impact of celebrity endorsement on soft drinks with specific reference to brand coca-cola

IMPACT OF CELEBRITY ENDORSEMENT ON SOFT DRINKS WITH SPECIFIC REFERENCE TO BRAND COCA-COLA

1. Introduction

Soft drinks are gradually overtaking hot drinks as the biggest beverage sector in the world, with consumption rising by around 5 percent a year according to a recent report from Zenith International. But while the US remains the biggest market for now, Asia is likely to be the main driver of sales growth in the future. This paper provides insights on the market trends facing the soft drink industry. It outlines the specific challenges confronting the companies operating in this arena, such as ever-changing consumer tastes, a growing emphasis on product safety, and the increasing power of global retailers. This paper explores opportunities for process improvement and cites specific solutions that can empower soft drink companies to meet industry challenges, both today and tomorrow, and drive profitability and growth.

2. Industry background and overview

The business environment for the soft drink industry

To understand the soft drink industry, one must first look at the beverage industry as a whole. In recent years, the beverage industry has been faced with new opportunities and challenges. Changing consumer demands and preferences require new ways of maintaining current customers and attracting new ones. Amid ever-increasing competition, beverage companies must intensely court customers, offer high-quality products, efficiently distribute them, ensure safety, and keep prices low – all while staying nimble enough to exploit new markets by launching new products. In this environment, success depends on a company’s ability to quickly capitalize on emerging opportunities.

The beverage industry is extremely competitive, with private labels greatly influencing the environment. A few global “beverage giants” produce many brands, but those brands fall into self-contained categories as well. Thus, the


“beverage” market is not really one market; it is a collection of markets with many different types of products, processes and requirements. The beverage market includes several different products that can be grouped into two main categories: alcoholic (beer, wine, spirits) and non-alcoholic (carbonated soft drinks, juice, water, sports drinks, etc.). Each category, and often each type, of beverage has its unique issues and needs.

Within the beverage industry, the soft drink market has been showing significant growth in most countries in the recent years, particularly in the emerging markets. While the U.S. represents the largest overall soft drink market and has the highest per capita consumption level, most markets are showing double-digit growth both in terms of volume and value. For instance, Mexico and Poland are two markets in particular that stand out.

Within the soft drink sector, carbonated soft drinks (CSD) continue to dominate the market, encompassing traditional favoured beverages as well as sugar- and caffeine-free drinks, which have soared in popularity. Simultaneously, manufacturers are focusing on innovation in order to maintain growth. New product categories are emerging swiftly and many are already consolidating, as consumer demand continues to shift toward healthier products, such as bottled water, juices and juice drinks, sport drinks, ready-to-drink teas, and functional beverages.

Recent trends in the food and beverage market centre on product safety, quality, consumer demand, and channel complexity (including the growing influenceof retailers on the supply chain). These trends have impacted the beverage industry in general and the soft- drink sector in particular.

In this paper, we will focus on the issues relevant for middle-market soft drink companies, defined as soft drink producers or bottlers with an annual turnover of


$500 million to $2 billion USD. Nonetheless, the majority of the points raised in the paper will be applicable to all soft drink companies, regardless of size.

Business performance improvement priorities

– The path to value

Against the backdrop of these market challenges, how can soft drink companies drive proitable growth and create value for their owners or shareholders?

In practical terms, there are four areas on which companies in the soft drink business need to focus:

•Revenue protection and enhancement – for example, as driven by product and packaging innovation, differentiated quality, improved product availability, and better management of customer relationships

•Cost reduction/margin improvement – for example, through improved operational efficiency, lower labour costs, reduced waste and the capture of operational synergies from acquisitions

•Improved asset utilization – for example, through reduced inventory levels of soft drinks held in cold storage and faster turnaround of re-usable transit packaging in the supply chain

•Regulatory/assurance – for example, through demonstrating quality by participating in retailer assurance schemes and assisting trade customers in achieving full compliance with new traceability legislation.

3. Market trends and industry challenges


In order to survive in this environment, companies must consider the market trends that will likely shape the industry over the next few years. This will help soft drink companies to understand the challenges they will encounter and to turn them into opportunities for process improvement, enhanced flexibility and, ultimately, greater profitability.

Market trends for the soft drink industry can be summarized by six fundamental themes:

1. Changing consumer beverage preferences, featuring a shift toward health-oriented wellness drinks

2. Growing friction between bottlers and manufacturers in the distribution system

3. Continually increasing retailer strength

4. Fierce competition

5. Complex distribution system composed of multiple sales channels

6. Beverage safety concerns and more-stringent regulations

Consumers turn to wellness and healthy drinks

In much of the developed world, a significant portion of the population is overweight or obese. This includes two-thirds of Americans and an increasing number of Europeans. Consequently, many people have started to actively manage their weight and change their lifestyles, a shift that is reflected in their choices in the beverage aisles:

•Demand has increased for beverages that are perceived to be healthy


•Energy drink consumption has also climbed, due to the increasingly active lifestyles of teenagers

This trend towards healthier drinks has created a number of new categories, and changed the consumption trends of the beverage industry as a whole. While previously dominated by carbonated soft drinks, the industry is now more evenly balanced between carbonates, and product categories with a healthier image, such as bottled water, energy drinks and juice.

While carbonates are still the largest soft drink segment, bottled water is catching up fast, with an average of 58 litres consumed annually per capita. Among individual countries, Italy ranks number one in bottled water consumption, with the average Italian drinking 177 litres per year. Overall, bottled water represents the fastest growing soft drink segment, expanding at 9 percent annually. This growth is being partially driven by increasing awareness of the health benefits of proper hydration.

The industry has responded to consumers’ desire for healthier beverages by creating new categories, such as energy drinks, and by diversifying within existing ones. For example, the leading carbonated soft drink companies have recently introduced products with 50% less sugar that fall mid-way between regular and diet classifications. Similarly, a South African juice company has recently released a fruit-based drink that contains a full complement of vitamins and nutrients.

Retailers’ power continuously increases

With Wal-Mart leading the charge, the world’s dominant retailers are demanding better service and shorter order-to-delivery cycles from soft drink companies. This


is dramatically reshaping the industry, forcing soft drink companies to become more efficient, while taking pricing power out of their hands. The dual need for improved supply chain agility and cost- efficiency is challenging suppliers to revaluate the ways in which they plan and manage their supply chains, as they constantly search for approaches that will help them achieve the rock-bottom prices and operational excellence now expected in the industry.

Furthermore, the growth of private-label products is encouraging manufacturers to take a number of steps to compete more effectively. Increasingly, they are turning to innovation and new product introduction as a means to achieve real differentiation as well as growth. Branded manufacturers are also looking to get closer to the consumer, with many of the larger ones piloting direct-to-consumer marketing approaches. They are also trying to better understand the in-store consumer experience by monitoring the execution of in-store activities.

Nevertheless, many suppliers are losing brand equity. In recent years, a couple of factors have been fuelling the growing competition between manufacturers and retailers:

•Retailers are using their power to set higher standards for marketing and operational excellence, including escalating demands for improved service quality and shorter order-to-delivery cycles from manufacturers and distributors. Many of these demands, not only squeeze margins but also require significant capital investments.

• Because of their direct relationships with consumers, retailers have a deeper knowledge of consumer behaviour.

Competition is becoming more and more difficult

In the beverage manufacturing industry, competition is growing due to the following factors:


•Constant demand for new niche products related to consumer preferences for healthier and more- diversified offerings

•Industry consolidation, which has significantly raised the bar for the “scale needed to compete”

•The growth of private-label products.

