CHAPTER ONE

INTRODUCTION

1.1    Background to the study

          In recent years, the preponderance of celebrities in advertisements has become more prevalentthan ever in Nigeria in particular and the world in general. Marketers have the perception that this technique of persuasion is a winning formulato build up brand image, increase sales revenue and gain strong brand loyalty. Consumers arebombarded by a variety of advertisements every day. Celebrity endorsement is very popular and widely used in advertising from magazines toTV advertisements, from toothpaste to luxury goods, etc. Famous endorsers appear in approximately 25 percentof all kinds of television commercials to promote different products and brands, and roughly tenpercent of advertisers’ budgets are spent on the use of celebrities (White, Goddard, & Wilbur,2009).

          This phenomenon displays the popularity and importance of the practice oncommunicating brand images, where the aim is to communicate the message to consumers in asuitable manner in order to achieve best results possible.A celebrity endorser can be described as follows:“Any individual who enjoys public recognition and who uses this recognition on behalf of aconsumer good by appearing with it in an advertisement (McCracken, 1989, p. 310).”Strictly defining a celebrity, it refers to a movie star, TV star, singer, athlete, leader, etc. But in broader meanings,any individual who is successful in the world of sports, business, art, politics, and the militarycan be attributed into the group of celebrities (McCracken, 1989, p. 310). The celebritiesthemselves transfer their own personality and image to the brand and product they arerepresenting, generating a related image between themselves and the brand or product. In orderfor the endorsement to be successful, there are three different attributes the celebrity needs tocommunicate to the consumers. These are; credibility, attractiveness and power, wherecredibility is represented by knowledge, skills and expertise concerning the product(s),attractiveness includes likeability, familiarity and similarity and power enables the endorser toaffect the consumer (Byrne, Whitehead & Breen, 2003 p.291).

          The most important aspect when practicing celebrity endorsement is the choice of celebrity, tosee that the image and personality projected on the brand and its existing image is suitable andenhancing. The impact on and the outcome of the endorsement have to be well evaluated before,during and after it takes place, with the intention of generating customers and creating brandloyalty. In addition to likeability and recognition, celebrity endorsement can create new segmentsof customers with a connection of some sort to the celebrity but with no previous attitude orpreference towards the brand (Byrne et al., 2003).

          The use of celebrity endorsement is not a new innovation in the advertising industry, an industryinvolving massive money investments. Marketers do certainly expect returns from theirinvestments, not only by increasing sales revenues but by something even more important in thelong run- brand loyalty. Till (1998) mentioned that celebrity endorsement can provide a greatvalue in building strong brand equity, but also improving a brand’s market position if theendorsers are used wisely. This marketing strategy is a swift and valuable way to build up instantbrand recognition. It saves marketers a lot of time when trying to attain consumers’ awarenessand draw attention to the brand.

          Why is brand loyalty so important to marketers? A variety of instruments are used in order tocapture consumers’ attention, interests and loyalty. As Trout (2001) stated, “Marketingbattles takes place in the mind of a consumer or prospect. That is where you win. That is whereyou lose.”

          Therefore, brand loyalty makes consumers deeply committed to a specific brand. This issomething marketers are constantly searching for by running a vast amount of differentmarketing campaigns.This leads us to the question of what brand loyalty really is and how it is constituted. Many researchers havesuggested that brand loyalty is a conscious reflection of a repetitive purchasing behavior of thesame brand.

1.2    Statement of the Problem

          If there is aninherent fit or consistency between a celebrity and a product, the endorsement is in fact perfectlymatched with the purpose of celebrity endorsement (Till &Busler, 1998). However, there is noevidence proving that the usage of celebrity endorsement will achieve stronger brand loyalty incomparison to endorsement by an ordinary person. In fact, consumers might pay more attentionto celebrities in advertisements than the actual product endorsed, which is not the marketersintention. For instance,in most cosmetics advertisements, physically attractive celebrities are especiallyrecognized. They might exert a magnetic power to consumers resulting in a behavioral purchaseinstead of true brand commitment. But whether or not the purchase behavior will becomerepetitive is less clear (Byrne, Whitehead & Breen, 2003).

          Heavy use of celebrities in advertisementsmight create a paradox, because consumers cannot identify whether they like the celebrity in theadvertisement or if it is the actual product they like. The ultimate goal of marketers is makingconsumers focus most of their attention to the products. But whether this goal can beaccomplished by using celebrities is unsure. “Attractiveness remains important but the attractionof the celebrity is not the best way to build a positive benefit for the brand (Till &Busler, 1998, p.585)”.

          Celebrities, as a person or asa character, do convey a profound meaning in our life, but to many ordinary people, thecelebrity’s unreal attractiveness has fewer connections with the situation in reality. Many prior researches have been done regarding celebrity endorsement and brand loyaltyseparately. However, there is no connection between a celebrity endorser and its effectiveness increating brand loyalty as yet. We do not know whether the prevalent usage of celebrities asendorsers especially in cosmetics advertising has an effect on creating brand loyalty or not. Even ifit is effective, what kind of loyalty can it create? As we have discussed earlier, brand loyaltyshould not only be defined by behavioral loyalty, it should also include attitudinal loyalty.

          Therefore, this research aims to explore the connection between using celebrities and itseffectiveness in order to create brand loyalty in the Telecommunication industry advertisements in Nigeria.

