1

CHAPTER ONE
INTRODUCTION
1.1. Background to the Study

One of the most valuable tangible assets of a firm or an organization is its

brand. Its brand Ambassador is ‘Incumbent’ on marketing to properly manage their

values. Building a strong brand is both an art and a science; it requires careful

planning, deep long term commitment, and creatively designed and executed

marketing. A brand Ambassador Command intense consumer loyalty, at its heart is

a great product and services. Marketers of successful 21 st Century brand

Ambassadors must excel at the strategic brand Ambassador Management process.

Strategic brand Ambassador Management Combine the design and implementation

of marketing activities and programmes to build, measure, and manage brand

Ambassadors to maximize their value (Ogar, Igwe, Umeri and Ogbuu, 2018).

However, in present day hyper competitive economy, with increasingly

rational buyers faced with abundant choice, the essence of strategic marketing that

promotes profitable value delivery process i .e choosing the value, providing the

value and communicating the value through segmentation, targeting and

positioning (STP) benchmark, the networking of a value chain of both primary and

support activities cannot be controversed (Porter 1985, Kumar 2004 and Wylie

2003 cited in Ogunsiji, 2012). Strategic brand management as a process involving

 2

the design and implementation of marketing activities and programmes builds

measures and manages brand(s) to maximize their value. The process of

maximizing brand value involves identifying and establishing brand positioning,

planning and implementing. That, in essence, is brand marketing for measuring

and interpreting brand performance, growing and sustaining brand value and

dissecting brand equity from a sociological, anthropological or biological

perspective (Kotler and Keller 2015).

However, as competition to create consumer attention and interest in a

product brand intensifies, it is critical that marketers develop better advertising

appeal to get the consumer’s attention, create his interest, arouse his desire, and

instigate his purchase action of the brand. In achieving this purpose, marketers

often engage individuals who have achieved some form of celebrity status to serve

as spokespersons for their brands. Nevertheless, firms believing that the power of a

brand lies in the mind of existing or potential customers and what they have

experienced directly or indirectly about the brand, adopt strategic brand

management approach, using celebrity endorsement (Ogunsiji, 2012). According to

Okorie (2014), a celebrity is a person who enjoys public recognition by a large

share of a certain group of people and has distinctive characteristics, such as

attractiveness, and trustworthiness. He has the ability to transfer his image to

specific product that is being advertised. Marketers have taken this opportunity
 3

into account and use celebrity as an advertising tool to gain high brand awareness,

recognition and preference. Celebrity endorsement is any individual who enjoys

public recognition and who uses this recognition on behalf of a consumer good by

appearing with it in an advertisement (Wilson and Chosniel, 2013).

Better-still, according to Dakung, Katura & Danladi (2014), celebrity

endorsement is a type of channel in brand communication through which a

celebrity acts as the brand’s spokesperson and certifies the brand’s claim and

position by extending his/her personality, popularity and status in the society or

expertise in the field to the brand. In short it is a tool of marked distinct

differentiation that creates a niche in the market and among equals in the industry,

and amongst the firms sponsoring the brand endorser(s). And because celebrities

are the image endorser there must be a symbolic match between the image of the

endorser and the brand. Such effectual match creates/establishes a correlation

between celebrity endorsement and brand image (Dakung et al., 2014).

1.2 Problems to the Study

Celebrity endorsement has been established as one of the most popular

tools of advertising in recent time. It has become a trend and perceived as a

winning formula for new product marketing and brand building. Therefore in

choosing a celebrity to endorse, the credibility of the person should be considered

since any mishap can affect the buying behaviour of customers. In that case, it is
 4

tough to establish a strong association between the product and the endorser.

Human beings are dynamic beings, their behaviours and preferences change over

time and so, despite all the enormous benefits and the advantages one can see in

this form of advertising, there are great problems associated with this form of

advertising. There are cases in which celebrities used in advertising over shadow

the product they are advertising. This can be seen especially, when a very popular

celebrity is used to advertise a newly introduced product (a new product) that has

no fit with the celebrity can quickly be overshadowed. When this happens, it is

said that the celebrity vampires the product. Most times, the celebrity’s value, the

category benefit and the new product values are not closely linked. This therefore

creates chances that the celebrity is remembered more than the product (Belch and

Belch, 2001; Gellene, 1998 cited in Dakung et al., 2014).

Issues of scandals which have dented the images of celebrities have also

translated into the products being advertised by the celebrities. Of course the

negative impression imprinted as a result of scandals is said to have drastically

affected the product’s patronage as well as its success. Also some of the celebrities

may lose relevance in their fields with time. When that happens, the products and

the messages being conveyed about the product may make no sense to the

audience. Sonny Ineji was dropped as a Globacom ambassador because he lost

relevance in the music industry (Ogar et al., 2018). Most Nigerian celebrities are
 5

celebrated just for a short time and thereafter, they are dumped for the new and

upcoming ones. The implication on the new product usually is the memory of the

new product quickly fades away in the minds of the customers and potential

customers as the celebrity is forgotten. Finally, some of the celebrities sign more

than one endorsement contracts and this alone can reduce the effectiveness of the

celebrity. This implies that the celebrity may not have much of his attention as

expected to promote new product of the company.