These competitive pressures have led to:

•SKU (Stock keeping units) proliferation - number of SKUs in a typical beverage company has doubled from 1991 to 200

• A plethora of new product failures:

• Only 20% are effective

• Only 10% generate significant revenue

• Most fail within the first two years

• Further consolidation and rationalization to capture cost savings by improving operations and eliminating redundancy

• Industry leaders are acquiring small, high- growth companies

• Mid-market players are vertically integrating

• Declining soft drink prices:

• Profitability can only be improved through greater efficiency in the supply chain or through more-effective trade promotions, which usually require considerable expenditures.

Statutory regulation is increasing


Governments around the world are concerned about food safety and quality. Periodically, safety failures make big news in the global press. Amid this growing concern, regulators are cracking down on sanitation and a variety of other food-safety requirements.

While food safety is the major focus in Europe, the emphasis in the US is more on bio-terrorism and food security. However, the provisions in the 2005 traceability legislation in the US, which stemmed from the Bioterrorism Act of 2002, and those in the EU Directive 178, Articles 18 and 19, are very similar. The U.S. Food and Drug Administration (FDA) is proposing the registration and tracking of almost all domestic and imported food articles, but some are concerned that the complexity of the rules will overwhelm both the food industry and the FDA.

Each soft drink company must take these industry challenges into consideration, as well as its own strengths and market position, when looking for ways to drive innovation, accelerate growth and increase margins. The next section outlines where some of the most promising opportunities for accomplishing these objectives can be found.

The global beverage market has been forecast to increase at a compound annual growth rate (CAGR) of 4.6% over the next five years, to reach a market value of $1,347 billion by 2017. The global beverage industry's rising product demand, not much affected by the currents of global recession, bears testimony to its unyielding growth throughout.

Until recently, the beverages market was divided simply between alcoholic and non-alcoholic beverages. As consumers' tastes grew more sophisticated and demand surged for a variety of beverage options catering to lifestyle changes and health concerns, the beverages industry has responded with a dizzying array of options to choose from.


The industry consists of the total revenues generated through the sale of soft drinks, beers, ciders, flavoured alcoholic beverages (FABs), spirits, and wines. Products manufactured by the beverage industry include: bottled water, juice, sparkling and still drinks, syrups, nectars, ready-to-drink and regular teas and coffees, dairy drinks, energy drinks, sports drinks, fruit powders, and alcoholic drinks such as beer, wine, cider and spirits.

The industry experienced a CAGR of 2.3% for the period spanning 2007-2016. Industry consumption volumes increased with a CAGR of 2.4% between 2006 and 2010, to reach a total of 717,040.5 million litres in 2011.

The market is flooded with innovative products which lead to the global beverage industry's highly competitive nature. Customer loyalty is vital to the industry's growth and to achieve and retain it; companies constantly strive towards manufacturing high-quality products.

Some of the expected industry growth propellers are urbanisation, expansion in middle class population, and increase in double income family. All companies are keen on getting a share of market profit which has driven them to develop new strategies such as aggressive advertisement and maintaining efficient distribution channel maintenance to earn more profits.

The soft drinks industry will continue to straddle two different worlds: the mature developed markets where growth has stagnated and developing markets where previously high growth rates have slowed, but still offer the greatest upside. Bottled water will continue to lead the soft drinks sector in volume terms, with a projected growth rate of 5.4% over the coming year. Ready-to-drink tea and Asian specialty drinks will be the fastest-growing soft drink segments with projected growth rates in 2013 of 9% and 14%, respectively.

Global energy drinks consumption surged by 14% in 2011 to 4.8 billion litres, adding over 1.5 billion litres since 2007. Average growth over the past five years has been 10% a year. Value has risen even more sharply, by an average 13% a year, to €26,500 million or $37,000 million in 2011. Leading brands include Red Bull, Monster and Burn.

The world beer market, which includes flavoured alcoholic drinks and cider, generated sales worth more than $585 billion in 2010. Market growth is expected


to remain steady at a yearly rate of around 1.5% through 2015, bringing market value close to $630 billion by 2015.

The global market for spirits expanded more than 3% in 2010 to reach almost $263 billion. It is predicted the market will exceed $306 billion in 2015, a near 17% increase over five years. In 2010, the spirits market expanded 2% to exceed 19 billion litres. It is expected to reach over 21 billion litres in 2015, an 11% increase in the five-year period. Whiskey leads the spirits market, representing almost 27% of the overall market.

It's been the best of times and the worst of times for the beverage market. It has weathered many headwinds, including volatility in the supply chain with higher input costs for key commodities, with sugar prices rising 150% since 2008, corn prices climbing 85%, and coffee prices increasing 42% since June 2010.

Packaging and distribution costs have also skyrocketed, with oil prices up 150% since January 2009 and aluminium costs up 25% since January 2010. Juice pricing has also sent shockwaves through the beverage industry over the past year, and we will continue to see volatility in input costs for the near term.

One of the biggest overarching trends in the global beverage market is that consumers are trading traditional carbonated soft drinks for "better for you" alternatives amid rising concerns over obesity. The wellness movement is fuelling growth in ready-to-drink teas and waters, and as consumers seek more enhanced products with functional benefits, beverage companies are responding by increasing their use of fortifications such as vitamins, minerals, caffeine and antioxidants. Global beverage players also are meeting new consumer demands by introducing a tier of low- and mid-calorie beverages.

Current economic environment remains gloomy in western markets and Euro zone countries are having a particularly turbulent ride. The signs so far indicate more difficult times ahead for the global economy and on-going challenges for the beverages industry.

Key industry players:

The Coca-Cola Company:


Coca-Cola is a leading manufacturer, distributor, and marketer of soft drink concentrates and syrups. It owns or licenses more than 500 brands across all categories of soft drinks, and the company is headquartered in Atlanta, Georgia.

Until 2010, Coca-Cola sold its syrups and concentrates to a number of contracted independent bottlers that would produce, bottle, and distribute the final product. In February 2010, Coca-Cola bought out the remaining interests in Coca-Cola enterprises, the main contracted bottler, giving the Coca-Cola Company control over 90% of the North American volume.

PepsiCo, Inc:

PepsiCo is one of the largest food and beverage companies in the world. Its products include a variety of salty, sweet, and grain-based snacks as well as Csds and non-Csds. the company is responsible for the manufacturing, marketing, and sales of these goods. It has 18 brands in its portfolio and is headquartered in New York.

PepsiCo is divided into three business units: PepsiCo Americas foods (PAf), PepsiCo Americas Beverages (PAB), and PepsiCo international (Pi). These three business units are further divided into six reportable segments: frito-Lay North America (fLnA); Quaker foods north America (QfnA); the Latin American food and snack businesses (LAf); PAB; europe; and Asia, Middle east, and Africa (AMeA).

Groupe Danone

The Groupe Danone is a French food-products multinational corporation based in the 9th arrondissement of Paris. It produces fresh dairy products, bottled water, cereals and baby foods, and yogurts. In the United States it is marketed as the Dannon Company. The company owns several internationally known brands of bottled water: Aqua, Volvic, Evian, and Badoit; in Asia, it owns Yili, Aqua (Indonesia), Sehat (Malaysia, Brunei, Singapore) and Robust, and has a 51%


holding in China's Wahaha Joint Venture Company. About 56% of its 2006 net sales derived from dairy, 28% from beverages, and 16% from biscuits and cereals.

