Perceived quality and brand loyalty of smartphones: an empirical investigation of celebrity endorsements in Indian market.
Brands are a firm's valuable intangible asset (Srivastava et al., 1998; Rao et al., 2004). Building, managing and sustaining a brand with a committed customer base has strategic importance due to its ability to provides competitive advantage as well as monetary benefits to the firm e.g. strong defence against competitor's marketing strategy, decreased marketing costs, better return on investment via increased market shares, improved coordination from channel partners, a positive word of mouth and greater brand extension opportunities to the firm (Dick and Basu, 1994; Chaudhuri and Holbrook, 2001; Homburg and Giering, 2001; Gounaris and Stathakopolous, 2004; Delgado-Ballester and Munuera-Aleman, 2005). Brand-loyal consumers are willing to pay more for a brand (Pessemier 1995; Reicheld 1996). This loyalty, in turn, may be determined by marketing communication and product quality in the brand. Thus, building brand loyalty and understanding the factors which build brand loyalty has created interest in marketing domain.
The use of celebrities for endorsements has been a practice since long (Kaikati, 1987) as the celebrities have been endorsing the brands since the late 19th century (Erdogan, 1999). Companies have been making huge investments in celebrity endorsements for improving effectiveness of marketing communication and aligning their brands with celebrities who are perceived to be dynamic in terms of attractiveness and appeal (Atkin and Block, 1983). Celebrities help not only in creating and maintaining attention, but also in achieving high brand recall in today's highly cluttered media environment (Friedman and Friedman, 1979; Kamen et al., 1975; Ohanian, 1991).
The conventional elements of marketing communications including advertising, sales promotion etc. have been studied extensively but individually and an effort has been made to integrate these activities since late 1980s. This need has arisen primarily due to a clutter in commercial media, advances in database management, changes in firm's practices of media buying, more focus on below-the-line promotions, and finally shift in power to modern trade. This trend has been noticed by many academicians and practitioners alike (Fawcett, 1993; Kitchen, 1994; Krugman, 1994; Schultz, 1991; 1994; Schultz and Kitchen, 1997; Shimp, 1997). Since celebrity endorsement involves a huge investment by companies, their bigger role in designing marketing strategies can not be ignored (Erdogan and Kitchen 1998).
A vast amount of celebrity endorsements research is related to the impact of celebrity endorsers but the research on linkage between brand loyalty and endorsed brand is sparse e.g. many celebrity endorsement studies have tried to find the effect of a celebrity on consumers' attitudes toward the brand and/or the advertisement (e.g. Atkin and Block, 1983; Freiden, 1984; Kamins, 1989, 1990; Petty et al, 1983; Tripp et al, 1994). There have been many studies of celebrity endorsement in recent years which have examined the impact of celebrities on behavior of youth (Hakimi et al., 2011), celebrity worship on purchase intentions (Hung et al., 2011), and the impact of a celebrity's credentials on consumer-based brand equity (Spry et al., 2011). Although previous studies suggest that high advertising spending signals high product quality (e.g. Kennedy, 1994; Milgrom and Roberts, 1986; Miller, 1988), the role of celebrities in creating positive quality perceptions is still not clear. Also little has been done to empirically examine the role of celebrities in building loyalty around the endorsed brand. The purpose of this research is to demonstrate the role of celebrity endorsements in building positive quality perceptions and brand loyalty. This research also intends at adding to the limited literature that looks at the effect of product quality on brand loyalty. Specifically, this study intends to find the relationship between celebrity endorsement and brand loyalty, celebrity endorsement and perceived quality, and between perceived quality and brand loyalty.
The rest of the paper is organized as follows. First, the existing literature on celebrity endorsements, perceived quality and brand loyalty is reviewed to develop the hypothesis. Second, the research methodology is discussed. Third, the empirical data and findings are presented. Finally, the last sections include discussions and conclusions which are followed by limitations and scope for future research.
Review of Literature
This section is aimed at briefly discussing the available literature on celebrity endorsements, brand loyalty and perceived quality.
