Effect of Celebrity Endorsements on Dimensions of Customer-based Brand Equity: Empirical Evidence from Indian Luxury Market

Abstract

Brand equity is a brand’s incremental value due to its name. It has been long argued that brand equity must be the ultimate criterion of success in brand management because brand equity contributes both to long-term sales and long-term profits. Celebrity endorsement has gained prominence as a popular resource for marketing strategies among many firms. This research aims to empirically test the role of celebrity endorsements in the brand equity formation process. This study explored the relationship between celebrity endorsements and four dimensions of brand equity of Aaker’s (1991) brand equity model in Indian luxury products market. Data were collected through a shopping mall intercept survey of 202 respondents in the cities of Delhi, Gurgaon, Faridabad, Noida and Chandigarh. Exploratory factor analysis was used for reducing the number of scale items while regression was used to test the proposed hypotheses. The results show a positive and significant effect of celebrity endorsements on two brand equity dimensions, that is, brand awareness and brand associations, but celebrity endorsements do not have any significant influence on other two dimensions, that is, perceived quality and brand loyalty. We finally discuss the implications—both theoretical and managerial—before providing directions for future research.

Keywords

Customer-based brand equity brand loyalty brand association brand awareness perceived quality celebrity endorsements

Introduction

Endorsement of luxury brands by celebrities is not a new phenomenon. The role of celebrities in influencing modern culture as well as consumption patterns is gaining prominence. Celebrities act as arbiters of style, taste and public opinion all over the world. The celebrity endorsement enables brand managers to catch attention, add credibility and numerous intangible benefits to the brand in a way which are perhaps difficult to be attained through any other form of advertising.

The celebrity culture has followers across Asia. In Japan and South Korea, 70 per cent of commercials use a celebrity. However, the phenomenon is picking up in India and China where it has acquired momentum in a relatively short span of time (Euromonitor, 2014). Celebrity power has taken off very rapidly in India, and firms are vying with each other to secure contracts for their brands with Bollywood actors and sportspersons.

The Indian luxury goods market is not only a unique but also a challenging one for international luxury brands seeking to establish their presence here. According to a KPMG-ASSOCHAM (2014) report, the number of ultra high-net worth households is expected to grow through 2017–2018 at a compound annual growth rate (CAGR) of 27 per cent. The luxury market was earlier driven primarily by the preferences of these ultra rich households. However, in the recent past, rising incomes and aspirations have created a new segment of typically upper middle class aspirers who are potential luxury buyers. By launching entry-level luxury brands for this potential segment, luxury brands try to help these consumers move up the ‘consumption ladder’ by customizing the shopping experience. This is a significant opportunity for brands for establishing strong consumer relationships. Celebrities can be perhaps one of the ways companies can use to connect with the customer.

The contribution of celebrities is extremely valuable for the luxury brands and can make or break brands. Celebrity endorsements can help in transferring the celebrity personality and/or celebrity status to the brand directly. In luxury brands, this phenomenon is apparent to a relatively lesser extent due to the fact that luxury brands possess strong brand personalities. Therefore, a study of celebrity endorsements in luxury brands as opposed to consumer brands is a subject of interest.

Moreover, researchers (e.g., Washburn & Plank, 2002) have acknowledged the scope for improvement in the measurement of customer-based brand equity (CBBE), for example, refining its dimensionality with a focus on two dimensions specifically, that is, brand awareness and brand associations. These two dimensions although are different conceptually (Aaker, 1991), there is empirical evidence to suggest that these dimensions can be grouped as one dimension (e.g., Washburn & Plank, 2002; Yoo & Donthu, 2001) as opposed to two distinct dimensions (Sinha & Pappu, 1998). Hence, further empirical examination of CBBE becomes more important.

Further, researchers (e.g., Washburn & Plank, 2002) have also suggested the need for re-evaluation of the CBBE scale items in the scale developed by Yoo and Donthu (2001), for example, need to incorporate brand personality items since brand personality is an important contributor to brand equity (Aaker, 1997). This research aims to overcome this drawback by adding brand personality measures. Many previous researchers have frequently used student samples (e.g., Washburn & Plank, 2002; Yoo & Donthu, 2001) for scale validation. This study intends to overcome this drawback by using a sample of actual customers. Moreover, due to limitations of previous research, researchers are suggesting to incorporate varying product categories in future research (Whitelock & Fastoso, 2007).