Dr Pepper Snapple Group:

The Dr Pepper snapple Group is a leading integrated brand owner, bottler, and distributor of soft drinks in the United States, Canada, and Mexico. The company has 15 brands and is headquartered in Plano, Texas.

Nearly half of the company's annual US volume is distributed by its company-owned bottling and distribution network. The remainder is driven through third-party/licensed bottlers and distributors, including those in both the Coca-Cola and PepsiCo bottling systems, as well as independent bottlers, brokers, and distributors.27 in 2009, 72% of dr Pepper snapple total volumes were distributed through the former Coca- Cola and PepsiCo bottling partners (these bottling partners were recently acquired by the Coca-Cola Company and PepsiCo inc., respectively). Pepsi Bottling Group, inc. (PBG) and Coca-Cola enterprises, inc. (CCe) were the two largest customers of dr Pepper snapple's Beverage Concentrate segment, and constituted 25% and 23%, respectively, of net sales during 2009.

SOFT DRINK INDUSTRY IN INDIA

The 50-billion-rupee soft drink industry is growing now at 6 to 7% annually. In India, Coke and Pepsi have a combined market share of around 95% directly or through franchisees. Campa Cola has a 1% share, and the rest is divided among local players. Industry watchers say, fake products also account for a good share of the balance. There are about 110 soft drink producing units (60% being owned by Indian bottlers) in the country, employing about 125,000 people. There are two distinct segments of the market, cola and non-cola drinks. The cola segment claims


a share of 62%, while the non-cola segment includes soda, clear lime, cloudy lime and drinks with orange and mango flavours.

The per capita consumption of soft drinks in India is around 5 to 6 bottles (same as Nepal's) compared to Pakistan's 17 bottles, Sri Lanka's 21, Thailand's 73, the Philippines 173 and Mexico 605. The industry contributes over Rs 12 billion to the exchequer and exports goods worth Rs 2 bn. It also supports growth of industries like glass, refrigeration, transportation, paper and sugar. The Department of Food Processing Industries had stipulated that 'contains-no-fruit-juice' labels be pasted on returnable glass bottles. About 85% of the soft drinks are currently sold in returnable bottles. There was a floating stock of about 1000 million bottles valued at Rs 6 bn. If the industry were to abide by the new guidelines, it would have to invest in new bottles, resulting in a cost outgo of Rs 5 bn. Neither Coke nor Pepsi is in a position to invest such a large amount.

Around 400,000 tonnes of raw material would be required to replace the existing stock of bottles. Instead, the soft drink industry suggested that a seven-year moratorium be extended to the industry so that it can incorporate the change in a phased manner. There is no such mandatory requirement anywhere in the world to specifically label the glass surface of returnable bottles. The government has decided to extend the date for replacing the bottles to end-march 2006. In the meantime, the producers have shifted substantially to the use of PET bottles.

Soft and aerated drinks were considered products for the middle class and the affluent. That segregation is no more valid. Soft and aerated drinks are consumed by all except those who cannot afford to buy any drink. An NCAER study says that 91% soft drink sales are made to the lower, middle and upper middle classes. The soft drink industry has been urging the government to categorise aerated waters (soft drinks) equitably with other consumer products of mass consumption and remove special excise duty.

The industry estimates that the beverage market should grow at twice the rate of GDP growth. The Indian market should have, therefore, grown by at least 12%. However, it has been growing at a rate of about 6%. In contrast, the Chinese market grew by 16% a year, while the Russian market expanded at almost four times the rate of growth of the Indian market.


It may be recalled that Coca-Cola, the world's number one player, was present in India for a long time in collaboration with an Indian producer but was thrown out in the late 1970s. It reappeared in India following the economic liberalization era - but after its rival, world's number two, had already entered in a big way following a long and tough fight against the opposition from the domestic producers. When Coca-Cola re-entered, it installed a new milestone. It acquired the well flourishing India's top player, Parle. Since then it is basically a fight between the two American giants. Others are playing a peripheral role, as adjuncts to the two MNCs. World's third biggest player, Cadbury Schweppes, had also made an entry but was gobbled up by Coca-Cola. When Coca-Cola acquired Parle brands, it was, in fact, buying the bottling facilities, the marketing network, and the established consumer preference during the market build-up. The brands were a drag on the global brand. Since Coca-Cola was not interested in brands (like Thumps Up), it did not promote them. The result, at least, in the short run was a loss of the market to the competitor. Coca-Cola decided to market more effectively the Parle brands. It had in its armoury Coke, Thumps Up, Limca and Fanta. The latest to enter market was Parle’s erstwhile Rimzim, alongside Portello, a black currant flavoured drink, very popular in Srilanka.

Coca-Cola operates through 35 plants and 16 franchisees throughout the country, while PepsiCo has 20 plants, but it has 7 more franchisees at 23 to 16 of its rival. Coca-Cola claims a market share of 51%, while Pepsi has a share of 46%. The claims, however, remain disputed. The other smaller players like Pure Drinks Ltd claim the rest of the market. The shares of the two lead players are consolidated figures, which include the respective bottlers. Coca-Cola had approached the government for a five year extension for divesting 49% equity in its bottling subsidiary, Hindustan Coca-Cola Holdings. It had set up the marketing subsidiary as part of its strategy to integrate all its bottling operations, both company-owned and franchisee bottlers, apparently keeping in line with its global policy. All together, it had bought initially over 38 franchisee bottlers.

Kandhari Beverages, coke bottlers for north have been eyeing to lift a stake in Coca-Cola India. Coca-Cola had filed an application to offload 49% stake of its bottling operations in favour of their Indian operators. Besides Kandhari, three other bottlers, one each from Uttar Pradesh, Gujarat and Jammu, were lined up to invest in Hindustan Coca-Cola Holding. Kandhari has already invested Rs 300


millionn in 1999 and 2000 to upgrade its capacity. The total investment by all the four was expected to be Rs 1000 millionn. Both Coca-Cola and PepsiCo planned for the launch of lemon-flavoured versions of their products. Both have been expanding their non-carbonated drink line-ups, as consumers seem to be shifting away from carbonated soft drinks. PepsiCo is deliberating whether to come out with Pepsi Twist, a cola mixed with lemon. But while both companies have juice does not sport drinks, bottled water and other such drinks in their line-ups, coke nor Pepsi has launched a new national variety of a cola-flavoured carbonated soft drink in years.

PepsiCo had achieved Rs 3 bn worth of exports, which include processed foods, basmati rice, guar gum and soft drinks concentrate. PepsiCo completed the second phase of its expansion and with this expansion, PepsiCo was to explore the possibility of expanding the export of concentrates to more countries in addition to the exports to Russia and other South Asian countries.

Pepsi India has entered into a marketing tie up with Hindustan Lever to promote sales of soft drinks through Pepsi-HLL network of vending machines and fountains. The major soft drink brands in the Pepsi stable are Pepsi, 7UP, Mirinda, Tropicana and Acquafina.

As a major strategic departure, both MNCs were expanding their brand range. Consequent to some diversifying moves, at present, the sales ratio of Coca-Cola between soft drinks and other beverages is 95.5. The company intended to change this to 80:20 in the next three years. Its juice brand, Maaza - acquired from Parle a few years ago - is being given a major thrust. It has plans to go in for canned coffee, iced tea and purified categories under expansion schemes. It has already launched its bottled water brand, Kinley, in the Indian market. Besides, it is intending to acquire domestic brands in the non-carbonated beverages segment.