Measuring the overall effect of advertising expenditures on sales is

problematic, and a direct assessment of the effectiveness of a celebrity

endorsement firm’s profitability may be impossible in addition, because

advertising effect accrue overtime, current profits may not accurately reflect the

true profitability of a given campaign (Bhasin, 2010). The difficulty associated

with isolating and measuring the profit associated with a given celebrity

endorsement campaign led us to the question of which method measurement is

better to be used. This is the expected profit associated with a celebrity

endorsement campaign as reflected in the abnormal return of a firm. Abnormal

returns are measured using event study methodology. Although a firm’s profit is

influenced by several factors, and isolating the contribution of any one variable is

difficult, the event study methodology provides a means and unique opportunity to

access the impact of a particular strategy on a firm’s expected future profits. It is in

 6

view of the above backdrop that the study intends to find out the effect of celebrity

endorsement on financial performance of organizations in Nigeria.

1.3 Objective of the Study

The study intends to investigate the effect of celebrity endorsement on financial

performance of organizations in Nigeria. Specifically, the study will seek to:

1. Determine the significant effect of between celebrities advertising cost on

the debt to equity ratio of manufacturing firms in Nigeria.

2. Ascertain the effect of celebrity advertising cost on the return on equity of

manufacturing firms in Nigeria.

3. Examine the effect of celebrities advertising cost on earnings per share of

manufacturing firms in Nigeria.

1.4 Research Questions

The following research question has been raised for the purpose of the study

1 To what extent does celebrities advertising cost significantly relate to the

debt to equity ratio of manufacturing firms in Nigeria?

2 How does celebrity advertising cost influence the return on equity of

manufacturing firms in Nigeria?

3 What are the relationship between celebrities advertising cost and earnings

per share of manufacturing firms in Nigeria?

 7

1.5 Research Hypotheses

In order to accomplish the objectives of the study, the following null hypotheses

are formulated;

Hypothesis One

H0: There is no significance relationship between celebrities advertising cost and

debt to equity ratio of manufacturing firms in Nigeria.

Hypothesis Two

H0: Celebrity advertising cost has no influence on return on equity of

manufacturing firms in Nigeria.

Hypothesis Three

H0: Celebrity advertising cost has no relationship earnings per share of

manufacturing firms in Nigeria.

1.6 Significance of the Study

This paper should be significant to the company itself, customers, the

general public and researchers.

The study will be beneficial to the companies as it will help them

understand the effect celebrity advertisement has on their product and as well

help the company understand the best strategy in choosing brand ambassador.

The study will help customers in understanding the implication of celebrity

endorsement on a brand product to avoid wrong choice of purchases due to

celebrity advertisement.
 8

It will be relevant for academic purposes. The rigorous nature of the

methodology of this research will make it serve as a pedestal for advanced or

continuous future research for students, market intelligence, research consultants

and others. It will also serve as material for academic reference in the circles of

marketing and strategic management treatment of the general topic of celebrity

endorsements.

1.7 Scope of the Study

The study seeks to cover the effect of celebrity endorsement on financial

performance of organizations in Nigeria. The researcher would develop the

conceptual framework in the area of the effect of celebrity endorsement on

financial performance of organizations in Nigeria. Emphasis would be on

consumerism, since the physical attractiveness of a celebrity endorser will enhance

evaluations of the products characteristics only if the characteristics of the product

“match-up” with the image conveyed by the celebrity. The researcher would

examine the effect of this endorsement on performance of Nigeria breweries ninth

mile Enugu. The study focuses on the opinions of staff of Nigeria Breweries Ninth

Mile Enugu saddled with the responsibility of taking charge of customer

patronage.

1.8 Limitation of the Study

Various shades of problems have been grappled with, especially as it cuts

across manufacturing sector. The problems particularly span from human to non-
 9

human problems and relate to data/information gathering and the general attitude

of the Nigerian public towards research activities. Ideally, a study of this nature

should cut across the entire manufacturing sector in Nigeria. However, the above

expectations were not sufficiently achieved due to the following:

a) The researcher encountered a lot of problems mostly in the area of ignorance

on the part of most Nigerian workers on the need to freely and sincerely answer

questions as aid to effective research results. This leads to lack of co-operation

from the staff who did not want to divulge classified documents or information

though the need for co-operation was discussed in their management meetings.

This issue reduced the sample size as not all the persons agreed to give information

about the information required.

 10

CHAPTER TWO

REVIEW OF LITERATURES

2.1 Conceptual Framework

In this topic, several concepts were reviewed for better understanding of the

study. More so, theoretical and empirical literatures were as well reviewed and gap

shown to enhance the need for the study.

2.1.1 Concept of Celebrity Endorsement

Celebrity endorsement has become a prevalent form of advertising in

the Nigeria. According to industry sources, approximately 20% of all television

commercials feature a famous person, and approximately 10% of the nairas spent

on television advertising are used in celebrity endorsement advertisement (Melford

& Nwulu, 2015). The number and naira value of celebrity contract constitute a

significant and growing portion of advertising budget (Ateke, 2013). Several

studies have examined consumers’ response to celebrity endorsement in

advertising. Findings show that celebrity make advertisement believable (Bhasin,

2010) and enhances message recall (Friedman and Friedman 1979 cited in Melford

& Nwulu, 2015).

Furthermore, celebrity aids in the recognition of brand, create a positive

attitude towards the distinct personality for the endorsed brand names (Aleke,

Onwujiariri and Doris, 2015). Ultimately, celebrity endorsement is believed to

 11

generate a greater Likelihood of customers’ choosing the endorsed brand

(Bondesson, 2012). Thus, the used of celebrity endorsements is an advertising

strategy that should enhance the marginal value of advertisement expenditure and

create brand equity by means of the “Secondary association” of a celebrity with a

brand (Ateke & Elvis, 2013). Celebrity endorsements are expensive for the firm,

depending on the status of the celebrity; remuneration could run into millions of

naira for several years. In the contract, many also include a profit sharing plan.