Most of the empirical work in consumer-based brand equity has been done primarily in the United States or Europe (Christodoulides & de Chernatony, 2010). Research on endorsement of brands by celebrities has been conducted more recently in Asian countries (e.g., Chan, Ng, & Luk, 2013; Tantiseneepong, Gorton, & White, 2012; Thwaites, Lowe, Monkhouse, & Barnes, 2012). However, little research has been dedicated to understand the influence of celebrity endorsements on brand equity dimensions in India. There is a fundamental difference in terms of consumer profile and demographics between Indian and other markets. A relatively young Indian aspirational population (about two-thirds being below 30 years of age) poses challenge for international luxury brands. Therefore, a study of Indian luxury market will add value to both academia and practitioners.

Despite the increasing relevance of Indian luxury market, the topic of building brand equity via celebrity endorsements appears to be under-researched. Understanding the Indian consumer can provide international luxury marketers with valuable information for creating brand equity in Indian market and build suitable strategies for enhancing competitive advantage. This study has been organized as follows. The study begins with a review of relevant theoretical literature on dimensions of brand equity and luxury goods. Further, we describe the hypotheses for the study followed by research methodology, discussions, conclusions and limitations.

Objectives of the Study

The following objectives are intended to be achieved through this empirical study:

To understand the role of celebrity endorsements in building brand equity dimensions in Indian luxury market;

To develop a reliable parsimonious scale for measuring the effect of celebrity endorsements on brand equity dimensions;

To test the applicability of Aaker’s (1991) model in Indian luxury market.

Although the second aforementioned objective is secondary, our main focus is to understand the influence of celebrity endorsements on brand equity dimensions so that luxury brand managers can devise their strategy by optimally utilizing or allocating their resources.

Review of Literature

Researchers such as Fleck, Korchia and Roy (2012) have found that consumers having a positive brand perception will be having a greater willingness of purchasing the brand. Literature defines brand equity from two perspectives, that is, financial (e.g., Mahajan, Rao, & Srivastava, 1994) and customer (e.g., Christodoulides & deChernatony, 2010; Pappu, Quester, & Cooksey, 2005; Vazquez, Rio, Del, & Iglesias, 2002). Scholars have classified the CBBE further into two categories (Cobb-Walgren, Beal, & Donthu, 1995; Yoo & Donthu, 2001). One category looks at brand equity from customer perception point of view, that is, brand awareness, brand associations, perceived quality, while the other looks at from customer behaviour angle, that is, consumer loyalty supported by keenness to pay premium.

Conceptualizing and measuring brand equity, including its antecedents and outcomes, is a challenging task (Kish, Riskey, & Kerin, 2001). In addition, there is hardly any agreement regarding dimensionality of consumer-based brand equity. Christodoulides and de Chernatony (2010), in their review of literature, have identified several consumer-based brand equity dimensions. Similarly, practitioners have suggested a number of aspects which could be considered consumer-based brand equity dimensions (Veloutsou, Christodoulides, & de Charnatory, 2013). Despite different opinions of scholars and practitioners regarding the brand equity composition, the most commonly and widely adopted model in conceptual domain of consumer-based brand equity in empirical research has been that of Aaker (1991).

In this study, we use Aaker’s (1991) widely acclaimed and accepted model of brand equity. Brand equity (Figure 1), apart from other proprietary brand assets, consists of four main dimensions, namely, brand awareness, brand associations, perceived quality and brand loyalty (Aaker, 1991), which have been frequently used and accepted by many scholars (Bendixen et al., 2003; Cobb-Walgren et al., 1995; Kim et al., 2003; Lee et al., 2011; Motameni & Shahrokhi, 1998; Yoo, Donthu, & Lee, 2000; Yoo & Donthu, 2001; Washburn & Plank, 2002 ).

Figure 1.

Source: Aaker (1991).

Brand equity has been defined by Aaker (1991) as ‘a set of assets and liabilities linked to a brand that create value for both customers and the firm’. The set of assets and liabilities has been grouped into five different categories (Figure 1) and are referred to as brand equity dimensions.