The global deal between Coca-Cola and P&G to form a snacks and beverages joint venture company was reported to have slipped into rough weather. The P&G brand of potato wafer, Pringles, seemed to be faced with distribution problems in India. P&G had globally tied up with Coca-Cola to form a stand-alone juice and snacks company. The new firm is focused on developing and marketing new juices, juice based beverages and snacks on a global basis. The Sharjah-based Allied Beverages was pushing its Ahlan brand in India, having entered the market


in mid-2000. Its target was carbonated drinks market in PET bottles. Its plans were to launch a PET bottle in the popular 300 ml category. Ahlan expected to gain a 12% share of the total PET bottle market in northern India. Of the total market, PET bottle segment is approximately 12%. Presently, Allied Beverages has a manufacturing unit at Dharuhera in Haryana. The product range includes carbonated drinks - cola, orange, lemon and soda in three pack sizes - 500 ml, 1500 ml and 2000 ml. Allied Beverages sells non-carbonated drinks in 200 ml food grade cups priced at Rs 7 in its portfolio, available in four different flavours. The company's future plans include pulp-based fruit drinks in flavours, which will be available in 200 ml non-returnable glass bottles.

IFB Agro Industries has handed over the distribution rights of Cadbury Schweppes in favour of Coco-Cola India, following the global takeover of Schweppes beverages by Coke. The company still retains the bottling rights for the beverages.

Soft drinks shows strong double-digit growth

In 2014, soft drinks registered a stronger double digit off-trade value growth rate than the CAGR for the review period. This growth was attributable to strong double-digit performances in categories, such as bottled water and fruit/vegetable juice, which had a good year due to rising mercury levels. Long summers and higher disposable incomes continue to be the main growth drivers of soft drinks.

2014 is a year of brand revival


In carbonates, 2014 proved to be a year of brand revival, especially among the leading players, such as Coca-Cola and PepsiCo. A revamp of old brands started with Coca-Cola when it revived its Citra brand in lime carbonates. In August 2012 the company also revived its RimZim brand. Similarly PepsiCo revived its Duke brand in India.

Intense competition between Coca-Cola and Pepsi continues

Tough competition between Coca-Cola and PepsiCo continued not just in carbonates but in other categories, such as bottled water as well as fruit/vegetable juice. Both companies are strengthening their non-carbonated drinks portfolio as carbonates are slowly losing their sheen to fruit/vegetable juice in urban India

Independent small grocers remain the strongest retail channel

Independent small grocers continued to lead the distribution of soft drinks. Modern retail outlets are increasing their footprints in urban India but independent small grocers continue to account for the largest share of sales. This is because of the strong reach of independent small grocers in rural India which is a potential growth avenue for soft drinks.

Soft drinks will continue to experience steady sales

Bottled water and fruit/vegetable juice will drive strong volume and value growth within soft drinks during the forecast period. Soft drinks giants PepsiCo and Coca-Cola will target rural areas in order to enhance their presence. The outlook for soft drinks looks positive in the forecast period due to strong marketing activities and product innovations by manufacturers.


Demand: Past & Future

YEAR CASES IN MILLION2000-01 2432001-02 2622002-03 2792003-04 2912004-05 3102005-06 3302006-07 3592007-08 3732008-09 3882009-10 4032013-14 479

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2013-140

100

200

300

400

500

600

CASES IN MILLION

CASES IN MILLION


CHAPTER 2

RESEARCH DESIGN

Title of the study

“Impact of celebrity endorsement on soft drinks with specific reference to brand Coca-cola”

Objectives of study:


To study the impact of the Advertisements on the brand preference of consumers.

To study the consumer perception regarding the most effective media for Advertisements.

To identify the influence of celebrity endorsement on consumer buying behavior.

To study celebrity endorsement as a source of brand-building.

To find which type of celebrity persona is more effective.

Need and scope of the study:

As we know these days soft drink companies are advertising their product so much on televisions and are spending so much money on the Advertisements of their products. In soft drink industry the cost of advertising is nearly 35 % of the total cost. For increasing the sale of their product they are taking film stars, cricket stars in their advertisements of their products which are again very costly. The soft drink companies are spending so much on the sponsorship of events like cricket match


etc. so this study deals with these aspects that whether Advertising is having any effect on consumers or not.

This study will help

To know that people are influenced by Brand Ambassadors or not. Analyze different media options available for Advertisements and which are

most influential ones. Influence of Advertisements on their brands and brand loyalty.

RESEARCH DESIGN

A research design is a framework or blueprint for conducting the marketing research project. It specifies the details of the procedures necessary for obtaining the information needed to structure and/or solve marketing research problem. The research design used in this project is Descriptive research design.

Sample Design

SAMPLING TECHNIQUE USED:

In this research we have used Convenience Sampling.

SAMPLE SIZE

For this study, a sample of 100 has been taken.


Data Collection Instrument:

Questionnaire

SOURCES OF DATA COLLECTION:

Primary data: It is the first hand information collected through questionnaire

Secondary data: Secondary data was collected from the following sources: Books, Newspapers, Journals, Magazine, and Research Papers.

Tools of Investigation

The study was conducted with the help of questionnaire which was administered personally to all the respondents. The questionnaire is aimed at fulfilling out the impact of Advertisements of Coke and Pepsi in terms of Consumer preferences recall and purchase behaviour.

The questionnaire dealt with aspects like

Impact of Advertisement of the purchase behavior of soft drinks Factors influencing choice of a brand Influence of advertisements on the preference and purchase of a soft drink

brand Reasons for brand preference.

Aided Recall test will be used to study the Recall ability of respondents for the Advertisements of Coke and Pepsi. For Aided Recall various clues will be given e.g. Slogans and name of the model and Respondents will be asked to identify the


soft drink brand ambassador associated with them. In some questions ranking method is used.

After going through various sources like magazines, newspapers, websites I found that lot of research work has been undertaken by researchers regarding impact of celebrity endorsement, but there was a gap in the research regarding whether celebrity endorsement act as a source of brand-building. There is a need to discover this fact. Hence I decided to work on this particular aspect.

Hypothesis Testing

The tool used for testing of hypothesis is a well structured questionnaire which consists of close ended and multi choice questions.

Close ended questions are structured ones with two or more alternative responses from which the respondents can choose the right option. They contain standardized answers and they are simple to administer and easy to compile and analyze.

Multiple choice questions contain more than two alternatives, that is, there are a number of alternatives from which respondents can choose or else specify their own choice.

LIMITATIONS OF THE STUDY

The study was done for a limited period and purely was done for academic purpose

The study covers only a part of population Analysis was made on the limited available data which need not be a true

representative of the population or a whole.

Scope of study:

Study on celebrity endorsement effect on brand equity of Coca-Cola and its impact on Coca-Cola which can useful for future strategies.


This study leaves an immense scope for carrying out further research in the following areas.

To carry out similar study from the advertiser’ perspective and comparing that with the customers’ perspective

To establish a more definite correlation between celebrity impact on brand and relation with customer's psychology.

To carry out study on other possible aspect of endorsements. To carry out studies in other geographic areas i.e., in other nations and

include all possible industries to find out whether there is any significant difference in the impact on the customers who are geographically separated.