Firm often build special and costly advertising campaigns around celebrities. For

example, Coca Cola reportedly spent over 25 million in an advertising campaign

with bill Cost by as its spokesperson for Coke (Hanzaee & Taghipourian, 2012).

Similarly, IBM spent about 40 million in an advertising campaign involving

MASH actors (Nelson, Tunji & Akhidenor, 2012). Overall, the use of celebrities as

spokesperson in advertisement constitute a significant investment in intangible

assets by the sponsoring firm an investment that management hope to offset with

greater future sales revenue and profits.

However, Celebrity endorsement is an advertising strategy whereby

companies use people of public recognition as spokespersons for their products

(Melford & Nwulu, 2015). Celebrity endorsement is a common phenomenon in

today’s market-place where celebrities as well known personalities are gaining

more importance and fan following. By definition, celebrity endorsement is a form

 12

of brand or advertising campaign that involves well known persons using their

fame to help promote a product (Ateke & Elvis, 2013); while a celebrity endorser

according to Friedman and Friedman (1979) cited in Bondesson (2012) is any

individual, character or organization who enjoys public recognition and who uses

this recognition on behalf of a consumer good (or service) by appearing with it, or

speaking in support of its claim in an advertisement.

There is a general belief among advertisers that advertising messages

delivered by celebrities provide a higher degree of appeal, attention and possibly

message recall than those delivered by non-celebrities (Hanzaee & Taghipourian,

2012). Marketers also claim that celebrities affect the credibility of the claims

made by the firm, increase the memorability of the message, and may provide a

positive effect that could be generalized to the brand (Nelson, Tunji & Akhidenor,

2012). Celebrity endorsement has the ability to break through the advertising

clutter, enhance message believability, increase message memorability and ignite

purchase intentions (Ateke, 2013). It has thus become a trend and perceived as a

winning formula for product marketing and brand building (Nwulu & Asiegbu,

2015). Celebrity endorsement provides an alternative to creative advertising.

Where creative advertisements tend toward logic, humour or emotion, celebrity

endorsement is mainly focused on the strength of the celebrity and more often, it
 13

tend to make the celebrity speak directly to the public (Bhasin, 2010); and mostly

to his fans and loyalists.

2.1.2 Conceptualization of the Concept Brand Ambassador

Brand Ambassadors are people who enjoy public recognition by a large

share of a certain group of people. Whereas attributes like attractiveness extra

ordinary lifestyle or special skills are just examples and specific common

characteristics cannot be observed, it can be said that within a corresponding social

group celebrities generally differ from the social norm and enjoy a high degree of

public awareness. This is true for classic forms of celebrities, like actors (e.g

Flavour, P-square, I go die, Basket Mouth, Meg Ryan, Pierce Brosnan, models (e.g

Naomi Campbell, Gisehe Buendehen), sports athletes e.g Kanu Nwankwo, J.J.

Okocha, Mikel Obi, Anna Kournkova, Micheal Sehumacher) entertainers (e.g Pete

Edochie, Nkem Owo, Patient Ozokwo, Madorm, Winfrey, Conan O’ Brien) and

Pop stars (e.g Madorm, David Bowie) but also for less obvious groups like

businessman (e.g Donald Trump, Bill Gate) or politicians (e.g Rudy Giuliani, Lee

Kuan Vew) to mention but a few.

Celebrities appear in public in different ways. First, they appear in public

whom fulfilling their profession, e.g. Pete Sampras, who plays tennis in front of an

audience in Wimbledon. Furthermore, celebrities appear in public by attending

special celebrity events, e.g. the Academy awards, or world premieres of movies.
 14

In addition, they are present in news, fashion magazines, and tabloids, which

provide second sources information on events and the “private life” of celebrity

through mass media channels (e.g Fox 5 news Cacering Winona Ryder’s trial on

shoplifting in style).

Furthermore, celebrities act as spokesperson in advertising to promote

product and services (Kambitsis et al. 2002 cited in Monga & John, 2010).

Companies frequently use spokesperson to deliver their advertising message and

convince consumers of their brand a widely used and very popular type of

spokesperson is the celebrity endorser (Tom et al 1992 cited in Ogar et al.., 2018).

According to Friedman and Fried man (Nelson & Aderogba, 2011) a ‘celebrity

endorser is an individual who is known by the public for his or her achievement in

areas other than that of the product chase endorsed”. The cosmetic manufacturer

Elizabeth Ardm, for example, uses the actress Catherine Zeta Jones to endorse its

perfume (Nelson, 2010).

2.13 Brand Loyalty

There are two kinds of loyalty: Behavioral loyalty and Attitudinal Loyalty.

Behavioral loyalty indicates a consumers purchasing motive (repeat purchase) of a

particular product or brand which can lead to the development of Loyalty. Milford

& Nwulu (2015) Posits that “behavior is a function of a favorable repeat purchase

pattern” while Nelson (2010) asserts that the possibility exist that might make a
 15

practice of brand loyalty in accordance with behavioral perspective by a

conventional more or deficiency of literacy as estimated by other choices.

Attitudinal loyalty as seen by Ogar, Igwe, Umeri and Ogbuu (2018 (2007)

constitute a conducive inclination concerning the brand. Six diverse prerequisites

that may indicate loyalty was reviewed by the theory. These are:

(1) The biases

(2) Behavioural response

(3) Expressed overtime

(4) By some decision making unit,

(5) With respect to one or more

(6) Function of psychological decision making, evaluative. The consumers

evaluate these conditions when developing a loyalty for the brand.