Perceived Quality

Perceived quality has been referred to ‘the customer’s judgment of a product’s overall excellence or superiority’ (Zeithaml, 1988). As compared to non-luxury brands, the luxury brands are expected to offer both superior product quality and performance. Expectations of perfectionist consumers in terms of value are high from luxury brands (Aaker, 1991) because of a better brand perceived quality and reassurance. The luxury consumption literature emphasizes the importance of luxury brand quality leadership for better perception (Garfein, 1989; Quelch, 1987). According to Zeithaml (1988) brand value is composed of perceived quality and therefore the consumers may choose a brand due to its high perceived quality rather than other competing brands.

Brand Awareness

Brand awareness is an important constituent of brand equity and refers to a brand’s presence and its strength in consumers’ minds (Aaker, 1991; Keller, 1993). Brand awareness is defined by Rossiter and Percy (1987) as the ability of the consumers to either identify or recognize a brand. Keller (1993) proposed brand awareness being composed of not only brand recognition but also brand recall. Several brand awareness levels have been mentioned by Aaker (1991) ranging from just brand recognition to brand dominance—a condition where the consumer recalls the brand involved as the only brand recalled. Brand awareness can symbolize quality and commitment, creating brand familiarity of consumers and thus improving brand consideration during purchase (Aaker, 1991).

Brand Associations

Brand association refers to any linkage to a brand in consumer’s memory (Aaker, 1991) and is described by the linkage of informational nodes to the brand node in consumer’s memory that contains the meaning of the brand for consumers (Keller, 2003). These associations have their own levels of strength (Aaker & Keller, 1990). Brand associations help in creating value both for the firm as well as its customers and build brand equity by differentiating the brand, creating positive feelings or attitudes in the minds of consumers. Researchers (e.g., Pouromid & Iranzadeh, 2012) have shown a positive and significant relationship between brand association and brand equity.

Brand Loyalty

The ultimate goal for any firm is the creation, maintenance and improvement of customer’s brand loyalty (Dick & Basu, 1994). Loyal consumers will show relatively better responses to the marketing of a brand than non-loyal consumers (Grover & Srinivasan, 1992). The benefits of building customer loyalty for any firm include improved profitability, reduced costs of marketing and edge over competition (Reichheld & Sasser, 1990). Brand loyalty has been defined as ‘a measure of a customer’s attachment to a brand’ (Aaker, 1991). The extent to which a buying unit such as a household, focuses its buying on a particular brand but within a product category over time is known as brand loyalty (Schoell & Guiltinan, 1990). Brand loyalty is a consumer’s deeply held commitment to purchase a preferred brand repeatedly on regular basis in the future, without being affected by situational influences and marketing efforts of competitors (Oliver, 1997).

Luxury Goods

Consumers purchase luxury brands for their uniqueness, quality, scarcity, hedonism and attributes such as self-expression (Vigneron & Johnson, 2004). Despite a tremendous growth and rich accumulated knowledge of luxury brands and luxury market, there is a no clear consensus about definition of a luxury brand (Vickers & Renand, 2003; Vigneron & Johnson, 2004). Social and behavioural psychology has defined luxury from motivations related to external factors, for example, opinions, approval of others (Groth & McDaniel, 1993) and internal factors stimulating consumption of luxury brands, for example, feelings and emotions (Vigneron & Johnson, 2004). The reasons for luxury goods consumption include creating positive impression, social recognition and status (Novak & MacEvoy, 1990; Vickers & Renand, 2003; Vigneron & Johnson, 1999). Luxury brands are also being consumed for hedonic purposes (Fenigshtein, Scheier, & Buss, 1975; Vickers & Renand, 2003).

Hypotheses

The importance and value of celebrities, especially in the luxury fashion sector cannot be ignored (Okonkwo, 2007). Friedman and Friedman (1979) defined a celebrity as ‘an individual who is well known to the public (i.e. an entertainer, an actor, a sports figure, etc.) for his or her achievements in areas other than that of the product class endorsed’.

Spielman (1981) has shown that celebrities can enhance the attentiveness towards the ad, increase the memorability, credibility or desirability of copy, and also glamourize the product effectively. Keller (2002) suggests that celebrity as a famous person can help in drawing attention towards a brand and shaping its perceptions. In a study conducted by Copeland, Frisby and McCarville (1996), the researchers found increased product awareness to be an important reason for choice of celebrity endorsers by companies. Other researchers also have discussed the role of celebrities in making advertisements believable (Kamins, 1990) and enhancing message recall by consumers (Friedman & Friedman, 1979). Celebrity endorsement thus affects the brand awareness positively.