1.3    Purpose of the study

The main purpose of this study is to examine the role of celebrity advertising in consumer brand loyalty.Considering the massive amount invested yearly on celebrityadvertising in the GSM Telecommunications industry in Nigeria, the study explores the effectiveness of theuse of celebrity advertisements and its influence on consumers’ behavioral andattitudinal loyalty. Although there is not a direct way to test the relationship between theeffectiveness of advertisements and consumer behavior, nor the effectiveness of advertisementand consumers’ attitudes, this research applies to advertisement influence, behavioral loyaltyattributes and attitudinal loyalty attributes separately. By utilizing all previously gainedknowledge, the results shall be able to serve the research purpose.

1.4    Objectives of the study

The specificobjectives of this study include:

1.     To examine the relationship between the use of celebrity endorsement in GSM network service advertisements and the creation of brand loyalty.

2.     To examine the influence celebrity endorsement inGSM network serviceadvertisements have on brand loyalty.

3.     To examine other factors consumers take into consideration when making their choices in GSM network service purchase other thancelebrity endorsement.

1.5    Research Questions

1.      What is the relationship between the use of celebrity in GSM network service advertisements and the creation of brand loyalty?

2.     To what extent does celebrity endorsement in GSM Advertising induce brand loyalty?

3.     What factors do consumers take into consideration when making theirGSM network service purchase decisions other thancelebrity endorsement?

1.6    Research Hypothesis

H0a: There is no significant relationship between the use of celebrity in GSM network advertisements and the creation of consumer brand loyalty

H1a: There is significant relationship between the use of celebrity in GSM network advertisements and the creation of consumer brand loyalty

H0b: The use of celebrity endorsement in advertisements has no significant influence on brand perception.

H1b:The use of celebrity endorsement in advertisements has significant influence on brand perception

1.7    Significanceof the study

          In spite of a vast amount of previously published research papers dedicated to the field ofcelebrity endorsement and brand loyalty separately, there are few studies which specifically focuson identifying or establishing a relationship between the two thus far. Celebrity endorsement is aconventional marketing instrument used by marketers to communicate brand images andinformation to consumers. Brand loyalty is the main effect marketers expect from consumers asthe final goal of all marketing campaigns, including TV advertisement, magazines, radio, etc(Emma, 2010).

          Considering the massive amount of celebrity endorsement practices in the telecommunication industry advertising, thisstudy is an effort to examine the link between celebrity endorsement and its effectiveness inattaining consumers’ brand loyalty. Brand loyalty, as stated earlier, should take both behaviorand attitude into consideration.Many previous studies have provided solid theoretical foundations in the fields that are coveredin the study, which are all essential to the undertaking of this research study. From a researcher’spoint of view, this research studywill contribute to the field of branding andmarketing management. It will also help companies in the Telecoms industry to better grasp consumers’ opinions concerning celebrity endorsement. Most importantly, this research can aidmarketers to identify a more efficient way to gain brand loyalty and thereby also to keep it.

1.8    Scope of the Study

          The focus of this study on role of celebrity advertising on consumer brand loyaltyis restricted to the survey of MTN GSM network subscribers in Ikeja Local Government Area of Lagos State, Nigeria. Data for this study was sourced primarily and generated through the administration of questionnaire to the target audience while the ordinary least square statistical method was used foranalysing the data.

1.9    Operational Definition of Terms

Brand: A name, term, sign, symbol or design or a combination ofthem, intended to identify goods or services of one seller or a group of sellers and to differentiate

them from those of competitor

Brand Loyalty: A consumer's commitment to repurchase or otherwise continue using the brand and can be demonstrated by repeated buying of a product or service or other positive behaviors such as word of mouth advocacy

Celebrity: Any individual who enjoys public recognition and who uses this recognition on behalf of aconsumer good by appearing with it in an advertisement.

Celebrity Endorsement: Marketing communication technique of using a person who is publicly known to appear in advertisement with a product with the purpose of promoting the product. It is also the use of celebrities in order to increase the sales and/ or the recall value of a brand

Advertising: Any paid form of non-personal presentation of idea, goods or services by an identified sponsor

Consumer: This is the person or persons to which the advertisement and products/services are directed

1.10  Structure of the study

The study is structured into five chapters as follows:

Chapter one covers the background to the study, statement of the problem, objective of the study, research questions, purpose of the study, research hypothesis, scope and methodology and  plan of the study. Chapter two comprises literature review and theoretical framework. Chapter three addresses the research methodology and sources of data, model specification, re-statement of hypothesis, method of analysis and decision criteria. Chapter four contains the presentation and analysis of data while chapter five covers summary of findings, conclusion and recommendations.

1.11  Company Profile of MTN Nigeria

MTN Nigeria Communications Limited, a mobile operator, provides digital global system for mobile telecommunications services for customers in Nigeria and West Africa. Its products and services include various packages, value added services, Internet services, international roaming, and phones and devices. The company was founded in 2001 and is headquartered in Lagos, Nigeria. MTN Nigeria Communications Limited operates as a subsidiary of MTN International (Mauritius) Ltd.

          With over 45 million subscribers and counting, MTN Nigeria Communications Limited is the biggest mobile operator in Nigeria and West Africa. It is also the largest subsidiary in the MTN Group – a multinational telecommunications group offering world-class cellular network access and business solutions to over 182 million subscribers in 21 countries across Africa and the Middle East.In Nigeria, MTN provides network coverage to 88.8% of Nigeria’s land mass, while 86.2% of the population have access to their services.