A celebrity endorser refers to an individual known publicly (e.g. an actor) for excellence in fields other than the brands category promoted by celebrity (Friedman and Friedman, 1979). In literature, there is supporting evidence as to how celebrity endorsements impact audience attention, recall, evaluations and purchase intentions (Hsu and McDonald, 2002). The literature discusses positive impacts of celebrity endorsement (Louie and Obermiller, 2002; Till and Shimp, 1998). Celebrity endorsement has been used for numerous purposes such as attracting consumer attention towards the brand being endorsed (Kaikati, 1987), communicating the advantages of the brand (Kamins, 1990) and making the brand's presence felt in the commercial crowd (Miciak and Shanklin, 1994). Celebrities have been shown to be employed for enhancing consumer's attention towards the commercials, enhancing the memorability and credibility of a copy, and glamorizing the brand (Spielman, 1981). Keller (2002) has suggested that well known persons can not only help in drawing the consumers' attention towards a brand but also mould the brand perceptions depending on their knowledge of these famous persons. If managers use these personalities wisely, they can play an important role in building consumer based brand equity by improving brand's position in consumers' minds (Till, 1998).
Perceived quality has been defined as the consumer's subjective judgment of the overall excellence or superiority of a product (Zeithaml, 1988). Since perceived quality and purchase intention are related positively, so perceived quality will positively influence the purchase intention (Monroe, 1990). It has been extensively researched that a long-term brand association and brand experience helps consumers evaluate the difference and the advantages of a brand over others. Since, perceived quality has been identified as an important constituent of brand equity, a high quality perception would have positive effect on the choice of the consumer for that brand rather than other competing brands (Zeithaml, 1988). Celebrity endorsement improves a brand's quality perceptions (e.g., Kamins, 1989; Ohanian, 1991). Celebrities have been chosen for creating strong long lasting impression to persuade for purchasing the brand (Erdogan et al.,2001). Thus a celebrity can influence the consumer perceptions of a brand's quality, hence facilitating the firm or its managers to charge premium (Shimp, 2008).
Dick and Basu, (1994) have stressed upon that the final marketing goal of a firm is ensuring and continuously improving loyalty toward its brands. Brand loyalty has a positive effect on the sales and profits of the company. On one hand, it makes consumers go for repeat purchase over and over again at the same time they are less vulnerable to brand switching to a competing brand. So brand equity increases as a result of consumer loyalty for the brand. Gounaris and Stathakopoulos (2004) opines that high brand loyalty is an asset which can be leveraged for extension besides the improving market share, increasing return on investment that finally translates into high brand equity. Brand loyalty is a favored response exhibited by the customer towards a brand over and above the set of brands available in the marketplace. Lin et al. (2005), stresses that the brand loyalty refers to the behavioral response of customers who prefer to buy products of that brand over those alternative brands available. Brand loyalty is thus a biased behavioral response expressed over time with respect to a brand from a set of brands.
Brand loyalty has been referred to as consumer's resistance to switch to other brands. It depends on factors such consumer's costs of switching, consumer's preference for specific brands which may be merely a habitual behavior (Aaker and McLoughlin, 2010). In case the celebrity is being seen as role model by consumers, their probability of not switching to other brands is low i.e. consumers will stay with the brand being used by the celebrity. Thus, celebrities can influence the consumers' repeat purchase behavior. In other words, an endorser reduces the consumers' price sensitivity and increases their brand loyalty (Mela et al., 1997).
Several factors such as a brand's name, its price, quality etc play an important role in influencing brand loyalty of the consumers (Lau et al., 2006). The customers will perceive the brand's quality high only if the brand helped them in meeting or exceeding their expectations. Further, customer's brand quality perception plays an important role in deciding the consumer's brand commitment.
In general, brand loyalty may imply customer satisfaction but satisfaction necessarily does not lead to brand loyalty. Thus there is a linkage between customer satisfaction and brand loyalty; and product quality is the basis for customer satisfaction. Hence in the long term, creating brand loyalty is possible only if the product quality is evident at the customer's expected level.
Based upon the review of literature, following hypothesis are posited:
[H.sub.1]: Perceived quality of a brand is related positively to the celebrity endorsement used for the brand.
[H.sub.2]: Brand loyalty is related positively to the celebrity endorsement used for the brand.
[H.sub.3]: Brand loyalty is related positively to the brand perceived quality.
The author conducted a pretest for assessing the clarity of scales and measures by conducting 50 pretest surveys by using a non-probability sample of b-school faculty (5), corporate executives (12) and management graduates (33) personally. The objective was to find out if the participants had any difficulty in comprehending and responding to the questions and give suggestions, if any for improvement. After receiving the feedback, minor improvements were made in the wording of questionnaire items.