Celebrity endorsement involves association between a brand and a person having already well-known name and face. McCracken (1989) proposed imparting of their own cultural meanings by celebrities to the endorsement process, for example, transfer of certain unique meanings embodied by celebrities (beauty, success etc.) being transferred to brands. Similarly, other researchers have deliberated the usefulness of associative learning theory in explaining the process of transferring celebrity’s unique attributes to brands (Till, 1998). According to this theory, memory is a network of various nodes connected by associative links. The pairing of a celebrity and brand over a time period will help in connecting these nodes and repeat exposures towards a celebrity will transfer feelings and or meanings to the endorsed brand. Celebrity endorsement thus affects the brand association positively.

When a company uses a celebrity for brand endorsement, it hopes the brand to benefit from customers’ brand awareness by improving the quality perceptions of the brand or imparting a certain image. The credibility of a celebrity endorser normally instils high quality in the minds of consumers. For example, any sports brand associated with top-line athletes can indicate the superior brand quality thus creating a credible image. Perceived quality thus refers to consumers’ brand opinions which are subjective in nature. According to Erdogan, Baker and Tagg (2001) celebrities are chosen by firms to build a strong lasting so as to persuade the consumer for making a purchase. Thus, the celebrity may also enhance perceived quality of a brand, thus allowing higher prices to be charged by the brand managers (Shimp, 2008).

The celebrity endorser can reduce the consumers’ price sensitivity and improve the brand loyalty (Mela, Gupta, & Lehmann, 1997). If the consumers view the celebrity as a role model then they will most likely be loyal to the brand endorsed by celebrity. Therefore, celebrities can influence the consumers purchase the brand repeatedly, that is, increase their brand loyalty.

Based on the literature review, we propose the following hypotheses:

H₁: Perceived brand quality is related positively and significantly to celebrity endorsements used for the brand.

H₂: Brand awareness is related positively and significantly to celebrity endorsements used for the brand.

H₃: Brand association is related positively and significantly to celebrity endorsements used for the brand.

H₄: Brand loyalty is related positively and significantly to celebrity endorsements used for the brand.

These proposed hypotheses and their relationships are shown in Figure 2.

Figure 2.

Source: Authors’ own.

Methodology

Pre-test

For assessing the clarity of the items and questions, by using non-probability sampling technique we collected 50 pre-test surveys from a corporate executives (32) and management graduates (18) through e-mail. The respondents were asked to convey the difficulty in comprehending and answering the questions, and also suggest improvements in the questionnaire, if any. Based on the respondents’ feedback from the pre-test, we made minor improvements in the wording of questionnaire.

Data Collection

We employed mall intercept survey technique to collect consumer information. Shopping malls in north Indian cities of New Delhi, Gurgaon, Faridabad, Noida and Chandigarh were selected based on the criterion whether selected apparel brands included in the study were available in these malls. The study subjects were adult respondents 18 years of age or older who had purchased any of the listed brands in the last 12 months and were also users of the brands in this study. Each respondent had to evaluate only one of their favourite brands.

Product Stimuli Selection

To select the commercial brands in this study, we used only well-known brands (Leuthesser, Kohli, & Harich, 1995) by interviewing 50 individuals personally and requested them to indicate international luxury brands from three categories (pens, watches and perfumes) purchased and used by them and of which they had sufficient knowledge. Based on the responses, nine brands were shortlisted (referred to as stage 1 in Table 1).

Table 1.

List of Brands Considered, Category and Country of Origin

S.No.	Brand	Category	COO	Stage 1		Stage 2
				F	%	F	%
1	Mont Blanc	Pens	Germany	5	10	21	10.40
2	Sheaffer	Pens	U.S.	6	12	29	14.36
3	Parker	Pens	U.K	5	10	19	9.41
4	Longines	Watches	Switzerland	6	12	28	13.86
5	Tag Heuer	Watches	Switzerland	6	12	23	11.39
6	Rolex	Watches	U.K.	7	14	21	10.40
7	Dior	Perfumes	France	6	12	18	8.91
8	Hermes	Perfumes	France	5	10	23	11.39
9	Bvlgari	Perfumes	Italy	4	8	20	9.90
			Total	50	100	202	100

Source: Authors’ own.

