This Business Paper tries to look beyond the benefits that might be derived out of celebrity endorsement. It tries to understand the process of consumer psychology and impact of celebrity endorsement on the overall process of brand building. The in-depth study of various models brings to light the complexities pertaining to celebrity endorsement. Analyzing its success is as much a necessity as is the understanding of its need. The importance of celebrity management has been emphasized to realize success or failure in its true sense. A symbiotic model has been proposed to define: how to make celebrity endorsement a win-win situation for both the brand and the brand-endorser.

1. A Business Paper on
“Impact of Celebrity Endorsement on overall Brand”
(Towards “In search of excellence” Business Paper Writing Competition)
Impact of Celebrity Endorsement on overall Brand

2. TABLE OF CONTENTS
Abstract
1. Introduction
2. Branding & Celebrity Endorsement
2.1 What is a Brand?
2.2 Definition of Celebrity
2.3 Definition of Celebrity Endorsement
3. The Need for Celebrity Endorsement
4. The Process of Celebrity Endorsement
4.1 The Meaning Transfer Model
5. The Importance of Celebrity Management
5.1 Schema-Based Expectancy Theory
6. Celebrity Selection
6.1 Stereotyping
6.2 The Tears Model
6.3 The no Tears Model
7. Why Celebrity Endorsement Fails?
7.1 The Reasons
7.2 The Solutions
7.3 The Symbiotic Model
8. Celebrity Endorsement: The Issues Involved
8.1 Price vs. Profit
8.2 Multiple Brand Endorsement vs. Multiple Celebrity Endorsement
9. Conclusion
References
Web Links
Glossary
TABLE OF FIGURES
Figure 1: The Meaning Transfer Model
Figure 2: The Symbiotic Model
Figure 3: Multiple Brand Endorsement (Shah Rukh Khan)
Figure 4: Multiple Celebrity Endorsement (Adidas & Hyundai Santro)
Impact of Celebrity Endorsement on overall Brand

3. ABSTRACT
Successful branding programs are based on the concept of singularity. The objective is to
create in the mind of the prospect the perception that there is no other product on the
market quite like your product
- Al Ries & Laura Ries
Indian advertising started with the hawkers who used to call out their wares right from the days
when cities and markets first began. Since then, Indian advertising has metamorphosed into a
strategic tool that enhances sales, siphons more profits and helps in the process of brand-
building and product promotion. With this evolved a strategy that tried to benefit from the
emotional attachment of the admirers or the fans of the celebrities; in the form of celebrity
endorsement. It does help in creating instant awareness & visibility; but for a cost.
This paper tries to look beyond the obvious benefits that might be derived out of celebrity
endorsement. It tries to understand the process of consumer psychology and impact of celebrity
endorsement on the overall process of brand building. The in-depth study of various models
brings to light the complexities pertaining to celebrity endorsement. Analyzing its success is as
much a necessity as is the understanding of its need. The importance of celebrity management
has been emphasized to realize success or failure in its true sense. A symbiotic model has been
proposed to define: how to make celebrity endorsement a win-win situation for both the brand and
the brand-endorser.
“Brand” is the most valuable asset of any firm. Any thoughtless adventure can be like the Sword
of Damocles. It’s the “strong idea” of promotion which is a more strategic means of brand-
building; which can be an economical alternative over celebrity endorsement.
It doesn't matter how new an idea is: what matters is how new it becomes.
- Elias Canetti
Impact of Celebrity Endorsement on overall Brand

4. Impact of Celebrity Endorsement on overall Brand
“If you're trying to persuade people to do something, or buy something, it seems to me
you should use their language, the language in which they think."
-David Ogilvy
1. INTRODUCTION
If the world were full of all wise men and all wise women; we would have never heard of a term
called “advertisement”. And then good products would have found the right customers and grown
to prosperity. Firms would have worked out a mathematical formula to sell and succeed. But the
buying process isn’t rational; and so is this world.
Today, the business firms are trying out different ways in advertisement to increase their sales.
Indians are die-hard movie and sport buffs; and this aspect of the consumers has invited the
concept of “Celebrity Endorsement” to the world of advertisement. The purpose of this paper is to
analyze the role of Celebrity Endorsement in the process of brand-building by taking appropriate
examples from the advertising landscape.
2. BRANDING & CELEBRITY ENDORSEMENT
Indian Firms have been juxtaposing their brands with celebrity endorsers in the hope that
celebrities may boost effectiveness of their marketing and/or corporate communication attempts.
Today, use of celebrities as part of marketing communication strategy is fairly common practice
for major firms in supporting corporate or brand imagery.
2.1 What is a Brand?
Jack Welch, the former CEO of General Electric once said “Our most valuable assets are our
intangible assets.” The intangible asset he was referring to is a brand. The Dictionary of
Business & Management defines a brand as: a name, term, sign, symbol, or design, or a
combination of them, intended to identify goods or services of one seller or a group of sellers and
to differentiate them from those of competitor.
2.2 Definition of Celebrity
A celebrity is a person who is widely recognized in a society. Whereas attributes like
attractiveness, extraordinary lifestyle or special skills are just examples and specific common
characteristics cannot be observed. It can be said that within a corresponding social group
Impact of Celebrity Endorsement on overall Brand