The research employed survey technique to collect consumer information from four different cities i.e. New Delhi, Gurgaon, Faridabad and Noida. The study subjects were adult respondents 18 years of age or older who had purchased any of the listed brands during previous one year and those who have actually used the brands in this study. Participants were requested to respond for only one brand. Table II summarizes sample characteristics of respondents included in the study.
Product Stimuli Selection
To select the commercial brands in this study, those brands were used which had high familiarity with the consumers, as has been done by previous researchers (Leuthesser et al., 1995). Thus fifty respondents were personally interviewed by the author of different demographics and requested to mention smartphone brands (domestic or international) purchased and used by them and of which they had sufficient knowledge. Based upon the responses, six brands were shortlisted (Samsung, Nokia, Apple, Micro max, Lava and Karbonn).
Instrument and Measures
14 Items representing perceived quality, brand loyalty and celebrity endorsements were generated through literature for the instrument (refer Table 1). A five-point Likert scale was used in this study with 1 indicating strongly disagree and 5 as strongly agree.
Responses were obtained from 225 patrons of smartphone brands. 210 responses were found to be valid. Non-probability sampling method has been used for this research in general and convenience sampling in particular. A sample of actual users was surveyed through mall intercept interviews. Participation in the survey was voluntary and questionnaires were personally administered. Both the genders were almost equally represented in the sample (Table II). All variables were assessed through the respondents' evaluations based on their perceptions and the recall of their experiences.
Reliability and Refinement of Measures
The measures used in the study were borrowed and/or adapted from previous studies conducted in western countries. Thus, instrument had to be tested for its reliability before using it in Indian smart phone market. Cronbach's alpha and exploratory factor analysis were employed to refine the scale.
Due to the multidimensionality of the brand equity construct, coefficient alpha (Cronbach, 1951) was computed separately for each of the three constructs by using the standard cut-off of 0.7 as suggested by past researchers (e.g. Nunnally and Bernstein, 1994). Those items which did not have significant contribution towards reliability were eliminated. The alpha values were calculated again and items were deleted further till there was an improvement in the alpha values. Finally, 10 items were retained across 3 constructs.
Exploratory Factor Analysis (EFA)
The dimensionality of the 10-item scale was examined by exploratory factor analysis. Kaiser-Meyer-Olkin (KMO) test and Bartlett's test of sphericity were used for ensuring sampling adequacy and checking the appropriateness of the factors extracted. The KMO value (0.818) was more than 0.5 and Bartlett's test (p=0.00) was significant (p-value less than 0.05) indicating that the factors extracted were adequate as well as appropriate. The number of factors were constrained apriori to 3.
Principal Component Analysis (PCA) method with varimax rotation was applied for extracting the components. Only items with loading factor of more than 0.7 were considered as an acceptable loading factor. High factor loadings in Table III show clearly defined factors. An internal consistency is indicated among items of each construct by high Chronbach alpha values. The combined reliability for the 10-item scale was 0.813.
The effect on dependent variables (Brand loyalty and Perceived quality) was analyzed through regression. The results show a positive and significant influence of celebrity endorsements on brand loyalty and perceived quality (Table IV). Further, the role of celebrity endorsements is more profound in creating brand loyalty (=0.183,p<0.01) as compared to perceived quality (=0.149, p<0.05) The influence of perceived quality on brand loyalty was found to be positive and highly significant =0.789, p<0.01).
In the current study, the role of celebrity endorsements has been found to be significant and positive in influencing brand loyalty and perceived quality in smart phone industry. Further, a positive and significant relationship has been found between perceived quality and brand loyalty.
The hypotheses HI (significant and positive effect of celebrity endorsement on perceived quality) was supported in current study. Thus smart phone brands of inferior or similar quality to their competitors can benefit by celebrity endorsement. The findings contradict those researchers who suggested that celebrities are helpful in catching consumer attention and even in brand recall and but fail to create positive attitudes of consumers towards brands. Further these researchers added that celebrity endorsements neither influence consumer purchase intentions nor the firm's sales. The findings in current study suggest that celebrity endorsements of a smart phone helps boosting consumer that brand's quality perception. One of the reasons for celebrity endorsements by firms is the trust and faith of the consumers who believe the celebrity recommendations to be genuine and authentic. Moreover, consumers always look up to these celebrities as their role models and hence considering the brands endorsed by them as of superior quality.