Notes: Key: F = Frequency, COO-Country of origin

Stage 1- Product stimuli selection; Stage 2- Final survey

Instrument and Measures

Items representing four brand equity dimensions and celebrity endorsements were generated through literature review to create the initial pool for the instrument leading to 29 items (at least five items per construct). The respondents had to indicate their level of agreement through a 5-point Likert scale (1 = strongly disagree and 5 = strongly agree). For complete list of measures and sources of brand equity dimensions and celebrity endorsements, please refer the Appendix.

Data Analysis

Responses were obtained from 225 patrons of luxury brands and the reduction in number of items was done by using exploratory factor analysis (EFA). Twenty-three responses were not considered for further analysis as they were either incomplete or were identified as outliers. We analyzed the data through two-step approach. The first stage involved ensuring instrument’s reliability and validity. We then tested the hypotheses in second stage. Table 2 summarizes sample characteristics of respondents included in the study.

Table 2.

Sample Characteristics (N = 202)

Demographic Characteristics		F	Per Cent
Gender	Male	109	53.96
	Female	93	46.04
Age (years)	18–25	64	31.68
	25–35	62	30.69
	35–45	56	27.72
	45–55	17	8.42
	55–65	3	1.49
Education	High school	6	2.97
	Graduates	102	50.5
	Post-graduates	88	43.56
	Others	6	2.97
Marital status	Single	71	35.15
	Married, with kids	72	35.64
	Married, no Kids	55	27.23
	Others	4	1.98
Household annual income (in ₹)	Upto10 lakhs	56	27.72
	Between 10 and 20 lakhs	63	31.19
	Between 20 and 30 lakhs	45	22.28
	More than 30 lakhs	38	18.81
City-wise break-up of respondents	New Delhi	48	23.76
	Gurgaon	41	20.3
	Noida	38	18.81
	Faridabad	34	16.83
	Chandigarh	41	20.3

Source: Authors’ own.

Reliability of Measures

A large number of the items in this study have been borrowed from instruments used in earlier studies mainly conducted in western countries. It was, therefore, necessary to test the scale before collecting data for ensuring its applicability to the Indian market.

Reliability

Due to the fact that brand equity construct is multidimensional, coefficient alpha (Cronbach, 1951) was computed separately for each of the five constructs. A cut-off level of 0.7 has been recommended research involving theory testing (Nunnally & Bernstein, 1994). Using this criterion, we eliminated those items whose contribution to reliability was not significant. By repeating this iterative sequence several times, we obtained a set of 16 items across the five constructs.

Exploratory Factor Analysis (EFA)

We examined the dimensionality of the 16-item scale by using EFA which helped in reducing the number of items and determining construct validity. Kaiser–Meyer–Olkin (KMO) test was used to ensure sampling adequacy. The KMO value (0.861) was found to be more than accepted value of 0.5. Bartlett’s test of sphericity indicated that the sample and factors extracted were adequate and appropriate as the value obtained (p = 0.00) was significant (<0.05).

We extracted the components by using principal component analysis (PCA) method and retained only those components which had Eigen values higher than 1 and those items whose loading factor was more than 0.7. The high factor loadings obtained after varimax rotation in Table 3 show a clear factor pattern indicating an internal consistency among items within each construct, which is indicated by high alpha values. In addition, the combined scale alpha value of 0.805 for the 16-item instrument indicates satisfactory reliability.

Table 3.

Construct Reliability

Cons	Items	CID	CAC (NI)	FL	VAR (per cent)	EV
	I know this brand X very well	0.730		0.813	24.620	7.420
BAW	X is not known to me (R)	0.728	0.756(3)	0.806
	I am aware of brand X	0.752		0.723
	I consider myself to be loyal to Brand X	0.734		0.716	15.350	5.310
BLO	Brand X would be my first choice	0.746	0.731(3)	0.706
	I will not buy other brands if Brand X is available at the store	0.802		0.702
	I can quickly recall the symbol or logo of brand X	0.724		0.718	13.360	3.830
BAS	Brand X is associated with sophistication	0.719	0.753(4)	0.810
	I have a clear impression of the type of people who use brand X	0.718		0.816
	Some characteristics of brand X come to my mind quickly	0.818		0.801
	Brand X is a brand characterized by its continuous innovation	0.825		0.756	8.360	2.460
PRQ	Brand X appears to be of very poor quality (R)	0.824	0.725(3)	0.733
	Brand X is of high quality	0.827		0.731
	Brand X is intensively endorsed by celebrities	0.850		0.704	6.120	1.630
CEL	The celebrity endorsements for brand X seem very expensive	0.749	.711(3)	0.719
	My opinion about brand X’s celebrity endorsements is very high	0.750		0.716

Source: Authors’ own.