2.1.4 Concept of Financial performance

Financial performance can be defined as a subjective measure of how well a firm

can use assets from its primary mode of business and general revenues (Griffin,

2013). This term is also used as a general measure of a firm’s overall financial

hearth over a given period of time, and can be used to compare similar firms across

the same industry or to compare industries or sectors in aggregation. The

performance measurement concept indicates that employees can increase the value

of the firm by; increasing the size of a firm’s future cash flows, by accelerating the
 16

receipt of those cash flows or by making them more certain or less risky (Neely,

2012).

Kaplan and Norton (2011) highlighted that there are many different ways to

measure financial performance but all measures should be taking in aggregation.

Some of the indicators of financial performance are return on equity, liquidity

ratios, asset management ratios, profitability ratios, leverage ratios and market

value ratios. However, Falshaw, Jeffrey, & David (2009) have noted that financial

measures of performance can capture only one part of the company's profitability.

Neely (2012) also argue that the use of financial performance could still be

justified on the grounds that it reflects what mangers actually consider to be

financial performance and, even if this is a mixture of various indicators like

accounting profits, productivity and cash flow. Financial performance is

determined by the following indicators such as profit or value added indicators;

sales, fees, budget, cost or expenditure and stock market indicators (e.g. share

price) and autonomy. Proxies for financial performance also include the accounting

measure of performance; revenue income, operating profits, return on equity

(ROE), earnings per share (EPS) and return on assets (ROA) (Randolph and Dess,

1998 cited in Baker and Sinkula, 2010).

 17

2.5 Celebrity Endorsement Strategy

Marketers use individuals who have achieved some form of celebrity status

to serve as spokespersons for their companies. When a company decides upon

using an endorsement strategy as their marketing communication tool, the main

focus lies in exposing their brand (Hoegele et al, 2015). In an endorsement

strategy, a sort of product is given a new brand name that is unique for that

product. Besides the unique brand name, they also get provided with the name of

an endorser. In this case, the endorser is a celebrity and functions as endorsement

which means an approval or support that can be seen as a guarantee of

recommendation for consumers. This means that the name of the endorser should

be clearly visible next to the name of the product he or she is endorsing.

Companies have jointly been using their products and themselves, through the use

of celebrity endorsers, with the hope that celebrities may boost the performance of

the product at long run (Nasir, Khan, Sabri and Nasir, 2016).

2.1.5 Celebrity endorsement selection criteria

Celebrity endorsers have been found to produce more positive responses

towards advertising and greater purchase intentions than a non-celebrity endorser.

 18

To understand how these celebrity endorsers are able to transfer their personality to

products, it is important to understand what attitudes an endorser must exhibit to

successfully influence a company or product image. American practitioners

believed that, as baseline criteria for consideration, celebrities must be trustworthy,

recognizable, and affordable, generate minimal controversy or risk, and be

appropriately matched with target audiences (Sartaghu, Cathi, and Korkmaz,

2014). The following criteria are as follow;

1. Source attributes

Patra S and Datta (2012) as cited by Sartaghu et al.., (2014) developed

three basic categories of source attributes: credibility, attractiveness and power.

Each category influences the recipient’s attitude or behaviour through different

processes referred to as internalization, identification and compliance.

Source credibility: Celebrities are generally viewed by consumers as credible

sources of information about the product or firm they endorse. Source credibility

can be defined as “a communicator’s positive characteristics that affect the

receiver’s acceptance of a message”. The source credibility model analyses the

factor leading to the perceived credibility of the communicator. The model

contends that the effectiveness of a message depends upon the perceived level of

expertise and trustworthiness associated with an endorser or communicator

 19

(Nasir et al.., 2016). Information from a credible source influences beliefs,

opinions, attitude and behaviour through a process known as internalization. This

occurs when the receiver adopts the opinion of a credible source since customers

believe information from this source is accurate. A highly credible source is

particularly important when the message recipient have a negative position toward

the product, service, brand or issue being promoted. The credible source is likely to

inhibit counterarguments and reduced counter arguing should result in greater

message acceptance and persuasion. For instance, Abel Ubeku and M.K.O. Abiola

because of their celebrity status endorsed the Nigerian Airways, which was

initially perceived as unreliable by the market, such endorsement alters the

consumers’ perception in fhvour of Nigerian Airways.

i. Celebrity expertise: Patra and Datta (2012) define expertise as “the extent to

which a communicator is perceived to be a source of valid assertions. It refers to

the perceived level of knowledge, experience, or skills possessed by an endorser”.

Celebrities with higher levels of expertise have been found to be more persuasive

and can generate more intentions to buy the brand. For instance, medical doctors

have been found to generate consumer’s awareness, interest, desire and action in

advertising pharmaceutical products.

ii. Celebrity trustworthiness: According to Patra and Datta (2012), trustworthiness

is the degree of confidence consumers place in a communicator’s intent to convey

 20

the assertions he considers most valid. Favourable disposition, acceptance,

psychological safety, and perceived supportive climate are as favourabel

consequences of trust. A highly trustworthy communicator produces an effective

attitude change, while non- trusted communicators’ impact proved immaterial.

Perceived communicator trustworthiness has also been shown to produce a greater

attitude change than perceived expertise. When a celebrity is perceived more

trustworthy, the message will be more effective and the consumer will be more

integrated.

