Project Materials

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

The level of competition in consumer goods market is overwhelming covering new and existing products. Achieving sales and maximizing profitability depends on how effectively firm seeks to use several marketing promotional tools to strategically attract and convince consumers.

Out of these promotional tools is advertising, which according to Opuni et al. (2014) is used to create awareness about a particular product. But as a result of congestion of advertising contents and consumers being exposed to tons of voices and images on the media such as television, radio, newspapers, billboards and websites, sellers are now adopting new approach to promotion using celebrity endorsement.

There is the tendency that people will always associate themselves with celebrities and most especially within the entertainment industry, which in turn make buyers to quickly associate themselves with product endorsed by celebrities. Celebrities are individuals who enjoy public recognition by a large share of a certain group of people.

Friedman & Friedman (2011) defined the term “celebrity” as an individual who is known to the public, for example, actors, sports figure, and entertainers, among others. Dean and Biswas (2013) suggested that celebrity endorsements can contribute to higher consumer awareness, advertisement ratings and favorable product evaluations.

It is argued that successful celebrity endorsements could have a substantial impact on firms’ financial returns (Erdogan, Baker and Tagg, 2013). Celebrity endorsement becomes effective when consumers can find a clue of the endorsers’ genuine likeness of the product rather than possible earning from the endorsement.

Research has shown celebrity endorsement has multiple effects on the product and message performance: credibility, message recall, memory and likeability of the advert and purchasing intentions (Erdogan, 2010; Ericsson and Hakansson, 2009).

However, celebrity endorsement is not a trivial assignment both in terms of financial and image consequences of bad endorsement. Consequently, firms expend substantial attention and financial resources to attract and retain the right celebrity for their products.

Poor judgment in the choice of celebrity endorser could harm not only sales and corporate image but may hasten commercial failure of products in markets where morality and ethical standards are of high essence.

In consequence, celebrities can be very useful when it comes to promoting brands through the process of endorsement (Bhasin, 2018). However, firms enjoy high popularity among other brands when using celebrity endorsers (Deshwal, 2015).

Thus corporations invest great amount in convincing celebrities to endorse their products/brands. In Pughazhendi and Ravindran (2012) who stressed that endorsers are referred to “any individual who enjoys public recognition and who uses this recognition on behalf of consumer goods by appearing with it in an advertisement”.

Firms often use this type of promotional strategy to communicate new product attributes to potentials and retaining existing customers. Currently, this form of promotional approach seems to be increasing across all types of products in media presentation. Erdogan (2012) asserted that with the level of intense competition celebrity endorsement will inevitably provide differentiation and strengthen brand image.

Thus, firm using celebrities should seek to fulfill the following objectives of familiarity, relevance, esteem and differentiation. And by differentiation, celebrities should stand out amongst others. By esteem, celebrities‟ credibility must be considered.

By relevance, there should be a link and connectivity from celebrities to the product and audience. And by familiarity, we mean that the endorser/celebrity is recognized by the target market (Lalwani, 2011).

Vipul (2011) opined that the success of any brand through celebrity endorsement can only be achieved with the cumulative of Celebrity-Target Audience Match, Celebrity Values, Costs of Acquiring the Celebrity, Celebrity Regional Appeal Factors, Celebrity-Product Match, Celebrity Controversy Risk, Celebrity Popularity, Celebrity Availability, Celebrity Physical Attractiveness and Celebrity Credibility.

Furthermore, Khan et al., (2016).Reported that consumers are more committed to product when they trust that a celebrity is actually involved with the product. Further studies are of similar view that involving a celebrity in an advertisement shows powerful results on credibility, recall and acceptability of that advertisement and finally leading to sales. (Menon et al., 2013; Laffety and Golsmith, 2010).

In the studies conducted by Dean and Biswas (2013) it was also concluded that celebrity endorsement can contribute greatly to consumer awareness, advertising rating, favorable product evaluations and firm’s financial returns (Erdogan et al., 2013; Oyeniyi, 2014).