The hypotheses H1 (significant and positive effect of celebrity endorsement on brand loyalty) was supported in the current study. A possible explanation can be that celebrity advertising has both informational and emotional impacts on the customers. The informational component helps in creating brand awareness whereas the emotional component builds a strong emotional bond between the celebrity and the customer. Positive emotional responses can influence behavioral responses (Reeve, 1992) and can increase consumers' tendencies to engage in favorable behaviors (Brief and Motowidlo, 1986). Thus, apart from ensuring brand loyalty, positive emotional responses may also lead to favorable perceptions of a smart phone brand's quality.
The hypotheses H2 (significant and positive effect of perceived quality on brand loyalty) was also supported in current study. Till and Busier (1998) have shown that the celebrity knowledge and proficiency of a field was more impactful than its glamour (or charm) for brand endorsements. Since smart phones carry both financial and performance risks, the criteria for celebrity selection for smart phone endorsements may include their expertise and actual usage than only the attractiveness. This may further help in improving the consumer's brand quality perceptions and hence a better word of mouth which may further lead to an increase in brand loyalty.
The findings of current study contradict those researchers who suggested that in case the brand and advertisement recall are the important objectives of a particular campaign, then choosing a celebrity for endorsements is a sensible decision (e.g. Friedman and Friedman, 1979). The findings of current study suggest that celebrity endorsements help in achieving even better goal i.e. creation of brand loyalty and superior perceptions of quality.
Marketers spend enormous amounts on celebrity endorsements. This study justifies the rationality of heavy investments in celebrity endorsers due to their ability to create positive quality perceptions and build brand loyalty.
A celebrity endorser is known to be helpful in establishing the meaning of a brand, which can be used by consumers to actively construct their own identity. In other words, a celebrity endorser can indirectly help in building a connect between a brand and its consumers thus building brand loyalty. Marketers therefore need to understand that consumers do not buy brands solely due to their functional aspect but because the consumers are involved in relationships with smart phone brands due to the benefit(s) from the meanings they add to consumers' life. To build such relationships, the celebrity endorsement can help in consumer engagement with the brand by consumer recommending the brand to peers and family, creating positive word of mouth etc. Therefore by using celebrity endorsements, marketers can create an opportunity to build a relationship between consumers and brand. The most innovative global smart phone companies across the world are not only connecting with the customers but also providing services and tools such as unique and creative mobile apps to keep these customers engaged and create customer loyalty in a heavily crowded and highly competitive smart phone market.
Further, when a brand is endorsed by a celebrity, the credibility and relevance of the indirect information inferred by the consumer increases. The result is an increase in consumer perception of a higher quality for the endorsed product and an increase in purchase likelihood. Further, customers may repurchase a particular smart phone brand due to the way they perceive the brand's quality. Buyers may however quickly shift to other brands if the endorsed brand does not perform up to their expectations. Hence smart phone marketers need to pay close attention to their products and services quality to build brand loyalty. Also, consumers sometimes have a tendency to pay more attention towards the celebrity in advertisements than the actual brand being endorsed. This might lead to an instant pull of consumers towards the brand leading to a behavioral purchase rather than any true brand commitment. However, a single behavioral response does not indicate a real brand loyalty, and this behavioral response might be easily influenced by other factors thus shifting consumer brand loyalty. A frequent use of celebrities in smart phone advertisements might create a confusion in the minds of consumers such as whether they are influenced by celebrity or it is the smart phone brand.
However, there is a need to question the similarity between celebrity and its choice (relevance or appropriateness) for endorsing the brand and ability to create positive quality perceptions and brand loyalty. If consumers perceive a strong fit between a brand and the celebrity, an associative link will be formed quickly between these two entities. The marketers should choose a celebrity who fits well with the brand's current or possible associations for reinforcing either existing associations or creating associations for the brand. However, if there is a natural brand- celebrity misfit, the endorsement may not only be ineffective in creating brand quality perceptions and brand loyalty but also have a damaging effect on the brand.