Note: Cons, construct; BAW, brand awareness; BLO, brand loyalty; BAS, brand association; PRQ, perceived quality; CEL, celebrity endorsements; R, reverse coded; CID, Cronbach’s alpha if item deleted; CAC (NI), Cronbach’s alpha of construct (No. of items); FL, factor loading; VAR, variance; EV, Eigen values.

Hypothesis Testing

We used celebrity endorsements as an independent variable in this study to measure the effect on dependent variables, that is, perceived quality, brand awareness, brand association and brand loyalty through regression. The results show a positive and significant (p < 0.01) influence of celebrity endorsements on brand awareness and brand association (Table 4). Furthermore, the role of celebrity endorsements is more significant in creating brand awareness (β = 0.660) as compared to brand associations (β = 0.556). However, the influence of celebrity endorsements on perceived quality and brand loyalty was not found to be significant.

Table 4.

Hypothesis Testing

Dependent variable	Beta	t-Value	Sig.	R Square	Adj. R Square	SEE
Brand awareness	0.660	6.091	0.000*	0.436	0.424	0.499
Brand association	0.556	4.635	0.000*	0.309	0.295	0.468
Perceived quality	0.301	2.213	0.083	0.072	0.068	0.408
Brand loyalty	0.238	1.698	0.096	0.057	0.037	0.378

Source: Authors’ own.

Notes: Independent variable: celebrity endorsements; SEE, standard error of estimate; *sig. p < 0.01.

Discussion and Implications

In this study, the role of celebrity endorsements has been found to be significant and positive in influencing brand awareness and brand association. However, as per the findings celebrity endorsements do not help in improving the perceptions of quality and building brand loyalty.

The hypothesis H1 (significant and positive effect of celebrity endorsement on perceived quality) was not supported in this study. The findings can be compared with those researchers (e.g., Agrawal & Kamakura, 1995) who doubted the power of celebrity to impact the efficiency and features of the core product. Luxury brands deliver better experience at two different levels, that is, at a product level and at an experiential level. The experience at the product level refers to satisfaction of the functional and utilitarian characteristics, for example, craftsmanship, high product quality, precision and uniqueness in designs. At experiential level luxury brands appeal to consumer’s emotions. Celebrities may appeal to customer emotions and hence motivate 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 favourable brand image and brand loyalty and hence the firm’s profitability and competiveness. Thus, for building brand loyalty for luxury brands, investment in product quality is expected to build loyalty rather than only a communication from celebrity.

The hypothesis H2 (significant and positive effect of celebrity endorsement on brand awareness) was supported in this study. There are several reasons why firms use celebrity endorsers in advertising, for example, generating not only publicity but also brand attention (Biswas, Hussain, & O’Donnell, 2009), getting attention by cutting through advertising clutter and better recall results for advertisements (Friedman, Termini, & Washington, 1976; Kamins, 1990). Increasing brand awareness has been on top priority of companies. Celebrities can thus help not only in building and maintaining attention but also in achieving high brand recall rates in today’s cluttered environments.

The hypothesis H3 (significant and positive effect of celebrity endorsement on brand association) was also supported in this study. Advertisers have been spending large sums of money on celebrities for promotion of their brands in anticipation of a positive consumer brand association with a certain brand thus improving the firm’s sales and the brand equity.

Celebrity endorsement helps in transferring not only the attributes to the brand such as glamour, talent, beauty and style of the celebrity but also the status, for example, successful, wealthy, etc. This effect, however, may not be prominent in case of luxury brands due to their well-defined as well as strong brand personalities, thus raising the concerns regarding the choice criterion for a celebrity especially matching right celebrity with right brand for achieving maximum desired impact. Although a battery of tools can be used by marketers for developing and maintaining appropriate associations, endorsements by celebrity represent one way to transfer meanings to brands (McCracken, 1989) and a powerful mechanism for brand equity management. Marketers therefore need to be careful in selection, use and evaluation of celebrities, for example, choosing well-known personality with relevant associations to be transferred to the brand so as to create a logical link of the brand with the celebrity. Managers may avoid celebrities endorsing multiple brands.

