Editorial Board

A Refereed Monthly International Journal of Management

Celebrity Endorsement: A Study of Indian Banks

Author

ABSTRACT:

Indians are always fascinated towards Bollywood and Cricket celebrities. They treat these celebrities as their gods. Keeping it in mind, Celebrity endorsement is a promotional strategy which is very popular among the Indian marketers. Be it FMCG, automobile, banking, electronics equipment, real estate industry all of them are using celebrities to endorse their respective brands. The marketers believe that the charisma of the celebrities changes the fortune of their companies.

In the present study, the authors have made an attempt to study about the impact of celebrity endorsement on the consumer behavior in the Indian Banking Industry.

Keywords: Celebrity endorsement, celebrity, brand, banking industry

INTRODUCTION:

Banking sector plays a very important role in development of any economy. The economic health of any country can be studied by studying the banking sector of that country. The Indian banking sector has seen a lot of structural changes since its inception. The following Table No. 1 gives brief information about the major structural changes that occurred in the Indian Banking industry.

Table No. 1

Source: Extracted from various websites

In the year 1993, the Reserve Bank of India issued policy guidelines for the entry of private sector banks in the banking system of the country. This move increased the competition in the Indian banking industry. This policy guideline affected both the public sector and private sector banks. the On the one hand the monopoly of public sector came to an end whereas, on the other hand, the private sector banks were finding it hard to deal with the strong position of the public sector banks.

All the banks may be it from public sector, private sector or foreign banks were facing stiff competition with each other. Public sector banks focused on providing banking services to rural, semi-urban and urban areas equally whereas the private sector and foreign banks gave more preference to serving the customers of semi-urban and urban areas.

Table 2 makes it clear that, as at end-March 2017, Public Sector Banks have around 32% branches in rural areas, 28% in semi-urban, whereas around 40% branches in urban and metropolitan areas. Private Sector Banks have around 20% branches in rural areas, 32% in semi-urban, whereas around 48% branches in urban and metropolitan areas. Foreign Banks have around 3% branches in rural areas, 3% in semi-urban, whereas around 94% branches in urban and metropolitan areas.

Keeping the above analysis in mind, it can be said that public sector banks are primarily focusing on rural and semi-urban areas (60% approximately), private sector banks are giving equal attention to  rural & semi-urban and urban & metropolitan areas whereas foreign banks are mainly focusing on the customers of urban and metropolitan areas for their business (80%).

Table No. 2: Types of Banks & their Branches

Source:https://www.rbi.org.in/Scripts/PublicationsView.aspx?id=18069

As time passed, the banking sector understood the importance of promotion strategy in fighting competition. The banks of various sectors started using celebrity endorsement to build and enrich their brand equity.

It is evident from Table 3, that out of the seven (7) Public sector banks gone for celebrity endorsement, four (4) have chosen sports star to endorse their bank,  two (2) have chosen film stars and one has gone for endorsement by its own Chairman.

Table 3: Celebrity Endorsement by Public Sector Banks

Source: Extracted from information available on various websites

It is clear from Table 4 that four (4) Private sector banks had gone for celebrity endorsement and all have shown faith in film stars to endorse their banks at different point of time.

Table 4: Celebrity Endorsement by Private Banks

Source: Extracted from information available on various websites

Table 5 makes it clear that foreign banks are also using celebrities to endorse their banks and the services which they are offering but all the three banks which have used celebrities have shown their inclination towards sports-star as compared to film stars.

Table 5: Celebrity Endorsement by Foreign Banks

Source: Extracted from information available on various websites

REVIEW OF LITERATURE

Rashid et al. (2002) found that the advertising using celebrities influenced the Malays, Chinese, and Indian consumers in making decisions to purchase a product.

According to Khatri (2006) celebrity endorsements, serves as an aid to increase product recall and influence purchase. But on the other hand, it can also create problems if it is not accompanied by a powerful idea and effective positioning.

Biswas et al. (2006) examines the differential effects of celebrity and expert endorsements on consumer risk perceptions. They found that for high technology—oriented products there will be stronger effects of expert endorsers than celebrity endorsers in reducing consumer risk perceptions. 

Kim et al. (2007) found that participants evaluated an endorsed product more favourably when the fit between the celebrity athlete endorser and the endorsed product was congruent.