CHAPTER 3


COMPANY PROFILE

The Coca-Cola Company is an American multinational beverage corporation and manufacturer, retailer and marketer of non-alcoholic beverage concentrates and syrups, which is headquartered in Atlanta, Georgia. The company is best known for its flagship product Coca-Cola, invented in 1886 by pharmacist John Stith Pemberton in Columbus, Georgia. The Coca-Cola formula and brand was bought in 1889 by Asa Griggs Candler (December 30, 1851 - March 12, 1929), who incorporated The Coca-Cola Company in 1892. The company operates a franchised distribution system dating from 1889 where The Coca-Cola Company only produces syrup concentrate which is then sold to various bottlers throughout

http://en.wikipedia.org/wiki/Bottler_(company)

http://en.wikipedia.org/wiki/Franchising

http://en.wikipedia.org/wiki/Asa_Candler

http://en.wikipedia.org/wiki/Georgia_(U.S._state)

http://en.wikipedia.org/wiki/Columbus,_Georgia

http://en.wikipedia.org/wiki/John_Stith_Pemberton

http://en.wikipedia.org/wiki/John_Stith_Pemberton

http://en.wikipedia.org/wiki/Coca-Cola

http://en.wikipedia.org/wiki/Georgia_(U.S._state)

http://en.wikipedia.org/wiki/Atlanta

http://en.wikipedia.org/wiki/Syrup

http://en.wikipedia.org/wiki/Multinational_corporation


the world who hold an exclusive territory. The Coca-Cola Company owns its anchor bottler in North America, Coca-Cola Refreshments.

Coca-Cola (also known as Coke) is a popular carbonated soft drink sold in stores, restaurants and vending machines in over two hundred countries. It is produced by The Coca-Cola Company, which is also occasionally referred to as Coca-Cola or Coke. It is one of the world’s most recognizable and widely sold commercial brands. Coke's major rival is Pepsi. Although Coke has been the target of urban legends decrying the drink for its supposedly copious amounts of “acid”, or the "life-threatening" effects of its carbonated water but still it is the most in-style soft drink. About its safety and the ethics of the company that produces it, it is widely accepted as the most dominant soft drink in the world today.

Originally intended as a patent medicine when it was invented in the late 19th century, Coca-Cola was bought out by shrewd businessman Asa Griggs Candler, whose aggressive marketing tactics led Coke to its dominance of the world soft drink market throughout the 20th century. Although faced with accusations of perverse side-effects on the health of consumers and monopolistic practices by its producing company, Coca-Cola has remained a popular soft drink well into the first decade of the 21st century.

The last decade marked an increase in Coca-Cola's efforts to create a sustainable framework for the future. In 2009, the company launched Live Positively - a public commitment to making a positive difference in the worldby redesigning the way we work and live so that sustainability is part of everything we do. Live Positively includes goals for providing and tailoring beverages for every lifestyle, supporting active, healthy living programmes, building sustainable communities, reducing and recycling our packaging, cutting our carbon emissions, establishing a sustainable water operation and creating a safe, inclusive work environment for all.

The company has continued to build on existing relationships with global sports events such as the 2010 FIFA World Cup™ and prepare for the London, and the company continued to nurture our affiliation with the Special Olympics, which began in 1968.

http://www.coca-cola.co.uk/community/a-special-olympics-relationship.html

http://www.coca-cola.co.uk/world-cup/

http://www.coca-cola.co.uk/about-us/live-positively-sustainability.html

http://en.wikipedia.org/wiki/Anchor_bottler


Coca-Cola has remained dedicated to offering quality drinks for every lifestyle and occasion, marketing those beverages responsibly and providing information that consumers can trust. As of 2008, Coca-Cola can count more than 160 low and no calorie drinks in the company's range, such as Coke Zero and Powerade Zero. The company now also lists the nutritional information on the front of all drinks in Great Britain with plans to roll out worldwide.

From the early beginnings when just nine drinks a day were served, Coca-Cola has grown to be the world's most ubiquitous brand, with more than 1.6 billion beverage servings sold each day. Now well into its second century, the company's goal is still to provide magic every time someone drinks one of its more than 400 brands and to do so in a sustainable way that benefits consumers and the communities we operate in.

BRANDS

Globally, the Coca-Cola Company owns or licenses nearly 400 brands in the non-alcoholic beverage business. Many of those brands are considered among the worlds most valuable. Some of these include:

- Carbonated soft drinks

Such as Coca-Cola, Diet Coke, Fanta, Sprite and Fresca

- Juices and juice drinks

Such as Minute Maid, Qoo, Fruitopia, Maaza and Bibo

- Sports drinks

Such as PowerAde and Aquarius

- Water products

Such as Ciel, Dasani and Bonaqua

- Teas

Such as Sokenbicha and Marocha

http://www.coca-cola.co.uk/brands/powerade-zero.html

http://www.coca-cola.co.uk/brands/coke-zero.html


- Coffee

Such as Georgia coffee, the best-selling noncarbonated beverage in

Japan.


THE COCA-COLA STORY

Coca-Cola was invented by John S. Pemberton in 1886 in Columbus, Georgia, originally as a coca-wine called Pemberton's French Wine Coca. It was initially sold as a patent medicine for five cents a glass at soda fountains, which were


popular in America at the time thanks to a belief that carbonated water was good for the health. It was re-launched as a soft drink to counter Prohibition.

The first sales were made at Jacob's Pharmacy in Atlanta, Georgia on May 8, 1886, and for the first eight months only thirteen drinks were sold each day. Pemberton then ran the first advertisement for the beverage on May 29 of the same year in the Atlanta Journal. Asa Griggs Candler bought out Pemberton and his partners in 1887 and began aggressively marketing the product — the efficacy of this concerted advertising campaign would not be realized until much later. By the time of its 50th anniversary, the drink had reached the status of a national symbol. Coca-Cola was sold in bottles for the first time on March 12, 1894 and cans of Coke first appeared in 1955.

The first bottling of Coca-Cola occurred in Vicksburg, Mississippi at the Biedenharn Candy Company in 1891. Its proprietor was Joseph A. Biedenharn. The original bottles were Biedenharn bottles, very different from the much later hobble-skirt design that is now so familiar. Asa Candler was tentative about bottling the drink, but the two entrepreneurs who proposed the idea were so persuasive that Candler signed a contract giving them control of the procedure. However, the loosely-termed contract proved to be problematic for the company for decades to come. Legal matters were not helped by the decision of the bottlers to subcontract to other companies in effect, becoming parent bottlers. When the United States entered World War II, Coke was provided free to American soldiers, as a patriotic drink. The popularity of the drink exploded in the wake of World War II as American soldiers returned home, more grateful than ever to partake of a beverage that had become synonymous with the American way of life.

GLOBAL MARKET SHARE: COKE VS PEPSI


THEATRICAL ASPECT OF THE STUDY


The use of celebrities in order to increase the sales and/ or the recall value of a brand is called celebrity endorsement the late '80s saw the beginning of celebrity endorsements in advertising in India. Hindi film and TV stars as well as sportspersons began encroaching on a territory that was, until then, the exclusive domain of models. There was a spurt of advertising, featuring stars like Tabassum (Prestige pressure cookers), Jalal Agha (Pan Parag), Kapil Dev (Palmolive Shaving Cream) and Sunil Gavaskar (Dinesh Suitings). Of course, probably the first ad to cash in on star power in a strategic, long-term, mission statement kind of way was for Lux soap, a brand which has, perhaps as a result of this, been among the top three in the country for much of its lifetime.

Endorsements by celebrities have started since a long time. The very fact that their use has continued for so long is proof enough of its immense advantages, but they have several disadvantages too. When it comes to celebrity endorsement, the first brand that comes to the Indian mind is that of Lux, the Beauty Bar of the Stars. Since its inception, Lux the brand has grown positioning itself thus. However, recently Lux has tried to change its positioning from being a woman’s soap to being soap for men as well. Sticking to its strategy of using celebrities to appeal to its target audience, this time around it has used Shah Rukh Khan to endorse Lux. But this time the response has been confusing.