The hypothesis H4 (significant and positive effect of celebrity endorsement on brand loyalty) has not been supported in this study. Johnson, Herrmann and Huber (2006) have described perceived value as the total assessment made by consumers as to what is received in relation to what is paid for. Therefore, if the consumers believe that they have received something significant for the costs borne by them, they will show a stronger commitment and hence loyalty for a particular brand. However, if the brand quality does not resonate with their expectations, a polar effect will take place. Managers therefore need to understand that celebrity endorsements can enhance both consumers’ confidence in a product and preference for it thus influencing their purchase intention. Celebrity endorsements, however, always will not help in building brand loyalty which in turn ultimately depends upon brand experience. A celebrity may influence buyers’ decision to purchase a brand but their loyalties will shift quickly in the absence of brand performance up to customer expectations.

Our final instrument comprised 16 items representing celebrity endorsements and four brand equity dimensions, that is, brand awareness, brand associations, brand loyalty and perceived quality. The scale was developed in different stages, which included the purification of initial pool of items and assessment of reliability. The findings demonstrate scale’s reliability. We examined the dimensionality of the scale by using EFA which ensured construct validity. Our findings suggest that brand awareness and brand associations are two independent constructs. Byrne (2003) has argued that to judge model satisfactoriness, we should take into account both theoretical and empirical justifications. Empirically, this results from EFA suggested that the brand awareness and brand association constructs are independent. Aaker (1996) has conceptualized that brand awareness must precede brand associations. In another study, using apparel brands as stimuli among college females, brands with a higher brand awareness level were found to have significant level of favourable brand associations (Dew & Kwon, 2010). Thus, to develop a set of associations, a customer must be aware of the brand (Washburn & Plank, 2002). Celebrity endorsements can play a major role in building brand associations as indicated by hypothesis H3 being supported in this study.

Conclusions

Celebrities play an important role by adding value to brands particularly in the luxury market. Celebrity endorsement of luxury brands has a tremendous potential to create brand equity. However, the topic of building brand equity through celebrity endorsements has not been well researched especially in Indian market, although plenty of empirical studies exist related to consumer goods in general. The primary objective of this study is to create knowledge regarding creation of brand equity for luxury brands in India through celebrity endorsement.

This study makes a contribution to understanding Indian luxury market by exploring the relationship between brand equity dimensions and celebrity endorsements. This study shows the significant positive role of celebrity endorsements in creating brand equity by influencing brand awareness and brand associations. Brand awareness is first essential step in consumer purchase process. Therefore, the target market has to be made aware of a firm’s brand(s). This can be achieved through advertising or other form of communication. However, a celebrity along with the firm’s brand name will not only improve the likelihood of brand recall but also infuse the brand with charisma of the celebrity.

Managers need to understand that effectiveness of brand awareness is only up to a certain limit beyond which organizations need to build associations which are strong, favourable and unique in the potential customer’s mind so as to ensure brand purchase. This illustrates the importance of marketing of the brand beyond simply awareness and understanding simultaneously the important role of brand associations for building brand equity.

Celebrities may, thus, help in generating consumer attention and recall of advertising campaigns if there is an appropriate fit between the brand and the celebrity. A proper congruence between the celebrity and the luxury brand can help not only a brand stand out of the clutter but also in better brand recall. This can be achieved if the marketer does a thorough spadework before choosing a celebrity so as to build a brand’s unique selling proposition. Firms and their brand managers must take into account the possible consequences of associations with these celebrities, specifically when they fall under scandal that leads to a serious damage to the brand or the firm endorsed by them. Further, a single marketing communication effort such as celebrity endorsement individually may not build strong brand equity but using a combination of marketing elements may prove to be more effective for establishing a foothold in the Indian luxury market.

Although the endorsers help customers in knowing a brand better, the findings in this study suggest that neither perceived quality nor brand loyalty is influenced by celebrity endorsers in Indian luxury market. There is no evidence in literature showing that the celebrity endorsement will build strong brand loyalty as compared to a brand not endorsed by any celebrity. A possible reason could be that consumers focus more on celebrities in advertisements as compared to the actual brand being endorsed. The celebrity power may lead to one time or occasional behavioural purchase by consumers rather than building any true commitment towards the brand (Byrne & Whitehead, 2003).