Source Attractiveness: Attractiveness is the second category of source attributes;

attractiveness encompasses similarity, familiarity and likability. Similarity is the

supposed resemblance between the source and the receiver; familiarity arises

through knowledge of the source via repeated exposure. Likability occurs from

affection for the source due to the physical

appearance, behaviour or other personal characteristics (Patra and Datta, 2012).

Source attractiveness leads to persuasion through a process of identification,

whereby the receiver is motivated to seek some type of relationship with the source

and thus adopts similar beliefs attitudes, preferences, or behaviour (Muda, Musa,

Mohamed, and Borban, 2014). Advertisers have chosen celebrity endorsers on the

basis of endorsers’ physical attractiveness to gain from the dual effects of celebrity

status and physical appear. There is no doubt that attractive celebrity endorsers
 21

enhance attitudes towards advertising and brands, but whether celebrities are able

to create repeat purchases intentions is less clear.

Source Power: The third and the final source attribute is source power. This occurs

when a source has the ability to administer rewards or punishments. As a result of

the power, an endorser may be able to induce another person to respond to the

request or position the source is advocating. As a source characteristic, power is

very difficult to apply in advertising. This attribute is most commonly used for

spokespersons in personal selling (Monga & John, 2010).

2. Match-up Hypothesis/Product Fit

Amos et al (2008) as cited by (2014), comment that the celebrity/product fit,

also called the “match-up hypothesis”, refers to the harmony of the match between

the celebrity endorser and the product being endorsed. Advertisers must match the

product or company’s image, the characteristics of the target market, and the

personality of the celebrity, to establish effective messages. The determinant of the

match between celebrity and brand depends on the degree of perceived “fit”

between brand and celebrity image. Messages conveyed by the celebrity image and

the product message should be congruent for effective communication.

Special attention should also be paid to employ celebrities who have a direct

connection with the endorsed product and who are perceived to be experts by the

target audiences. If there is no congruency, then the audience remembers the

 22

celebrity and not the product. If the product is not appropriately matched to the

endorser, as specified by the match-up hypothesis, then the meaning of the

message that is transferred to the consumer may not be effective (Muda et al..,

2014). Ibok (2013) suggests that before picking an endorser, marketers must

consider which trails are most important to the brand.

 Ensure that the celebrity has qualities that fit the image suitable for the

organization.

 Find someone with a logical connection to the organization, someone who is

familiar with the target group or constituency.

 Choose someone who has a story and can tell it well. Not all celebrities can

communicate a meaningful and compelling story. Good communicators make

the most powerful spokespeople.

 Consider the long-term value of the celebrity, weight the desire to pick someone

who is “hot” against the celebrity’s staying power.

In regard to this, the Milford (2015) also identified 20 attribute companies should

consider before choosing brand ambassador for endorsement deals. There include

the following;

 Brand ambassador:- Product match the compatibility between the brand ambassador

and the product to be endorse will influence the effectiveness of the endorsement through.

i. The ambassador’s motive for associating him or herself with the product will influence

the consumer’s attributions of the ambassador.

 23

ii. The consumer’s attribute will subsequently affect their evaluation of the endorser, the

advertisement and the brand involve.

 Target Audience match:- The brand ambassador is regarded as the mouth piece

for the brand and has the ability to easily change the consumer’s perception of the

brand.

 Brand ambassador popularity:- Brand ambassador have a positive effect on

both the attitude towards the advertisement and the brand. Brand ambassador are

widely recognised and perceived to be more credible and produce greater influence

on evaluation of brands and its purchase intention. The lifecycle of a brand

ambassador’s popularity varies as consumers also tend to match the personality of

the brand ambassador with the brand.

 Brand ambassador credibility:- This aspect is regarded as most important in

endorsement deal. The most important dimension of credibility is trustworthiness

and expertise regarding the product or services marketed. For example, Maria

Sharapova was signed as Porsche’s brand ambassador in 2014. This decision was

made on the basis than Sharapova “Combines top performance in her sport with

elegance and power”. (Monga and John, 2010).

 Values: - The values of the brand ambassador transferring to the product or

service which they endorse, forms the essence of using a brand ambassador.

According to Muda et al (2014) Beyoncé is more than a performer or a legend. She

 24

is a brand. Beyonce’s brand is strong; reaches out to its audience emotionally and

tells a story. These three qualities are extremely important for a successful brand.

 Physical attractiveness:- The physical attractiveness of the brand ambassador

may be related to the attitude of the customer. In general attractive brand

ambassador should be more effective them unattractive ambassador.

 Regional and Intentional factor: - Dependent on the brand and the target

markets but the brand ambassador should be chosen in such a way that can

generate global overall impact. Celebrities with international recognition are more

valuable internationally than nationally.

 Controversy risk:- By associating a brand ambassador with reputation of

controversy or ill-behaviour it can reflect negatively on the brand. Any behaviour

of the brand ambassador that gives him negative image may reflect badly on the

brand. The British model, Kate Moss was photographed in 2005 using cocaine.

The pictures were published in London’s Daily mirror and quickly made headlines

news, which resulted. In host contract from Burberry, Channel and H&M. these

lost contract reportedly amounted to & 4 million. Moss’s troubled past still makes

her big risk for brand to be liked to her, even nine years (Muda et al.., 2014).

 Multiple endorsements: Brand ambassadors endorsing multiple different

brands can cause confusion in the minds of consumers and subsequently decrease

impact of using a brand ambassador in the first place. However, it can have the
 25

same result if a single brand uses multiple brand ambassadors. TAG Heuer’s brand

ambassadors include a long list of celebrities. Even though these celebrities are all

from different sport and entertainment backgrounds it still can cause some

confusion. Celebrities associated with the brand include, amongst others, Cameron

Diaz, Leonardo Dicaprio, Maria Sharapova, Jenson Button and Cristiano Ronaldo

(Muda et al.., 2014).