One of the first sports endorsements in India was when Farokh Engineer became the first Indian Crickets to model for Brylcream The Indian cricket teams now earns roughly Rs. 100 crore through endorsements. There was a spurt of advertising, featuring stars like tabassum (Prestige Pressure cookers). Jalal Agha (Pan Parag).Kapil Dev (Palmolive Shaving cream) and Sunil Gavaskar (Dinesh Sutings)

RISE OF CELEBRITY CULTURE

The modern mass media has increased the exposure and power of celebrity. Often, celebrity carries with it immense social capitals that is highly sought after by some individuals. High paying jobs and other social perks unavailable to most people are


readily available to celebrities, even for wok not connected to the talents or accomplishment that made them famous. For example A retired athletes might receive high “speaking fees ‘or compensation for public appearances, despite his talent having been sports. Often, celebrities cannot escape the public eye & risk being followed by fans. As well, child celebrities are notorious for having poor emotional health in adulthood, and often turn to drug and alcohols abuse when their fame fades.

In India today, the use of celebrity advertising for companies has become a trend and a perceive winning formula of corporate image building and product marketing. Associating a brand with a top-notch celebrity can do more than perk up brand recall. It can create linkages with the stars appeal, thereby adding refreshing and new dimensions to the brand image. In a world filled with faces, how many do you remember? Admittedly the ones that evoke some kind of feel in you, whether it’s humours, acceptance, appreciation or recognition. These are the faces you’d turn to look at, the ones that would stop you in your tracks. And that’s when you have more than just a face. You have personality. “Personality that’s reflective of your brand and promises to take it that extra mile”.

As existing media get increasingly cluttered, the need to stand out has become paramount- and celebrities have proved to be the ideal way to ensure brand prominence. Synergizing personality with product and message can create an instant breakthrough. Result? Brand buzz. People begin to notice, opportunities come about. People want to be part of the brand.

“Touch it. Feel it. Experience it.”

Stars, who are known to shape destinies, cast an enormous influence. No, we’re not talking about astrology here. We’re referring to the powerful effect of celebrities on destinies of brands. One approving nod from a famous face can translate into millions in brand sales. Perhaps that’s why the world over, companies have been using stars to endorse everything, from food to food chains, from soft and hard


drinks to health drinks, from clothes and accessories to cars (and the tyres on which they run).

Even political parties are awestruck by the charisma of stars. Such is the magnetism of celebrities in this country that in the recent general elections, major political parties fielded a record number of film stars and cricketers to contest from important constituencies around the country.

CELEBRITY ENDORSEMENTS AS STRATEGY

Signing up stars for endorsements is a time-tested strategy and has been effectively used by some of the top brands in the world including Nike and Pepsi. In India too, HLL has used Hindi film stars to endorse their beauty soap Lux since the fifties. Vimal, Thums Up, Gwalior and Dinesh are some of the other brands that used star-appeal in the early days of mass advertising. And who can forget Kapil ‘Palmolive’ Dev?

Marketers believe that star endorsements have several benefits, key among them being building credibility, fostering trust and drawing attention or any or all of which can translate into higher brand sales.

So how does one decide whether to put a celebrity in an ad? Ideally, this should be dictated by the communication idea. MG Parmeswaran, Executive Director of FCB Ulka says, “As advertising professionals, we recommend celebrity endorsements when the case is justified.


Coke (Open Happiness)

Open Happiness is a global marketing campaign for The Coca-Cola Company that was rolled out worldwide in the first half of 2009, following the company's "Coke Side of Life" advertising campaign. It was developed by the Wieden + Kennedy creative agency.

The campaign was launched on the reality television series American Idol on January 21, 2009, and rolled out to other national markets over the following weeks. In the United States, commercials following the Open Happiness theme appeared during NBC's broadcast of Super Bowl XLIII on February 1, 2009, and during ABC's broadcast of the 81st Academy Awards on February 22, 2009. Marketing for The Coca-Cola Company based on the Open Happiness theme also appeared in the United States as print ads in newspapers, in television commercials, in outdoor advertising, and in in-store advertising.

Coca-Cola has launched a new TVC extending its ‘Crazy for happiness’ campaign. The soft drink major has roped in Alia Bhatt, Varun Dhawan and Siddharth Malhotra for the new commercial. The TVC created by McCann WorldGroup India revolves around the tagline 'Bewajah khushiyan lutao, Coca-Cola pilao' (Spread happiness without reason, share a Coca-Cola).

The TVC opens in an Irani cafe where a hassled waiter is shown working frantically. He is clearing dishes, taking orders from patrons and receiving instructions from the owner of the café. Seated at a table are Bollywood actors Alia Bhatt, Varun Dhawan and Siddharth Malhotra. Dhawan asks for three bottles of Coke. Bhatt changes the order to four bottles. She gives a casual shrug when asked why by Dhawan and Malhotra. When the waiter sets the bottles on the table, Bhatt picks up the extra bottle and offers it back to the waiter. Surprised at her

http://en.wikipedia.org/wiki/81st_Academy_Awards

http://en.wikipedia.org/wiki/American_Broadcasting_Company

http://en.wikipedia.org/wiki/Super_Bowl_XLIII

http://en.wikipedia.org/wiki/NBC

http://en.wikipedia.org/wiki/American_Idol

http://en.wikipedia.org/wiki/Reality_television

http://en.wikipedia.org/wiki/Wieden_%2B_Kennedy

http://en.wikipedia.org/wiki/Wieden_%2B_Kennedy

http://en.wikipedia.org/wiki/The_Coca-Cola_Company

http://en.wikipedia.org/wiki/Global_marketing


unprecedented gesture, he looks at his boss for approval. The boss nods in the affirmative and the waiter along with the three youngsters enjoy their drink. A voice over signs off saying, 'Bewajah khushiyan lutao, Coca-Cola pilao'.

On the new TVC, Anupama Ahluwalia, vice-president, marketing, Coca-Cola India and South West Asia, said, “Brand Coca-Cola has been at the forefront in making a cultural point of view that encourages optimism and positivity in our everyday lives. This summer, the ‘Bewajah khushiyan lutao, Coca-Cola pilao’ campaign inspires everyone to spread and share happiness without any reason, through little gestures like sharing an ice cold bottle of Coca-Cola. We hope that the new Coca-Cola campaign serves as the thought starter, the trigger which encourages people to undertake simple acts of kindness towards others.”

Prasoon Joshi, CEO and chief creative officer, McCann World Group India, said, “Take one of the world’s most loved brands and team it with the young and vibrant stars of Bollywood, along with some peppy, foot tapping music. That’s how we made the latest Coca-Cola campaign. The whole idea of the campaign was to take the 'Crazy for happiness' theme to an individual level, with a call to action. The emotions of togetherness and celebration, energised by a bottle of Coca-Cola, are very real and identifiable, and we are sure that everyone will connect to this.”

The company has planned an integrated communication plan including OOH, digital, point of sale merchandise and other on-ground initiatives across key markets.