In order to transfer any meaning, it is first necessary that the specific meaning behind the brand is firmly established in the minds of the consumers so that the consumers know what does the brand stand for, what it can do for the consumers and how this brand is different from the competitors. Managers can create brand image by managing the associations that the consumers have linked to the brand. This can be achieved by managing marketing communication (e.g. advertising, promotions, celebrity endorsements etc.) to form strong, favorable and unique associations in the minds of the consumers so as to build positive quality perceptions and strong brand loyalty. Thus, a single marketing communication effort such as celebrity endorsement alone may not be sufficient but using a package of marketing efforts to improve quality perceptions and brand loyalty may be probably more effective in gaining a foothold in the Indian smartphone market.
In recent past, the researchers have focused in the increasingly important area of celebrity endorsements. The current study makes a contribution toward building brand loyalty in the Indian smart phone market by understanding the relationship between celebrity endorsements, perceived quality and brand loyalty. These findings show that celebrities are good at not only generating attention and recall but are able to create positive perceptions of brand quality and brand loyalty. The findings suggest that celebrity endorsement helps in boosting consumer brand quality perception due to the trust and faith of the consumers in celebrity recommendations as genuine and authentic since consumers consider celebrities as their role models. Further, due to emotional connect, celebrity advertising creates a strong emotional bond between the customer and the celebrity endorser which can influence favorable consumer behavioral responses thus ensuring brand loyalty. Since both financial and performance risks are associated with smartphones, the choice of a celebrity for smart phone endorsements may be based more upon their expertise rather than physical attractiveness. This will help in improving the consumer's brand quality perceptions and brand loyalty. Thus marketers have to ensure that the smart phone brand endorsed and the celebrity have a logical fit. However, smart phone marketers can not take loyalty to be guaranteed in Indian market. They need to pay close attention to their brand's overall perceptions by focusing on the quality of the product and services. They also need to ensure that consumers are not paying attention merely towards the celebrity in advertisements but are concerned about the actual smart phone brand being endorsed. There is thus a need to engage these customers through quality and other innovations to build and retain their loyalty to smart phone brands
The findings in this study have both theoretical and practical implications. Theoretically, this research shows that using celebrity endorsements is an important and integral part of smart phone firms' marketing communications strategy for to build positive quality perceptions and brand loyalty in today's dynamic market. Smart phone marketers or practitioners can also reap benefits from the findings by following pros and cons of using celebrity as endorsement strategy and provide guidelines for managerial planning for celebrity-based campaigns.
Celebrities are known to appeal to customer emotions and hence motivating them to purchase the product. However, only if consumers find the perceived value to be trustworthy in the brand, they will form superior brand quality perceptions which in turn will create a positive brand image, brand loyalty and hence profits and competiveness for a firm. It is clear from the discussion that celebrity endorsements act as a powerful and useful tool but celebrities alone will not guarantee success. Moreover, firms must realize that a celebrity is no substitute for the comprehensive process of smart phone brand building. Firms must utilize all possible communication channels rather than relying on celebrity alone. Firms can expect superior competitive advantage for celebrity endorsements by following and implementing all steps in the branding process.
To conclude, current study has achieved the main objective. This study will help managers in formulating effective strategies to build customer loyalty and hence increase profitability. This research will also benefit academia who are interested in the related area for gaining deeper insights.
Limitations and Directions for Future Research
Although this study has successfully explored effects of celebrity endorsements on creating brand equity in the Indian smartphone market by providing important theoretical and practical implications, the study has its own limitations. Future researchers need to overcome these limitations to enrich theory.
This study focused only on the five north Indian cities. More research needs to be conducted for generalizing these results in other Indian regional markets e.g South, West and East. Second, this study has examines the effect of single integrated marketing communication variable i.e. celebrity. Since there is an interaction between different marketing strategies, a possible interaction between celebrity endorsement with advertising, and advertising with commercial event sponsorship and so on, can not be ruled out. The mix of various marketing strategies needs to be studied extensively so that both scholars and managers can understand the basics of building brand loyalty in Indian smart phone market. Future research needs to focus on the interaction effects of these marketing communication variables.
Another limitation is that this study looks at celebrity endorsements from a general perspective. For example, all celebrities build a brand. However, understanding the type of celebrity (e.g. athlete, an actor etc.) and its role in building a strong brand will provide better insights for marketing strategy. Finally, there is a need to explored the role of demographics and psychographics in building brand quality perceptions and brand loyalty. Also a comparison of Indian and international celebrities, sports celebrities and actors can be made to understand their impact on brand loyalty.