5. celebrities generally differ from the social norm and enjoy a high degree of public awareness.
Today’s celebrities are larger figures from movies (Amitabh Bachchan, Shah Rukh Khan),
television (Larry King, Smriti Irani) and sports (Sachin Tendulkar, Michael Schumacher).
2.3 Definition of Celebrity Endorsement
According to Friedman & Friedman a “celebrity endorser is an individual who is known by
the public for his or her achievements in areas other than that of the product class
endorsed.” So, in the Coco-Cola advertisement; actor Amir Khan is the celebrity endorser for the
product or brand called Coke and this process is referred to as Celebrity Endorsement.
3. THE NEED FOR CELEBRITY ENDORSEMENT
The charisma of the celebrities almost always entices people and their words are worshipped by
a lot of people. Their influence also goes on the political front, where they are invited for political
endorsement. The business firms thus resort to celebrity endorsement to perk up brand recall and
product sales. This has now become a trend and is being perceived as a strategic means of
brand building exercise. The Elaboration Likelihood Model (EML) suggests that consumers will
scrutinize claims more in important situations (say life saving drugs) than in unimportant ones. So,
for almost similar products like Coke & Pepsi it makes sense to use endorsement. Also, Friedman
& Friedman have shown that a celebrity relative to a non-celebrity spokesperson would be more
effective for products high in psychological or social risk, involving such elements as good taste,
self-image, and opinion of others. Just for example when actor Shah Rukh Khan endorses
Santro-Zip drive; the consumers are made to think that he is giving his opinion to go for this car.
Two reasons why advertisers need celebrity endorsement are to increase the credibility &
attractiveness of their advertisement. This is solely to affect consumers’ attitude towards their
brand. To justify this hypothesis, we can take the example of former Miss Universe Sushmita Sen
who helped the Epson brand of printers achieve instant recognition; even with the established
giants like Hewlett-Packard and Wipro in the running. Similarly, actress Rani Mukherjee has
turned the tables for Bata’s ladies footwear brand called Sundrop as sales increased by a
whooping 500%.
4. THE PROCESS OF CELEBRITY ENDORSEMENT
The process of celebrity endorsement is more of meaning translation & meaning application. A
deeper insight into this complex process is provided by the following theory.
Impact of Celebrity Endorsement on overall Brand

6. 4.1 The Meaning Transfer Model
McCracken, the author to this model, has suggested that “The effectiveness of the endorser
depends, in part, upon the meaning he or she brings to the endorsement process.” A
celebrities’ effectiveness as endorsers stems from the cultural meanings with which they are
endowed. It is a three-stage process of meaning transfer that involves the formation of celebrity
image, transfer of meaning from celebrity to the brand, and finally from the brand to the consumer.
Figure 1: The Meaning Transfer Model
To explain it with the help of an example, we can take the case of Rahul Dravid and Castrol. The
cricket icon is seen as “Mr. Dependable”. And when he endorses Castrol, an image of
“dependability” is tagged on to the brand under promotion.
5. THE IMPORTANCE OF CELEBRITY MANAGEMENT
In a world full of faces, the ones’ which bolt from the blue are perhaps of the celebrities. The
advertisers are always on the look out for such faces for the purpose of endorsement. But, the
major challenge before them is to find the right faces for their brands or in other words celebrity
management. McCraken quotes: “In the best of all possible worlds, the marketing or
advertising firm first would determine the symbolic properties sought for the product... It
would then consult a roster of celebrities and the meanings they made available, and
taking into account budget and availability constraints, would choose the celebrity who
best represents, the appropriate symbolic properties.” This suggests that the image of the
celebrity must fit or be congruent with the product which can be explained from the theoretical
perspective using a social cognition framework.
Impact of Celebrity Endorsement on overall Brand