CHAPTER 4

DATA ANALYSIS & INTERPRETATION

SHOWING THE GENDER DISTRIBUTION PATTERN OF THE RESPONDENTS

Gender:


56%44%

MALE FEMALE

Interpretation:

From the above Table, it can be seen that the number of male and female respondents

are almost equal. This equal distribution of gender is used to determine the preference

and behavior towards consumption of carbonates and also to compare between the

gender

AGE GROUP OF RESPONDENTS

Age group No of respondents Percentage (%)15 02 02%15 to 30 65 65%30 to 45 22 22%45 to 55 11 11%55 above 00 00%


2%

65%

22%

11%

1515 to 3030 to 4545 to 5555 above

INTERPRETATION:

India now has major number of its population as youngster and the fact that brand Coca cola should cater to the needs of the younger generation and also people who fall under the age group of 15-30 years as they formulate the majority of the population and also represent the customers to the beverage industry.

1) What is your occupation? (Occupation distribution pattern of the respondents)

OCCUPATION No of respondents Percentage (%) STUDENTS 25 25% PROF/TECH 45 45% SERVICE 01 01%


TEACHER 03 03% BUSINESS 17 17% HOMEMAKER 09 09% OTHERS 00 00%

25%

45%

1%

3%

17%

9%

STUDENTS PROF/TECH SERVICE TEACHER BUSINESS HOMEMAKER OTHERS

Interpretation:

From this pie-chart it is clear that majority of the respondents are prof /tech and rest of

share is occupied by students and business class.

2) Which category of products you like most? (Different kinds of drinks customers considers buying)

SOURCES Respondents PercentageCarbonates 76 76%Nectars 17 16%Sports drinks 07 10%


76%

17%

7%

CarbonatesNectarsSports drinks

Interpretation:

This pie-chart depicts that 76% of the people prefer carbonates and 17% nectars and

the rest prefer sports drinks.

3) If soft drinks then which brand of soft drinks do you prefer mostly?

Brands Respondents PercentageCoca-cola 42 42%Thumps -Up 16 16%Sprite 16 16%Red bull 05 05%Miranda 05 05%Fanta 10 10%Pepsi 02 02%


7 Up 03 03%Gatrode 01 01%

42%

16%

16%

5%

5%

10%

2%3%

1%

Coca-colaThumps -UpSpriteRed bullMirandaFantaPepsi7 UpGatrode

Interpretation:

This pie-chart depicts that 42% of the people like coca cola and 16% people prefer the

likes of thumps up and the rest have a varied interest on the remaining brands of

carbonates.

4) Are you influenced by other opinions and suggestions before making your purchase decision?

SOURCES RESPONDENTS PercentageRespondents saying YES 82 82%Respondents saying NO 18 18%


82%

18%

Respondents saying YESRespondents saying NO

Interpretation:

This pie-chart depicts that 82% of the people collect information or take any advice

before making purchase decision and rest 18% will just go-ahead with their purchase

process.

5) If yes then which factor affects you most?

Sources Respondents PercentageFriends 27 27%Advertisement 57 57%

Opinion leader 13 13%Others 03 03%


27%

57%

13%

3%

FriendsAdvertisementOpinion leaderOthers

Interpretation:

The chart depicts that 57% of the people consider advertisement while going for

the purchase, followed by advice from friends 27%, opinion leader contribute 13%.

6) Which factor related to product affects you most? (Reason behind the purchase of a product)

SOURCES RESPONDENTS PERCENTAGE%PRICE 27 27%QUALITY 59 59%CELEBRITY ENDORSEMENT

13 13%

OTHERS 01 01%


27%

59%

13%

1%

PRICEQUALITYCELEBRITY ENDORSEMENTOTHERS

Interpretation:

This pie-chart depicts that 59% of the people consider quality has the major factor that

affects the purchase decision followed by price 27% and celebrity endorsement 13%,

the above chart reveals that consumers often look for a good quality product backed by

reasonable price.

7) What attributes about Coco cola attracts you the most?

SOURCES RESPONDENTS PERCENTAGEBRAND 55 55%QUALITY 21 21%TASTE 13 13%CELEBRITY ENDORSEMENT

11 11%


55%

21%

13%

11%

BRANDQUALITYTASTECELEBRITY ENDORSEMENT

Interpretation:

The pie chart depicts that about 55% of the respondents believe in Coca-Cola has a brand and has enjoyed a long and illustrious reign as #1 Best Global Brand for good reason. An enduring classic that has evolved over its 127 years, Coca-Cola remains the most recognizable and one of the most valuable brands in the world followed by taste 13% plays a major part with quality 21% and the remaining being celebrity endorsement.

8) Do you think celebrity endorsement work as an effective tool of persuasion for soft drinks industries?

SOURCES RESPONDANTS PERCENTAGE

STRONGLY AGREE 10 10%AGREE 70 70%DISAGREE 20 20%


10%

70%

20%

STRONGLY AGREEAGREEDISAGREE

Interpretation:

This pie chart depicts that 70% of people agree that celebrity endorsement is an

effective tool of persuasion and 10% people strongly agree that it work as tool of

persuasion and 20% of people disagree that it is one of the tool.

9) In case of Coca cola, which celebrity endorsement do you prefer?

SOURCES RESPONDANTS PERCENTAGEBOLLYWOOD STARS 43 43%SPORTS STARS 49 49%OTHERS 08 08%


43%

49%

8%

BOLLYWOOD STARSSPORTS STARSOTHERS

Interpretation:

This pie-chart depicts that majority of people around 49% like to see sports stars to

endorse their Brands followed by 43%of them want Bollywood Stars. While remaining

08 % don’t want to any celebrity endorsing the brand.

10) Is celebrity endorsement making you loyal towards brand Coca cola?

SOURCES RESPONDENTS Percentage Respondents saying YES 21 21% Respondents saying NO 79 79%


21%

79%

Respondents saying YES Respondents saying NO

Interpretation:

This pie chart depicts that there is a greater difference between celebrity endorsement

and the quality of the product, people believe quality and price has an effective tool on

loyalty towards a brand, about 79% of the people disagree that Celebrity endorsement

is an effective tool of persuasion which in turn makes them loyal towards a product and

the remaining 21% of people strongly agree that celebrity endorsement is an effective

tool of persuasion which makes them loyal towards a product.

11) What makes you choose a brand?

SOURCES RESPONDENTS PERCENTAGEQUALITY 30 30%ADVERTISEMENT 27 27%CELEBRITY ENDORSEMENT

09 09%

PRICE 30 30%WORD OF MOUTH 04 04%


30%

27%9%

30%

4%

QUALITYADVERTISEMENTCELEBRITY EN-DORSEMENTPRICEWORD OF MOUTH

Interpretation:

The chart depicts that 30% of the people consider Quality while going for

the purchase, followed by advertisement with 27%,price with 30% and 04% people

Consider word of mouth. As people usually are more interested towards well known

brands and if these brands are often of good quality and are advertised by famous

celebrity it creates a huge impact.

12) Do you believe products specifically advertised by the celebrities are of good quality?

SOURCE RESPONDENTS PERCENTAGEYES 23 23%NO 35 35%SOME KIND OF ASSURANCE

42 42%


23%

35%

42%

QUALITYADVERTISEMENTCELEBRITY EN-DORSEMENT

Interpretation:

This pie chart depicts that 35% of the people disagree that Celebrity endorsement is an

effective tool of persuasion and the product is of a good quality followed by 42% of the

respondents think it is some kind of assurance and the remaining 23% people strongly

agree that celebrity endorsement is an effective tool of persuasion and the product will

be of a good quality.

13) Would you buy Coca cola if your favorite celebrity is endorsing it?



Agree40%

Disagree60%

Interpretation:

This pie-chart depicts that 60% of the people consider celebrity endorsement has not

influenced them while going for the purchase of Coca-Cola, followed by 40% of the

respondents who believe that they are influenced by celebrities while making a

purchase decision.