Paper received on June 17, 2016
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Associate Professor (Marketing), Jaipuria Institute of Management, Noida.
Table--I Measures of Perceived Quality, Brand Loyalty and Celebrity Endorsements Construct Item (No. of tems) Perceived Brand X is of high quality * quality (4) Brand X is of very poor quality [R] * Brand X is a brand characterised by its continuous innovation ** Brand X is a quality leader within its category ** Brand loyalty (5) I consider myself to be loyal to brand X * Brand X would be my first choice * I will not buy other brands if brand X is available at the store * I will buy brand X again ** I will suggest brand X to other consumers ** Celebrity The Celebrity endorsements for brand X seem very Endorsements (5) expensive, compared to campaigns for competing brands * Brand X is intensively endorsed by celebrities. * The Celebrity endorsements for brand X are seen frequently * In general, I like the Celebrity endorsements for X brand ** My opinion about brand X's Celebrity endorsements is very high ** Sources: * Yoo et al. (2000); ** Villarejo-Ramos and Sanchez-Franco (2005); [R]-reverse coded Table--II Sample Characteristics Demographic Characteristics (N=210) % Gender Male 109 51.90 Female 101 48.10 Age (years) 18-30 92 43.81 31-40 80 38.10 40-50 22 10.48 51-60 16 7.62 Education High School 31 14.76 Graduates 77 36.67 Post-Graduates 88 41.90 Others 14 6.67 Marital Status Single 101 48.10 Married and with Kids 43 20.48 Married but no Kids 51 24.29 Others 15 7.14 Household Annual Income uptolO lakhs 76 36.19 between 10 lakhs-20 lakhs 94 44.76 between 20 lakhs-30 lakhs 28 13.33 more than 30 lakhs 12 5.71 Source: Author's own Table--III Construct Reliability and EFA Cons Items CID CAC (NI) Factor loading BLO I will buy brand X again 0.748 0.742(3) 0.716 I will suggest brand X to other 0.766 0.706 consumers I will not buy other brands if 0.734 0.702 Brand X is available at the store PRQ Brand X is a brand characterized 0.725 0.765(3) 0.756 by its continuous innovation Brand X appears to be of very poor 0.842 0.733 quality (R) Brand X is of high quality 0.727 0.731 Brand X is intensively endorsed 0.732 0.728 by celebrities CEL In general, I like the Celebrity 0.716 0.712(4) 0.719 endorsements for X brand The Celebrity endorsements for 0.711 0.713 brand X are seen frequently * My opinion about brand X's 0.705 0.706 celebrity endorsements is very high Cons Items Variance Eigen (%) values BLO I will buy brand X again I will suggest brand X to other 25.52 4.18 consumers I will not buy other brands if Brand X is available at the store PRQ Brand X is a brand characterized by its continuous innovation 18.61 2.57 Brand X appears to be of very poor quality (R) Brand X is of high quality Brand X is intensively endorsed by celebrities CEL In general, I like the Celebrity 10.42 1.84 endorsements for X brand The Celebrity endorsements for brand X are seen frequently * My opinion about brand X's celebrity endorsements is very high Key: Cons: Construct; PRQ: Perceived Quality; BLO: Brand Loyalty; CEL: Celebrity Endorsement; R: Reverse Coded; CID: Cronbach's Alpha if Item Deleted; CAC (NI): Cronbach's Alpha of Construct (No. of Items) Source: Author's own Table--IV Hypothesis Testing Hypothesis Dependent Independent Beta t-value Sig. variable variable H1 Brand Celebrity 0.183 2.801 0.005 * Loyalty Endorsements H2 Perceived Celebrity 0.149 2.276 0.023 ** Quality Endorsements H3 Brand Perceived 0.789 19.366 .000 * Loyalty Quality Hypothesis R Square Adj. R SEE Result Square H1 0.035 0.031 0.783 Positive and Significant H2 0.022 0.018 0.588 Positive and Significant H3 0.623 0.621 0.469 Positive and Significant SEE--Standard Error of Estimate; *sig. p<0.01; ** sig. p< 0.05
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