 Cost acquiring: In order to acquire the best brand ambassador, a company

should be able to afford the brand ambassador. Small firms who use the services of

a brand ambassador (Whether local or internationally) run a great risk if they invest

large amounts. Muda et al (2014) reported that Tiger woods’ made & 83 million

dollars in 2013 of which $71 million came from course endorsements.

 Fit with the advertising Idea: In the new marketing sphere, marketers now seek

to adopt a 360 brand stewardship in which brands increase their number of contact

points with target consumers. Brand ambassador play a pivotal role in terms of

their recognition, status and / or popularity as each brand ambassador have their

own unique image or cultural meaning. Female rapper, Nick, Minaj is the choice of

the new generation of marketers as she easily identities with younger consumers.

In 2012 she also signed “seven figure endorsement deal with Pepsi (Muda et al..,

2014).
 26

 Avail ability: Due to the available of certain brand ambassador brands may

decide to delay their marketing campaign with certain brand ambassadors as it can

leads to the dilution of the brand ambassador image. The availability of brand

ambassadors should be determined beforehand.

 Brand User: It is crucial for the brand ambassador to also use the brand which

they are promoting. In order for an endorsement deal to be successful, the

customers should believe in the endorsement. Black berry Unveiled Alicia Key’s

as its new spokesperson, but is letter came to light that she was posting Tweets

from her. IPhone. This had a negative impact on the Black berry brand more than

on Alicia Key’s image.

 Consumer Influencing Advertisement: The brand ambassador should be

genuine in portraying the image of brand in advertisement. The advertisement

should be well made and designed and contribute to the image of the brand and

focus on the message intended to be transferred. Often, due to poor performance of

the brand ambassador the promotion attempt fails. Nike advertisement which was

released in 2010 after Tiger Woods Scandal broke was highly criticized. The

advertisement showed the athlete silent with the voice of woods’ father (who died

in 2006) interrogating him and “dressing him down”. The advertisement was

characterized as being “Creepy” and “Weird”. Nike was also accused of using

woods’ personal problems for their gains (Monga and John, 2010).
 27

 Previous endorsement: Prior endorsement of a brand ambassador should also

be monitored carefully. This will assist in determining the impact of the brand

ambassador as well as their dedication, professionalism and credibility. Again,

Maria Sharapova’s list of brand which she has acted on behalf is a clear indication

of her dedication, professionalism and credibility. Brands which she has endorsed

include TAG Heuer, Prosele, Nike, Cole Haan (Fashion house), prince and Canon.

As of 2007, she has been the United Nations Development Programme God will

Ambassador (Monga and John, 2010).

 Proper use of promotional Medium:- The marketing campaign for which the brand

ambassador is intended should ensure the proper use of promotional medium. Dependent on the

time period of the campaign and the variance in the target audiences the medium should be

determined. When using audio, specifically for radio advertisement, the voice should be well

known and easily recognizable. According to Muda et al (2014) James Eart Jones has

Hollywood’s most recognizable voice and is subsequently a good fit for audio advertising.

 Brand image Formation Capability:- Product endorsed by a brand ambassador

is regarded as a form of co-branding as the brand image is influenced by the

meaning transferred from the brand ambassador to the endorsed brand. The

effective paring of brand ambassadors and product congruence result in a positive

impact on brand image which in turn, has positive impact brand equity.

 Interest of endorser:- Many celebrity, such as Jennifer Lopez, Sean Coms,

Victoria Beckham and Elizabeth Hurley have venture into fashion and accessories
 28

business. The effectiveness of endorsement increase when the brand ambassador is

also interested in the association with the brand and when the celebrity can use the

benefits for building their own image as well. Should brand ambassador be

genuinely interested and have a genuine affection for the product it will

subsequently add to the marketing campaign.

 Endorsement Management Team:- Brand ambassador who have multiple

brands which they support often deal with multiple management teams. Brand

leadership is maintained through proper and effective celebrity endorsement.

 Unique Idea of Promotion:- Great ideas at the right time result in great brand

endorsements. These brands express uniqueness and effectively, utilizing all

element in the communication mix. Apple has creatively expressed its most “Own

able” and beneficial brand attribute, namely innovation. The innovative

advertisement planning, promoting, selection of animation and identification of

media are all aspect which contribute to successful endorsement deals. Nicki

Minaj’s endorsement deal with MAC Cosmetics resulted in the Viva Gham lipstick

line being the bestselling shade in the range.

 2.1.6 Risks associated with celebrity endorsement

 According to Till (1998), despite well-publicized celebrity miscues such as Bill

Clinton Sexual harassment, Mike Tyson’s rape conviction, and Michael

Jordan’s gambling debt, the use of celebrity endorsers continues unabated.

 29

Although endorsers can be used for a variety of purposes such as getting

attention and penetrating commercial clutter, the high cost of endorsements

suggests that marketers expect to get far more value from the endorsement than

simply the use of a cleaver executional device designed to attract consumer

attention. Despite the popularity of celebrity pitchmen, many commercials

using celebrity endorsers do not live up to advertisers’ expectations (Francis

and Yaz danifard, 2013). However, used appropriately, celebrity endorsers can

serve a valuable role in developing brand equity and enhancing a brand’s

competitive position.