Studies have also shown that celebrity endorsement have multiple effect on the product performance, product credibility, likeability and memory of the advert, sales growth (Erdogan, 2010; Ericsson and Hakansson, 2009; Oyeniyi, 2014).   Therefore, this current study seeks to examine celebrity endorsement and sales growth of beverage manufacturing firms.

STATEMENT OF PROBLEM

Celebrity endorsement is a tool for consumer exposure in the areas of information, education, and persuasion for the patronage of a firm’s products and services. Undoubtedly, the expectation of every meaningful business organization is to thrive successfully in a competitive business environment. This can only be achieved via gaining market acceptance and brand preference.

Consumers always approach the market place with well defined and established sets of taste and preferences (Hoyer and Brown, 2010). This makes it difficult to position products in already flooded market. Gone are the days that producers will always say, ”consumers, beware” We are in the era that consumers say,” producers beware’

This is because there are so many alternative and competing brands crying out to be heard and noticed and it is only dynamic marketers who understand customers’ supremacy can make headway in this competition and succeed.

It is against this backdrop that celebrity endorsement and sales growth of Beverage Manufacturing Firms in Port Harcourt became the focus for this research works.

AIMS OF THE STUDY

The major aim of the study is to examine celebrity endorsement and sales growth of Beverage Manufacturing Firms in Port Harcourt. Other specific objectives of the study include;

1. To examine the factors to be considered in celebrity endorsement and sales growth of Beverage Manufacturing Firms in Port Harcourt.
2. To examine the endorsement strategy used to increase sales growth of Beverage Manufacturing Firms in Port Harcourt.
3. To examine the impact of celebrity endorsement on sales growth of Beverage Manufacturing Firms in Port Harcourt.
4. To examine the various risks associated with celebrity endorsement.
5. To examine the relationship between celebrity endorsement and sales growth of Beverage Manufacturing Firms in Port Harcourt.
6. To determine the extent to which celebrity endorsement influences consumers’    preference towards a company’s brand.

RESEARCH QUESTIONS

1. What are the factors to be considered in celebrity endorsement and sales growth of Beverage Manufacturing Firms in Port Harcourt?
2. What is the endorsement strategy used to increase sales growth of Beverage Manufacturing Firms in Port Harcourt?
3. What is the impact of celebrity endorsement on sales growth of Beverage Manufacturing Firms in Port Harcourt?
4. What are the various risks associated with celebrity endorsement?
5. What is the relationship between celebrity endorsement and sales growth of Beverage Manufacturing Firms in Port Harcourt?
6. What is the extent to which celebrity endorsement influences consumers’ preference towards a company’s brand?

RESEARCH HYPOTHESES

Hypothesis 1

H0: There is no significant impact of celebrity endorsement on sales growth of Beverage Manufacturing Firms in Port Harcourt.

H1:  There is a significant impact of celebrity endorsement on sales volume of Guinness malt distribution in Enugu metropolis.

Hypothesis 2

H0: There is no significant relationship between relationship between celebrity endorsement and sales growth of Beverage Manufacturing Firms in Port Harcourt.

H1: There is a significant relationship between relationship between celebrity endorsement and sales growth of Beverage Manufacturing Firms in Port Harcourt.

SIGNIFICANCE OF THE STUDY

The finding of this study will be of immense benefit to the following; the companies and their stakeholders, advertising agencies; consumers of beverage products; the government, researchers and students. This study would also be of immense benefit to students and scholars who are interested in developing further studies on the subject matter.

SCOPE AND LIMITATION OF THE STUDY

The study is restricted to celebrity endorsement and sales growth of Beverage Manufacturing Firms in Port Harcourt.

LIMITATION OF THE STUDY

Financial constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview)

Time constraint: The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

DEFINITION OF TERMS

Celebrity – Celebrities are people who enjoy specific public recognition by large number of certain group of people.

Celebrity Advertising – Celebrity advertising is the use of a public figure’s likeness for the purpose of selling a product or service