7. 5.1 Schema-Based Expectancy Theory
A schema is an abstract, cognitive structure that represents some stimulus domain, e.g., a person,
place, event, or thing. It is organized through experience and consists of a knowledge structure.
They can determine what information will be encoded or retrieved from memory. Schemas are
involved in encoding, interpretation, retention, and retrieval of information. They can influence
perceptual cognitive activities through the generation of expectancies. In the case of well-known
celebrities, individual would typically have personal relevant schemas (person schemas),
acquired over time. When a celebrity endorses a brand, the characteristics of that celebrity may
be compared with the advertised attributes of the brand by the audience for congruence or fit with
their available person-schema. The degree of congruence between the new information (the
brand attributes) and the existing information (the celebrity's characteristics) may then influence
the level of recall of the new information.
The Associative Network Model suggests that information inconsistent with an individual's
schema may be quite salient and information will, therefore, be attended to more closely and be
processed more deeply. Therefore, this information would be conceptually linked to a larger
number of items in the memory, compared to a piece of information that is consistent with the
schema.
While the Schema-Pointer + Tag Model proposes that consistent or typical items are encoded in
terms of a "pointer" to a generic schema that contains the typical components and relationships
for that particular knowledge domain. The atypical or incongruent items are, on the other hand,
encoded with a rather distinctive "tag" and stored as a unique, separate unit. This leads to higher
recalling for incongruent items than for typical items. And empirical researches confirm
significantly higher recalling when the image of the celebrity is congruent with the brand image.
Therefore, celebrity management it is very important for the success of any brand.
"If commerce is the engine of our economy, then advertising is the spark. Responsible
advertisers are the drivers who keep us on the right track, leading to a richer, more
benevolent society."
-Brian Philcox
6. CELEBRITY SELECTION
There are various scientific ways in which the right celebrity is selected for the product
endorsement, which are discussed hereunder.
Impact of Celebrity Endorsement on overall Brand

8. 6.1 Stereotyping
Tellis defines stereotypes as perceptions and depictions of individuals based on simplistic, biased
image of the group to which they belong, rather than on their own individual characteristics. For
example: its’ better to select celebrities who say are teens for chocolate advertisements and
females for detergent ads etc.
6.2 The TEARS Model
The attributes highlighted by the acronym “TEARS” are gauged for celebrity selection. These are:
o Trustworthiness: For example – Legendary actor Amitabh Bachchan who is an icon of
trust; promoting ICICI Bank.
o Expertise: For example – Golfer Tiger Woods for a sports brand.
o Attractiveness: For example – Tennis player Anna Kournikova who earns 10 Million
dollars per year in just endorsement.
o Respect: For example – Former Miss World Aishawarya Rai and the Eye donation
campaign.
o Similarity: For example – a child artist promoting a chocolate brand.
A celebrity scoring high on all the above attributes can turn out to be a good endorser for the
brand under question.
6.3 The no TEARS Model
The “no TEARS” approach is a tool for managers and their advertisers how to go about selecting
celebrities so as to avoid the pitfalls from making an unwise decision. It gauges the following
information:
o celebrity & audience match up,
o celebrity and brand match up,
o celebrity credibility,
o celebrity attractiveness,
o cost consideration,
o a working ease and difficulty factor,
o an endorsement saturation factor,
o a likelihood-of-getting-into-trouble factor
Selecting the right celebrity does more than increasing sales; it can create linkages with the
celebrities’ appeal, thereby adding new dimension to the brand image. Research conducted by
Katherine Eckel has revealed celebrities can get people to make a better choice but cannot
influence ‘people to make a foolish choice’. The success of celebrity endorsement in India can be
sought from a market research conducted earlier which found that 8 out of 10 TV commercials
scored the highest recall were those with celebrity appearances. A few examples: Sachin
Impact of Celebrity Endorsement on overall Brand

