Matrix describing luxury brand positioning

In fact, Louis Vuitton has become a popular brand in recent years. Their target group is not only limited to high-end client; many other groups have also become customers of this fashion brand. However, the question is how to LVHM can sell more products without becoming a mass-selling brand instead of a luxury label. One of the solution to handle this issue is price increasing strategy. Brands want to keep high-end customers and eliminate low-end platforms to enhance their brand image and hope can gain new customers on the top end. They are willing to reduce their profits from low-income group to maintain an image of luxury brand.

So far, Louis Vuitton is apparently following in the footsteps of Hermes on the way to become the most luxury brand. However whether these products having leather Monogram Canvas are worthwhile as the product of Hermes and could they attract loyal customers of other luxury brands to buy them?

Are premium customers going to spend few hundred dollars extra to buy high-grade leather products such as Hermes or buy the more expensive products of Louis Vuitton?

The loyal customer group of other brands would pay more attention to products as they continue price increasing campaign?

 Louis Vuitton

Written by Saurabh Pandit and Jacky