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Past Issue • Apr-Jun 2016

Celebrity Endorsements: An Issue in India Because of Higher Power Distance

Celebrity endorsement has come into the spotlight in India with recent controversies over products endorsed by well-known personalities. This is more of an issue in emerging markets like India because of the high credibility that celebrities carry. This phenomenon stems from the fact that power distance, or the acceptance of unequally distributed power, is high in countries like India. Recent research by Manish Gangwar, Assistant Professor, Marketing at the Indian School of Business (ISB), shows why this is a matter of concern.

Nestle India was embroiled late last year in an unseemly controversy over the usage of Monosodium glutamate (MSG) in its popular Maggi noodles with alleged excessive usage of the food additive even leading to a temporary withdrawal of the product from store shelves. While the company emerged unscathed from the controversy a collateral fallout has been the focus on celebrity endorsers, and the extent of their accountability for the quality and claims made by producers for the products they sell. Some of Maggi’s endorsers included Bollywood actors Amitabh Bachhan, Madhuri Dixit and Preity Zinta. The Maggi fiasco was soon followed by a controversy over cricketer M S Dhoni’s endorsement of the Amarpali housing project that kept newspaper headlines busy for several weeks.

So much so, recently India’s Consumer Affairs Minister Ram Vilas Paswan was reported to have stressed a new Consumer Protection Bill would be introduced in the forthcoming monsoon session of the Parliament holding celebrities responsible and accountable for the products they endorse. This comes close on the heels of the opinion of the Standing Committee on Food, Consumer Affairs and Public Distribution in April that the existing laws were not deterrent enough to discourage manufacturers or publishers from using such personalities for misleading advertisements. In fact the Committee went on to recommend a fine of up to `10 lakhs or imprisonment of up to two years or both for a first-time offender and a fine of `50 lakhs and five years’ imprisonment for a second-time offender. The 9th report of the Committee submitted in April this year, further suggested a redefinition of endorsement to avoid ambiguity.

But the moot question is why should one be so concerned about celebrity endorsements, and why is it more of an issue in emerging markets like India and China where it is more prevalent than in countries like America? The reasons for this are not difficult to fathom says Manish Gangwar. He has extensively researched the phenomenon through several studies comparing the impact of celebrity advertising on subjects in India and the US. His research theorises that the positive effect of celebrity endorsers on advertisement evaluations is more potent as power distance increases and that source expertise and trustworthiness mediate this moderating effect. “My research shows that power distance influences how consumers perceive the celebrity endorsements as credible and trustworthy. As the influencing how consumers perceive the celebrity endorsements as credible and trustworthy. As the influencing power of celebrities is high in countries like India, celebrities may have to be concerned about the products they advertise and be accountable for deficiency in the quality of the products,” he says. (See interview) And this also explains why celebrity endorsements are more popular here in India, China and other emerging markets.

Celebrities need to be more accountable

Perceived credibility of celebrities is high in emerging markets.
Therefore, celebrities need to be made accountable also, says Professor Manish Gangwar.

A parliamentary panel has suggested celebrities should be held accountable for the brands they endorse, especially if an advertisement in which they feature is found to be misleading. Why is celebrity accountability important?

Countries like India, China, Korea are characterised by high power distance. My research shows that the power distance influences how consumers perceive the celebrity endorsements as credible and trustworthy. As the influencing power of celebrities is high in countries like India, they should be concerned about the products they advertise and be accountable for deficiency in the quality of the products.

Celebrity endorsement appears to be more popular in emerging markets than those in the developed markets. Why is it so?

Celebrities are idolised by consumers in the emerging markets. The consumers tend to identify themselves with the celebrities and try to imitate them. They also tend to internalise the beliefs of the celebrity. The perceived credibility of celebrities is also high in emerging markets.

Is the effectiveness of celebrity endorsement consistently effective across cultures and regions? Your research talks about the concept “power distance”. How is it related to the effectiveness and popularity of celebrity endorsements?

The effectiveness of the celebrity endorsement varies across different cultures and regions. My research shows that power distance, that indicates the degree of inequality of power and wealth in a society, is low in countries like USA and is higher in countries like India and China. People in countries with high power distance tend to accept inequality and authority. They listen to and respect the opinions of the authoritative persons like celebrities, thereby attributing credibility to the celebrity. Celebrity endorsements are more effective in countries with high power distance than in countries with low power distance.

How much does attractiveness play a role in acceptance of celebrity endorsement? What did your research show?

Attractiveness pertains to the familiarity and likability of the celebrity. The attractiveness of the celebrities impacts the advertising effectiveness via the affective route (emotional) i.e. changing the attitudes towards the product. As most of the spokespersons in advertisements tend to meet minimum threshold of attractiveness, it was assumed to be constant in this research.

What are the implications of your research for advertisers? How should they strategise while using celebrity endorsers? What are your recommendations for them?

The advertisers need to consider variations in the cultural factors across countries while selecting the celebrity endorsers and should select ‘Horses for Courses’. In emerging markets (usually associated with high power distance), celebrity endorsers should be used to increase the effectiveness of the advertisements. In countries with high power distance, the advertisers need not worry too much about the actual credibility of the celebrity endorsers as the high power distance increases the perceived credibility of the endorsers. Our research shows that the consumers in low power distance countries do not tend to attribute greater credibility to celebrity endorsers visa- vis non-celebrity spokespersons. Source credibility may be critical while using celebrity endorsements in low power distance cultures.