Amos et al. (2008) conducted a study which provides a relationship between celebrity endorser source effects and effectiveness in advertising. According to them celebrity trustworthiness, celebrity expertise, and celebrity attractiveness appears to capture the three most influential source effects on purchase intentions, brand attitudes and attitudes towards the advertisement.

The study conducted by Spry et al. (2011) in Australia city showed that a celebrity endorser should be one who is perceived as credible based on their attractiveness, expertise and trustworthiness. Moreover, their research concluded that even a celebrity having a moderately low credibility also proved to be able to build the brand.

Elberse et al. (2012) found that celebrity endorsements are associated with increasing sales in an absolute sense and relative to competing brands.

According to the study conducted by Wang et al. (2012), celebrity endorsements, advertising appeal, and advertising significantly affect consumer purchase intentions. 

Chan et al. (2013) had conducted a study to find the most appealing elements of advertisements using celebrity endorsements among 76 Chinese adolescents aged 13 to 19. Their study concluded that interviewees were best able to recall celebrity endorsers whom they considered attractive, funny and expressive.

Biswas et al. (2006) examines the differential effects of celebrity and expert endorsements on consumer risk perceptions. They found that for high technology—oriented products there will be stronger effects of expert endorsers than celebrity endorsers in reducing consumer risk perceptions. 

An interesting study was conducted by Kooli et al. (2018) to find the impact of celebrity endorsement on buying behavior in Arab countries. 32 interviews with some celebrities of The Sultanate of Oman and the United Arab Emirates had been conducted. The respondents have been taken to know their perception regarding the celebrity endorsement and its attributes and the impact on customer buying behaviour and effect on sales. Celebrities still believe that normal advertising is more effective than celebrity endorsement.

OBJECTIVES OF THE STUDY

1.      To analyze the impact of celebrity endorsement on consumer behavior.

2.      To examine the relationship between background characteristics and choice of celebrities.

3.      To study the characteristics preferred in a celebrity endorser and measure whether the customers are able to recall celebrities association with brand.

DATA AND METHODOLOGY

Initial exploratory research was conducted to get some idea about the distribution of banks in respect of private and public sector, celebrity endorsement in banking sector, characteristics of celebrities, types of celebrities used etc. The structured data obtained by enumerating these attributes allowed us to conduct a single cross-selection description research on celebrity endorsement in banks.

Initial focus group discussions and interviews with bankers and account holders were conducted, as well as secondary data from the different sources were analysed. Using the inputs from this exploratory research, we formulated a comprehensive online questionnaire to further refine our understanding on the celebrity endorsement in banks.

The collected data are analyzed through descriptive statistical tools such as percentage and mean which have been used to describe the profiles of respondents, since how many years customers are having account in the bank, preference of celebrity etc. In order to measure the relationship between two attributes, authors applied chi-square test of independence. In a chi-square test of independence, we test the null hypothesis that the two attributes of the elements of a given population are not dependent (they are not associated) against the alternative hypothesis, that two attributes are dependent (associated). 

RESULTS AND DISCUSSIONS

To achieve the above mentioned objectives, authors have collected information from 130 respondents. But out of 130 respondents only 110 responses are considered for study. Table 6 shows the distribution of respondent as per their background characteristics. This table also explains the number of years the customers are having account in public sector, private sector and foreign banks. Table 6 indicates that age of the seventy five percent respondents are less than 30 year and around 50% respondent belong to 35+ age group. The information is taken from around 26% female respondents. The occupation of respondent are distributed in four categories and maximum respondent are salaried employees followed by the student. Respondents are taken from both married and single people. Incomes of respondent are distributed in five groups.

 As per Table 6, 25% customers are having account in public sector banks since 10 years but only 14% in private sector banks. Around 60% respondents are having account in public sector banks in last five years. Recently more accounts are opened in private bank compare to public bank. It indicates, now people prefer open are bank account in private banks. People have started to open account in foreign bank also. 

To study the preferences of customers while opening an account in a bank, authors have collected information related to the preferences of respondents on different parameters. Table 7 shows that more than 50% customers consider ‘interest rate offered by that bank’ as an important parameter followed by ‘minimum balance required’ while opening a bank account. People do not bother which celebrity is endorsing bank or whether bank belongs to private or government sector while opening an account. Customers also prefer number of ATMs of particular bank in the city and investment/loan opportunities in banks.