14) Do you believe the celebrities also use those products which they themselves endorse?



Agree40%

Disagree60%

Interpretation:

This pie-chart depicts that 60% of the people consider celebrities don’t use the product

which they endorse and the remaining 40% believe celebrities use this products and it

gives some kind of assurance about quality of the product.

15) What means of advertisements persuades you the most to purchase a product?

SOURCE RESPONDENTS PERCENTAGETelevision 57 57%Radio 02 02%Internet 25 25%Magazine 05 05%


Newspaper 11 11%

30

279

30

4

QUALITYADVERTISEMENTCELEBRITY EN-DORSEMENTPRICEWORD OF MOUTH

Interpretation:

From the above table it is clear that television and internet plays a major role in creating awareness about product on the minds of consumers. This is followed by Magazines and then news paper and the remaining played a least role in creating awareness on

the respondents.


CHAPTER 5

FINDINGS, CONCLUSION AND SUGGESTIONS

FINDINGS FROM THE ANALYSIS

The following are summary of findings from the analysis made on the response given by the respondents.

1)Also, nearly 72% of the respondents say that there it is clear that television and internet plays a major role in creating awareness about product on the minds of consumers. This is followed by Magazines and then news paper and the remaining played a least role in creating awareness on the respondents.


2)Nearly 74% of the people consider celebrities don’t use the product which they endorse and the remaining 26% believe celebrities use this products and it gives some kind of assurance about quality of the product. It is clear that consumers believe celebrities have no relationship associated with the product or the brand

3) The image given by a celebrity to a brand should be sustained with appropriate appeals over a period of time. When there are already a number of celebrities in the category, a new brand attempting the celebrity route may not be the best alternative.

4) On an average about 48% of the respondents believe quality has the major factor in choosing. As people usually are more loyal towards well known brands and if these brands are often of good quality and are advertised by famous celebrity it creates a huge impact. This shows that there has been a very good reach of the advertisements featuring with celebrities.

5) More than half of the respondents (60%) said that there are fewer chances that they would buy a particular soft drink brand because it is endorsed by their favourite icon. They also look into other attributes like quality, price and value for money.

6) Reference group appeals could provide a creative dimension to brands if marketers are drawn by the rationale of using celebrities rather than by the emotion and excitement of celebrity usage.

7) Many respondents, nearly 70% of people believe quality and price has an effective tool on loyalty towards a brand, celebrity endorsement may not push them to buying a product quality and price is equally important.


8) Nearly 48% of the respondents believe Sports stars having a larger impact on the endorsing of the product than any other form of celebrity.

9)Most no. of people nearly 56% believe that celebrity endorsement is an effective mean of persuasion i.e. it convey the message clearly to the target audience regarding product offerings and persuade them to go for the purchase.

10) According to the survey about 42% of the respondents agree on the fact that brand name influence the buying decisions. Brands, which have positive image like Coca-cola, definitely influence the buying behaviour of the customer.

11)Nearly 68% of the people consider quality has a major factor of which influences them in making a purchase decision, celebrity endorsement has no major factor people believe price and quality are the two important factors which help them identifying a brand or a product .

12) Brand awareness and brand recall can be effectively established by advertisements only. And if brand ambassadors can help to do those, then it can be inferred that brand ambassadors indirectly help in creating good brand awareness and brand recall.

Conclusion

Understanding buying behaviour of customer is the toughest task for a marker, we can identify the factors, which influence purchase decisions, but it is next to impossible to know which factor influence when. We have countless permutation and combination for it, each individual has different behaviour and different influencing factors.


Marketers spend millions of dollars on advertising and especially on celebrities. Hoping that the stars will bring their magic to the products and services they endorse and make them more appealing and successful. But, all that celebrity glitter is not gold, but it can be. If appropriately used, celebrity advertising has paid off and definitely influenced the purchase decision. Celebrity endorsement does a premium in term of impact and memorability. There is also a position influence on persuasion, though less strong.

It is not enough that the celebrity is the advertising is remembered, more important, the brand must be. In using celebrities as endorsed, advertisers need to understand not only how to choose celebrities but also how to use them in advertising. The strategy and creative execution should reinforce strongly and consistently the celebrity brand association. And the celebrity should not only evoke positive retains, but helps focus attention on the brand in the advertising. Thus the product will be made more desirable because of its association with the star.

SUGGESTIONS

1) Instead of hiring any celebrity companies should try to create nice innovative idea and then match the suitability of celebrity with the idea. This is also supported by the fact that Today’s era is of Gen X their taste changes very fast and wants fresh material.

2) This study reveals that celebrity endorsement act as a source of brand-building but it isn’t the complete solution. Companies should ensure a match between the brand being endorsed and the celebrity so that the endorsements are able to


strongly influence the thought processes of consumers and create a positive perception of the brand.

3) Companies can’t rely only on celebrity endorsement to sell their products but they should follow an integrative approach so as to generate good sales volumes. They should provide more schemes to their customers in order to sell their products. Companies must realize that having a celebrity endorsing a brand is not a goal in itself; rather it is one part of the communication mix that falls under the broader category of sponsorship marketing.

4) The most preferred medium for celebrity endorsement strategy was television although using several media was seen as an effective way to get good return on investment since celebrity fees are usually high. Using multiple celebrities or a single celebrity depends on the time period over which a campaign is planned to have impact, campaign budget, and variance in target audience characteristics. Other medium like radio, hoarding, poster, news paper etc can also be used to promote the advertisement.

5) Companies should also be vary of “vampire effect”, which is the effect of a celebrity overshadowing the brand .This can cause a breakdown in the effective communication of a product being advertised towards the consumer simply because consumers are more attracted with celebrities, in order to come out of this companies should ensure a match between the brand being endorsed and the endorser so that the endorsements are able to strongly influence the thought processes of consumers and create a positive perception of the brand.

6) Judging by the size of the contracts, endorsements must have proved very effective, but experience has shown that it is not always a risk free policy for


drinks players. One's choice of celebrity is critical and even the most squeaky clean personalities may have something they did not mention on their CV. Tiger Woods is the obvious example; his Gatorade drink did not last long after it emerged that he was more active off the golf course than he was on it.

7) One of the important recommendations that I want to give is that during this slowdown period companies are cutting their advertisement expenditure but they shouldn’t do this. This is because this slowdown provides them an opportunity to differentiate themselves from their competitors. This is also supported by the researches. One of the research explained that during 1960’s recessions 290 global companies increased their advertisement expenditure and their sales increased by whopping 300%. Some of the companies are well established brand name today’s like IBM, Microsoft, 3M etc.

8) There are many other pitfalls that marketers must be conscious of, firstly, the celebrity must actually drink the product they are endorsing. To be photographed with a rival brand provides a ‘head in hands’ moment for marketers and leaves the brand open to ridicule. The celebrity may have a shorter shelf life than expected as people who come into fashion often go out of fashion just as rapidly. The chosen one may be so much in vogue that they sign up to too many products, thereby diluting their impact.

9) Marketers should now seek to adopt 360 degree brand stewardship in which the brand sees no limits on the number of contact points possible with a target consumer. Advertising ideas, thus, revolve around this approach, and the celebrity endorsement decisions are made through these strategic motives.

http://www.just-drinks.com/news/pepsico-drops-tiger-woods-as-gatorade-sponsor_id99997.aspx

http://www.just-drinks.com/news/pepsico-drops-tiger-woods-as-gatorade-sponsor_id99997.aspx