Although celebrity endorsements have been found to not affect the perceived quality, the perceptions of quality can help in building brand loyalty. Attribute frequency concept helps in explaining loyalty towards brands. Higher the number of favourable attributes a brand possesses, the greater the consumer liking for the brand. A brand can be preferred to another if the consumer thinks that it possesses more favourable attributes, thus generating a strong attitude towards a particular brand one in this case (Bandyopadhyay & Martell, 2007). For a consumer not having any specific attitude towards a brand in a product category, the consumer will purchase the brand having most favourable attributes, thus leading to a behavioural loyalty.

A principal contribution of this study has been the incorporation of brand personality items as part of brand association construct and retaining three of these items in our final instrument. The reliable and parsimonious scale developed in this study will benefit both scholars and managers due to relatively few items and the simplicity to use. Few items will make the job of luxury brand managers in India easy to measure the impact of celebrity endorsements on brand equity dimensions as per conceptual framework. This study shows the role of celebrity endorsements in influencing brand equity dimensions for building brand equity in Indian luxury market. Managers can use these findings to draw implications for their branding strategies. Managers can strengthen their brands by investing in improving brand awareness and brand association(s). Although the role of celebrity endorsements in influencing perceived quality and brand loyalty may not be significant in Indian luxury market, their contributions in building brand equity cannot be ignored.

To summarize, celebrity endorsement of luxury brands is a strategy having undoubtedly great importance. The results on short-term basis may not be as per managerial expectations but if managed effectively, celebrity endorsement strategy may yield benefits in the long term such as improved brand awareness and brand associations. Managers can use these findings for brand-building strategies by using celebrity endorsements judiciously in Indian luxury market. It would be, however, dangerous if managers consider celebrity endorsement to be a solution for all brand-related issues.

Limitations and Directions of Future Research

We have successfully explored effects of celebrity endorsements on creating brand equity in the Indian luxury market and discussed important theoretical and managerial implications but this study has its own shortcomings. The focus of this study was limited to five north Indian cities. Further studies may be conducted in other regional markets of India, for example, south, west and east. Second, this study has examined only the individual marketing variables and their effects, the interactions among these variables need to be investigated. The different marketing strategies being interactive in nature, there is a possibility of an interaction between celebrity endorsement and advertising or between advertising and commercial event sponsorship and so on. Both scholars and practitioners need to understand the mix of such strategies that for developing and sustaining brand equity. Therefore, there is a need to explore the interaction effects. The third limitation is that this study has used the variables which are too broad in nature. For example, all celebrities build a brand. An empirical study about the type of celebrity (e.g., athlete, an actor, etc.) and its role in building brand equity will be more helpful in developing specific strategy.

Further, the growth of social media has been phenomenal in the recent past and it has created a self-styled celebrities. This new breed of celebrities, that is, the celebrities created through reality television, YouTube, social media and any other digital media attracts a large number of audience and have the potential to influence the buying behaviour of their followers. Researchers may like to explore their impact on brand equity of luxury brands and compare this new breed with traditional celebrities. Finally, all brand equity dimensions may be having a significant and directional causal relationship among them which also needs to be investigated.

Appendix:

Measures of Brand Equity Dimensions and Celebrity Endorsements

Construct (No. of Items)	Item
Brand awareness (5)	I can recognize brand X among other competing brands*
	I am aware of X brand*
	I know X brand*
	This brand X is not known to me ®**
	I know this brand X very well**
Brand association (7)	Some characteristics of brand X come to my mind quickly*
	I can quickly recall the symbol or logo of brand X*
	Brand X has a strong personality***
	I have a clear impression of the type of people who use brand X ***
	Brand X is associated with sincerity****
	Brand X is associated with excitement****
	Brand X is associated with sophistication****
Perceived quality (5)	Brand X is of high quality *
	Brand X must be of very good quality*
	Brand X appears to be of very poor quality ®*
	Brand X is a brand characterized by its continuous innovation***
	Brand X is a quality leader within its category***
Brand loyalty (7)	I consider myself to be loyal to X brand*
	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***
	The price of another brand would have to be considerably inferior to not choose brand X***
	Even in the case of not using it, I would like to buy brand X***
Celebrity endorsements (5)	The Celebrity endorsements for brand X seem very 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***

Source: *Yoo et al. (2000); ** Rajh (2005); ***Villarejo-Ramos & Sánchez-Franco (2005); **** Hananto (2006).

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