 However, there are certain risks associated with the use of celebrity

endorsement. One risk associated with the use of celebrity endorsers is the

possibility of negative information or publicity regarding the celebrity. If the

celebrity is strongly associated with the brand then the occurrence of negative

publicity about the celebrity can spill over to the brand. Many companies have

been badly affected by negative publicity from celebrity misdeeds, like

celebrity endorsers involved in drug scandals, rape, and murder. The harm

brought to the reputations of these companies may decrease the trustworthiness

and credibility held by the consumer (Francis and Yaz danifard, 2013). Once a

celebrity gets associated with negative information, the marketer has to consider

various relations to be able to maintain a good position in the market and a

 30

similar level of brand recognition as the all. Milford, & Nwulu (2015)

suggested that negative publicity about a celebrity can be reduced or cancelled

through consistent news story by the marketer making a disclaimer of the

negative information. For instance the sex scandal between Geneve Nnaji and

former Vice-President Atiku Abubakar was disclaimed by makers of lux soap.

More so, is the case of Tuface Idibia when his baby- mother issue came up, he

was on the payroll of Guinness.

 If a celebrity endorser is used, the risk of consumers focusing on the celebrity

and not on the brand exists. To solve this, advertisers should use a celebrity

endorser who will attract attention and enhance the sales message, yet not

overshadow the brand. Overshadowing occurs when the celebrity endorser

occurs in the presence of multiple other stimuli which all compete to form a

link with the celebrity endorser: While the advertiser intends for an associative

link to develop between the celebrity and the endorsed brand, overshadowing

suggests that the celebrity endorser is most likely to build a link with the most

dominating stimulus, which mist not be the featured brand in the advertisement

execution. Therefore, the celebrity and the brand should be the two strongest

elements in the advertisement (Francis and Yaz danifard, 2013).

 Another risk of using celebrity endorsees is that the credibility of the brand and

the celebrity may suffer when the celebrity choose to endorse several different
 31

products simultaneously and becomes overexposed. Researchers found that the

more products a celebrity endorses, the less credible he is seen by the consumer

(Ogar et al.., 2018). The reason is that consumers may question whether the

endorser really believes in and uses all the products he or she endorses or he is

purely motivated by financial gains. Overexposure is a common occurrence

between highly competing brands and highly recognized and well-liked

endorsers.

 This disloyalty to a company could lead to lowered credibility and loss of trust

in a braid. It can also make the consumers confused and unable to correctly

recall which brands the celebrity stands for (Francis and Yaz danifard, 2013).

For instance Z. B endorses both Arnatem and Enizor paracetamol.

 However, one has to be aware that multiple- endorsement does not have to

imply that it is useless. Researchers have shown some potential positive effects

like transfer of positive brand image, endorsing more brands allows the

consumers to have additional opportunities to strengthen their bond with

celebrity (Ateke, 2013).

 Advertisers sometimes use many different celebrities to endorse a brand or

product.

 (One reason is that the advertiser use different celebrities to appeal to different

market segments through different media andprograms. Another reason is that

 32

the competition for celebrities could heat up just like competition for other

resources. In that case, a company may sign up a celebrity to prevent another

company from using that celebrity. For instance, Lillian Bach, and Stella

Damascus were used at different times in promoting Delta soap.

 Johansson and Sparredal (2002) as cited by Francis and Yaz danifard (2013) are

of the opinion that a company’s use of multiple endorsers could have some

undesired results. Since each endorser has a unique image, a multiplicity of

endorsers might blur the image of the brand. Even if these endorsers were used

in different media or programs, because of segment overlap across media,

multiple endorsers could still blur the brand image. The use of multiple

endorsers may lead to the reduced effectiveness of this means of persuasion.

This is true for endorsers as for any other means of persuasion. Overuse of a

celebrity endorser may lead to declining popularity for advertising using

celebrities.

 The favourable responses that have been engendered to a particular brand

because of its association with a celebrity may weaken over time, particularity

if the brand receives significant exposure without association with the celebrity

(Francis and Yaz danifard, 2013). The celebrity may be very famous and

successful in the beginning of the contractual tern, but then become less

successful or lose their fame. For example, an athlete who wins a gold medal in
 33

the Olympics may be a very good endorser for a particular brand. If the athlete

gets injured or becomes less successful due to other circumstances and

disappear from the spotlight, he or she might no longer be the endorser a

company would sought after. If the advertiser has signed a contract that last for

many years, the advertiser is stuck with a celebrity who does not have the same

fame and impact on the target segment that he or she used to have.

 Another prominent risk associated with the use of celebrity endorsers is the

cost implication. At some point in the decision to use celebrity endorsers,

advertisers have to consider the cost effectiveness of the choice. The endorser

who appears to have the highest potential, tend to be the most popular and

therefore the most expensive to hire as endorser. The demand for entertainment

and sports celebrities has increased and these individuals are sometimes very

expensive to use as endorsers. In this situation, the advertiser must decide if

a celebrity endorser is worth the investment. Rather than pursuing a popular

endorser, advertisers can do well by looking for a less known, less expensive

endorser who nicely matches, the message of the brand and appeals to the target

segment (Dimed, and Joulyana, 2005, Liu, 2009; Hung et al, 2010 cited in Ogar

et al.., 2018).