When Celebrities Count: Popularity of Celebrity Endorsements in Emerging Markets

Working Paper by Winterich, Karen Page., Grewal, Rajdeep., and Gangwar, Manish

Abstract

Though celebrity endorsements have long been used in advertisements, celebrity endorsements are more prominent in some (emerging) markets such as China, Korea, India, and Latin America than other markets such as the United States and United Kingdom. Why are celebrity endorsements more popular in some countries than others? To examine why the effectiveness of celebrity endorsers varies across cultures, we propose that power distance, a cultural orientation regarding the extent to which one expects and accepts differences in power, should moderate the effect of celebrity endorsements on advertisement evaluations. We theorise that the positive effect of celebrity endorsers on advertisement evaluations is more potent, as power distance increases, and that source expertise and trustworthiness mediate this moderating effect. To test our hypotheses we develop a mediated-moderation regression model, where we correct for measurement error for the dependent variable and mediators and the endogeneity of the mediators (source expertise and trustworthiness) using latent instrumental variables (which makes the use of Markov chain Monte Carlo methods preferable). The results from an initial study measuring power distance among Indian consumers provides initial support that power distance does explain the popularity of celebrity endorsements in emerging markets. Our main study that primes power distance for consumers in two countries (India and United States) provides support for mediated-moderation such that this moderating effect of power distance is mediated by source expertise.

Discussion

Celebrity endorsements have long been used in advertisements, but recent research suggests that their presence may differ across countries (MEC 2009). Specifically, both media assessments and academic research suggest that celebrity endorsements are more prominent in emerging markets such as China, India, and Latin America than developed countries such as the United States and the United Kingdom (e.g., Paek 2005; Sager 2011). Our research examines whether the cultural dimension of power distance, which is higher in emerging markets (Fletcher and Melewar 2001; Kulkarni 2012), moderates the effect of celebrity endorsements on advertising effectiveness such that consumers with higher power distance have more favorable evaluations of advertisements with celebrity endorsers versus non-celebrity spokespeople compared to those with low power distance. Moreover, we examine whether perceived credibility of the source underlies the moderating effect of power distance on effectiveness of celebrity endorsements in a mediated-moderation regression model. Our model specification corrects measurement error in the mediator and dependent variable and endogeneity of the mediator by using latent instrumental variables. The results from analysis of data from a two-country (India and United States) experiment provided support for mediated-moderation, indicating that power distance does explain the popularity of celebrity endorsements in emerging markets and that this moderating effect of power distance is mediated by perceptions of source expertise, a dimension of credibility.

As more and more brands enter the global marketplace, it is important for managers to consider variations in the effectiveness of advertising strategies across cultures.

What is Power Distance?

“Power Distance has been defined as the extent to which the less powerful members of organisations and institutions (like the family) accept and expect that power is distributed unequally. This represents inequality (more versus less), but defined from below, not from above. It suggests that a society’s level of inequality is endorsed by the followers as much as by the leaders.”*

*Hofstede, G. (2011). Dimensionalizing Cultures: The Hofstede Model in Context. Online Readings in Psychology and Culture, 2(1). http://dx.doi. org/10.9707/2307-0919.1014

Our research makes several theoretical contributions by not only contributing to the limited understanding of the effect of power distance on consumer behavior, but also by providing insights into the effect of celebrity endorsements across cultures by examining the underlying process of perceived credibility. Specifically, we draw upon the association of higher power distance in emerging countries compared to that of developed countries to understand the role of power distance in the differences in celebrity endorsements across emerging and developed countries. In doing so, we demonstrate that the cultural tendencies associated with power distance that lead to respect for authority result in high power distance consumers attributing greater credibility to celebrity endorsers, which results in more favorable advertisement evaluations. Our research expands existing research on cross-cultural differences in celebrity endorsements by empirically demonstrating the process through which the cultural dimension of power distance influences advertising effectiveness.

Managerial Implications

Our research provides practical insights for marketing managers, particularly those considering the use of celebrity endorsers in their advertising campaigns. As more and more brands enter the global marketplace, it is important for managers to consider variations in the effectiveness of advertising strategies across cultures. Our research demonstrates that emerging markets, which tend to be higher in power distance, respond more favorably to celebrity endorsers as evidenced through enhanced advertisement evaluations. Importantly, the greater power distance that tends to characterise emerging markets improves advertisement evaluations because these consumers tend to perceive celebrities to have greater expertise whereas consumers with low power distance do not tend to attribute greater expertise to celebrity endorsers relative to non-celebrity spokespeople.

In recognising the underlying role of perceived credibility, specifically expertise, our research reinforces Amos et al.’s (2008) recommendation that practitioners should use the three factor source credibility model as a basis for evaluating consumer perceptions of a celebrity endorser. In utilising this model it is important for marketing managers to recognise that cultural differences between emerging
and developed countries may differentially impact source expertise. Additionally, given the importance of consumer perceptions of credibility rather than actual, objective credibility (Lee and Thorson 2008; O’Mahoney and Meenaghan 1998), our research suggests that marketers need not worry about objective credibility, or more specifically objective expertise, of endorsers in emerging markets where power distance will increase perceived expertise. At the same time, objective or at least perceived source expertise may be critical when utilising celebrity endorsements in advertisements targeted to consumers characterised by low power distance.

ABOUT THE AUTHORS

  • Manish-G

    Manish Gangwar

    Manish Gangwar, Assistant Professor of Marketing at the Indian School of Business (ISB).
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