Respondent were asked about the characteristics of celebrity which they look for in the celebrity endorsing bank (Table 8). The four characteristics of celebrity were given i.e personality, facial attractiveness, behavior in public life and skill of celebrity. Customers have shown more inclination towards behavior of celebrity in public life followed by skill of celebrity. They also prefer personality but they did not prefer facial attractiveness. To check the dependency between background variables and preference of characteristics of celebrity, authors have considered, first preference of respondents among four different preferences for characteristics like personality, behaviour in public life and skill. Table 8a shows that, preference of characteristics of celebrity does not depend on gender, occupation of respondent, marital status, income and age of the respondents. 

The respondents were asked to tell about their choice of celebrity for endorsing the bank. Around 42% bank customers wanted, business executives should endorse the bank. And this percent for Bollywood celebrities and sport stars are 15% and 12% respectively.

Chi-square independent test has been applied to examine the association ship between background characteristic (Gender, Occupation, Marital status, income, age) and choice of celebrity and results are given in Table 9. The researchers found no dependency among gender, income and age with preferences of celebrity. Marginal association ship was found between type of celebrity with occupation and marital status.  Table 10 makes it clear that around 75% of the respondents were able to recall correctly the celebrities endorsing the banks in which they have their accounts.

Celebrity endorsement is widely used to promote Drinks and Confectionary, Personal appearance products, Home Products and Appliances, automobiles and Services like insurance; telecommunication etc. in India. Many studies have shown that celebrity endorsements plays a very important role in affecting consumer buying behavior in case of above mentioned goods and services. Banking Industry has also started using it. Our study shows that the banking customers are able to recall the celebrity endorsing the bank easily in which they have accounts but they are not taking celebrity endorsement as an important parameter while they are taking their purchase decision. They are considering banking services related parameter more seriously as compared to celebrity endorsements. Majority of the respondents are of the view that business executives should endorse banks as compared to Bollywood and sports celebrities. Behaviour of celebrities in the public was considered to be more important than any other characteristics.

Table 6: Distribution of respondents as per their background characteristics

Table 7:  Parameters considered while opening a bank account by customer.

Table 8:  Distribution of respondents as per Characteristics likes in their favorite celebrity

Table 8a: Dependency between background characteristics and preference of characteristics of celebrity

Table 9: Dependency between background characteristics and types of celebrity

Table 10: Recall Value of Celebrity Endorsers

REFERENCES:

1.      Rashid, M. Z. A., Nallamuthu, J., & Sidin, S. M. (2002). Perceptions of advertising and celebrity endorsement in Malaysia. Asia Pacific Management Review, 7(4).

2.      Khatri, P. (2006). Celebrity endorsement: A strategic promotion perspective. Indian media studies journal, 1(1), 25-37.

3.      Biswas, D., Biswas, A., & Das, N. (2006). The differential effects of celebrity and expert endorsements on consumer risk perceptions. The role of consumer knowledge, perceived congruency, and product technology orientation. Journal of advertising, 35(2), 17-31.

4.      Kim, Y. J., & Na, J. H. (2007). Effects of celebrity athlete endorsement on attitude towards the product: the role of credibility, attractiveness and the concept of congruence. International Journal of Sports Marketing and Sponsorship, 8(4), 23-33.

5.      Amos, C., Holmes, G., & Strutton, D. (2008). Exploring the relationship between celebrity endorser effects and advertising effectiveness: A quantitative synthesis of effect size. International journal of advertising, 27(2), 209-234.

6.      Spry, A., Pappu, R., & Bettina Cornwell, T. (2011). Celebrity endorsement, brand credibility and brand equity. European journal of marketing, 45(6), 882-909.

7.      Elberse, A., & Verleun, J. (2012). The economic value of celebrity endorsements. Journal of advertising Research, 52(2), 149-165.

8.      Wang, J. S., Cheng, Y. F., & Chu, Y. L. (2013). Effect of celebrity endorsements on consumer purchase intentions: Advertising effect and advertising appeal as mediators. Human Factors and Ergonomics in Manufacturing & Service Industries, 23(5), 357-367.

9.      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.

10.  Kooli, C., Al Habsi, A., & Abadli, R. (2018). Celebrity Endorsement and Its Effect: Arabic World Perspectives. Int. J. Adv. Res, 6(2), 182-188.