9. Tendulkar-Adidas, Sourav Ganguly-Britannia, Leander Paes and Mahesh Bhupati-J. Hampstead,
Shah Rukh Khan-Pepsi, Sushmita Sen-Epson and Aishwarya Rai-Coke.
7. WHY CELEBRITY ENDORSEMENT FAILS?
There maybe cases where brands are not able to take-off even after the backing of celebrities.
And this leads to speculations in the Ad World on the soundness of celebrity endorsement as an
effective communication strategy.
7.1 The Reasons
According to leading management thinker Dr Seamus Phan, “Many celebrity endorsements fail
because they identify a celebrity they like in an emotive and un-researched manner and
then try to create advertising to force-fit the celebrity into the creative concept.” Therefore,
the advertisers must associate the celebrity to the advertisement and not vice versa. Thinking on
the similar lines, the advertisers shouldn’t identify the brand to associate with the celebrity but do
vice versa. The success of celebrity endorsement also depends upon the capacity, knowledge,
experience, and qualification to talk about the product. Failure may be attributed to improper
positioning (Example: Amitabh Bachchan, Abhishek Bachchan & Maruti Versa), negative
perception after use of product/service (inferior products), misapprehension of the meaning
of the endorsement, etc.
"The philosophy behind much advertising is based on the old observation that every man
is really two men -- the man he is and the man he wants to be."
- William Feather
Another reason for the celebrity endorsement to turn against the brand is due to
“Overshadowing.” This happens when the celebrity is larger than the brand being endorsed.
And unfortunately though the celebrity generates higher levels of attention among viewers, the
impression is not always strongly linked to the advertised brand. Finally, brand may also fail to get
noticed given a recent negative publicity of the celebrity endorser. Example: Michael Jordan lost
his endorsement deals when he announced in 1991 that he’s HIV-positive. It wasn’t until July
2003 that he landed his first endorsement deal since the announcement.
7.2 The Solutions
As discussed, celebrity management is very crucial to avoid the brand-celebrity disconnect and
subsequently brand failures. Proper market research should be carried out and right positioning
strategies should be in place. If the consumers have questions in their minds regarding the quality
Impact of Celebrity Endorsement on overall Brand

10. or performance of the product then even God cannot save the brand. There shouldn’t be any
ambiguity or confusions when showing the celebrity in the advertisement. The obvious solution to
the problem of overshadowing is to make sure that both the advertisement and the celebrity are
focused on the brand or product. To avoid any bad publicity arising out of celebrity defames,
companies may resort to multiple celebrity endorsement. For Example: Pepsi while capitalizing
on the popularity of cricket and films in India used several cricketers and film stars in their ads. So
when Azharuddin & Jadeja got embroiled in the match-mixing controversy, Pepsi’s severed its
association only with these stars, but its relationship with cricket continued.
7.3 The Symbiotic Model
Based on our understanding of the celebrity endorsement process we can propose our own
model taking cue from the biological kingdom. There are various symbiotic relationships that can
exist between two organisms. Similarly, we can visualize two entities “brand” and “celebrity”. To
achieve a perfect success there should be absolute symbiosis between the two entities. There
may be one of the six effects to the celebrity endorsement process:
Figure 2: The Symbiotic Model
o Mutualism (M): Both help each other (Example: Tata & Narayan Karitiken)
o Commensalism (C1): Only one among them is benefited (Example: A failed
endorsement)
o Parasitism (P): One is benefited; other is harmed (Example: Azharuddin and Pepsi. Also,
Home Trade & Shah Rukh Khan, Sachin Tendulkar, Hritik Roshan)
o Neutralism (N): None of them benefited or harmed (Example: Amitabh Bachchan,
Abhishek Bachchan and Maruti Versa)
o Amensalism (A): Only one of them is harmed; other unaffected
o Competition (C2): Both are harmed
Impact of Celebrity Endorsement on overall Brand

11. Celebrity endorsement is a complex process of balancing your risk with your gains.
"The pure and simple truth is rarely pure and never simple."
-Oscar Wilde
8. CELEBRITY ENDORSEMENT: THE ISSUES INVOLVED
There are several factors to consider before resorting to celebrity endorsement. There is no
single formula to win in the world of marketing. A company must analyze the prospect of
endorsement from 360 degrees, prior to product promotion.
8.1 Price vs. Profit
The most important issue is that of return on investment (ROI). Companies need to perform a
cost-benefit analysis prior to endorsement. The process of gauging the effectiveness of
endorsement on the overall brand is but difficult. The companies expect to bring, in the long run,
future sales, revenues and profit from the present investments on celebrity endorsement.
Celebrity endorsement is an expensive means of brand promotion and the price burden almost
always shifts on to the consumers; if not then it narrows the companies’ profit.
8.2 Multiple Brand Endorsement vs. Multiple Celebrity Endorsement
In the advertising landscape we find either a celebrity endorsing multiple brands or multiple
celebrities being used to endorse a single brand. Sachin Tendulkar for example in 2002 endorsed
12 brands (including Pepsi, Boost, Colgate Total, Gillette, Britannia Tiger, Fiat Palio, TVS Victor,
Fiat Sienna, MRF, Adidas, Visa Cards and Home Trade). Tripp et al, says that the endorsement
of as many as four products negatively influences the celebrity spokesperson’s credibility and
likeability.
Figure 3: Multiple Brand Endorsement (Shah Rukh Khan)
Also, the use of multiple celebrities to endorse a brand may hinder the meaning transfer process
and thus lead to confusion among the consumers.
Impact of Celebrity Endorsement on overall Brand

12. Figure 4: Multiple Celebrity Endorsement (Adidas & Hyundai Santro)
9. CONCLUSION
Celebrity endorsement can be a goldmine or a minefield for a company’s brand building process.
There have been extensive studies relating to the process of celebrity endorsement and brand-
building. These studies indicate that celebrity endorsement has worked well in some consumer
segments while failing in others. Few celebrities have been more successful than those with
almost parallel fame. So the role of celebrity endorsement in the advertising space is equivocal
and cannot be seen as a assured strategic tool to win profits, market share, revenues, etc.
Consumers can identify the clear difference between a good script and a good brand idea. For
example, while Pepsi's Sachin and Bachchan (kite flying) ad was seen as one with a good script,
Coca-Cola's Thanda Matlab… was seen as an insightful and strong brand idea. For all the flak it
drew in its vainglorious attempts to run down competition, Thumbs Up was seen as the only
example of seamless linkage between brand positioning and brand celebrity.
“Brand” is the most valuable asset of any company; building its image is thus of paramount
importance. Any thoughtless adventure can be like the Sword of Damocles upon your head.
Celebrities do not make brands but ideas do. If the former were true then brands would have
vanished when the hype and hoopla around the celebrities faded. Celebrity endorsement is also
one of the ideas. But, its’ easy to come up with new ideas; the hard part is letting go of what
worked for you two years ago, but will soon be out-of-date. Therefore, it is imperative to invest in
good ideas; which will bring good returns. Thus the need of the hour is to focus less on your
Return-on-Investment and think more in terms of your Return-on-Ideas.
“There is one thing which is stronger than all the armies of this world, and that is an idea
whose time has come”
-Victor Hugo
Impact of Celebrity Endorsement on overall Brand

13. REFERENCES
Bergstrom Christian & Skarfstad Rikard, May 27, 2004, Celebrity Endorsement – case study of J Lindeberg, Lulea
Bhusan Ratna, January 29, 2004, Celebrities: Bang for buck?, India, www.hinduonline.com
Chandran Rina, April 08, 2003, Coke, Pepsi bothered by naughty endorsers- celebrity matlab trouble, India,
www.hinduonline.com
Harwood Gary, May 16, 2004, Do celebrity endorsement build brands?, South Africa, www.biz-community.com
Jayarangan, L, September 09, 2003, Ad celebrities, India, www.hinduonline.com
Joshi Sangita, April 24, 2003, Face value, India, www.hinduonline.com
Kanaujia Deepak, August 17, 2004, How to build a powerful brand?, India, www.indiainfoline.com
Khatri Manoj, Is it smart to use celebrity endorsement for branding?, India, www.etstrategicmarketing.com
Kumar Ramesh, S, May 15, 2003, Cutting through celebrity clutter, India, www.hinduonline.com
Radhakrishnan Shanker, July 13, 2002, Sachin, Shah Rukh have top recall value:Study, India, www.hinduonline.com
Schlecth Christina, January 15, 2003, Celebrities’ impact on branding, Columbia,
Sen Shunu, May 16, 2002, Celebrity need to be at home with the trade, India, www.hinduonline.com
Sridhar Ramanujam, January 01, 2004, Of Celebrities or crisis?, India, www.hinduonline.com
Swamy Srinivasan, K, April 07, 2005, Is advertising really building brands? , India, www.financialexpress.com
Waker Dave, Celebrity Ads that sell, North America
Zafer Erdogan, B & Baker Michael, J 1999, Celebrity Endorsement: Advertising Agency Managers’ Perspective,
www.cjsm.com
Impact of Celebrity Endorsement on overall Brand

14. WEB LINKS
www.agencyfaqs.com
www.biz-community.com
www.buildingbrands.com
www.domain-b.com
www.etstrategicmarketing.com
www.fcps.k12.va.us
www.financialexpress.com
www.hinduonline.com
www.indiainfoline.com
www.investorwords.com
www.lockergnome.com
www.mediaware-infotech.com
www.netvigator.com
http://03.indiatimes.com
Impact of Celebrity Endorsement on overall Brand