2.1.7 How Celebrity Endorsements Influence the Consumer

 34

The image celebrities’ project to consumers can be just as important as their

ability to attract attention. While brand marketers with positive experiences would

tend to believe that celebrity endorsements work and some would disagree, one

would be sure that the magnitude of its impact is difficult to measure even if sales

figures are at our disposal. An interesting perspective on celebrity endorsement and

how they impact on consumers’ was developed by Bhasin (2010). According to

this model, a celebrity’s effectiveness as an endorser depends on the culturally

acquired meaning he or she brings to the endorsement process. Each celebrity

contains many meanings, including status, class, gender, and age as well as

personality and lifestyle. In his study of thousands of media commercials,

especially TV commercials that are viewed in the US, Europe and in Africa, it was

mentioned that the most viewed adverts or in other word, which are most enjoyable

to be viewed and can capture viewers attention has the following characteristics:

1. Humour: it is proved that humour in adverts increases viewer enjoyment and

involvement.

2. Music: music is an important element in more than 50 percent of adverts that are

categorized as watchable.

3. Celebrities: it was found out that celebrities are excellent in terms of attention-

getters, as they attract both male and female, in addition to different age groups.

“There is no doubt that advertiser everywhere continue to queue for the services of
 35

Celebrities hoping that some of their magic will tub off on the brand persona” In

recent times, marketers in Nigeria have made increasing use of celebrities in their

advertisement. More and more brands, whether product or services are banking on

the mass appeal of celebrities. As soon as new faces ascend the popularity charts,

marketers queue up to have them endorse their products or services.

2.1.8 Celebrity Endorsement Effectiveness

Influence of celebrity endorsements on consumer purchase decision has

been studied extensively by various marketing and social psychology researches.

Various hypothesis have been put forward which includes facts that celebrity

endorsement celebrities have credibility on expertise that makes the product more

desirable or enhances perceptions of quality, also that the celebrity endorsers

image is transferred to the product so that those who use the product are associated

with the image. Experiments suggest that in certain situations, celebrity

endorsement can enhance recall and use of the products. Clark and Horstman

(2003) In advancing reasons why celebrity advertising may be influential, Ateke et

al (2015) assert that celebrity advertising may be influential because celebrities are

viewed as dynamic, with both attractive and likable qualities. Additionally, their

fame is thought to attract attention to the product or service.

Muda et al (2014) and Ateke et al (2015) indicate that celebrity

endorsements enhance brain recall. Petty et al discovered that consumers tended to

 36

like the product more when it was endorsed by the famous athlete than by the

average citizen of California. This suggests that celebrity influence may be related

to the nature of the celebrity rather than the product that is consumers tended to

rate the product as better and of higher quality if it was endorsed by a celebrity.

Dakung et al (2014) finds that when it comes to selling, there is nothing quite, like

a celebrity sales person. According to him, signing a celebrity helps the brand leap

out of clutter and if the chemistry between the celebrity and the brand is right, the

buzz could well turn into a roar. Despite mixed findings, According to different

researchers, three factors seem to be associated with the degree to which celebrity

advertising is effective: source credibility, celebrity knowledge and

trustworthiness, and celebrity appearance.

2.1.9 The Effect of Celebrity Endorsements in Advertising

There is a belief that media have powerful effects on audiences either

directly or indirectly on attitudes, beliefs or behaviors (Hanzaee & Taghipourian,

2012). It also affects perceptions of reality, level of anxiety and many dimensions

on the way we think, feel or act. (Bondesson, 2012) Celebrity endorsements in

advertising are so common in that it helps build trust with current and potential

customers, increase the chances of the brand being remembered, and attract a new

type of audience. Endorsements also may increase the consumer's desire for a
 37

product. This is often achieved by implying that the particular celebrity is

successful, talented, or attractive at least partly because of the product.

According to Ateke & Elvis (2013) when a celebrity is paired with a brand,

the image helps shape the image of that brand in the minds of consumers. Most of

the celebrities used help in developing credibility and trust of the product being

advertised on the audience. Many people hold certain celebrities in high regard, so

an endorsement of a product instantly increases the amount of trust the consumer

has in the brand. According to (Bhasin, 2010) this can sometimes work against the

brand, however, if the celebrity starts to receive negative press. When an

endorser’s image becomes tarnished by allegations of illicit, unethical, unusual or

unconventionally behavior might lead to a lower opinion of the celebrity and the

brand that is being promoted.

Celebrity endorsers attract supporters as well as funs to try the brand, increase

brand awareness and consumption intentions. Celebrity likeability and congruence

between endorser and the endorsed brand influence predisposition towards the

advertisements, which in turn affect attitude toward the brand purchase intention

(Bondesson, 2012). The purchase confidence comes from the credibility and

profitability attached to employing a celebrity as an endorser. Effectiveness of the

celebrity in endorsement depends on three constructs of the source including

expertise, attractiveness and trustworthiness. The marketing implication is that

 38

marketers need to select celebrities that are the most attractive and believed to be

most entertaining to audience, popular and talents.

It is clear that most people tend to be influenced by what they watch on

celebrity endorsed products compared to the non endorsed advertisement or those

that are not exposed to any advertisement at all. This is because the audiences view

celebrities as successful and believe in them and take them as their role models

thus matching brand with the celebrity.

2.1.10 Factors that contribute to celebrities’ influence on audience

Identity: This is all about the people that a person associates with in the

environment. By observing continuously a person gets attracted and apes what they

doing (Wes ten, D. 1999) Audience view celebrities as very important, prestigious

and unique thus this brings in the perception of practicing what they do and

identify themselves with celebrities to have an image similar to them. This helps in

finding reinforcement for personal values thus finding model behavior.

Association: This is attached to the people that you live and socialize with where

you want to appear like them and be in the same level since there is belief of being

in the same social class. This focuses on identifying with others and gaining a

sense of belonging thus helps one to connect with family, friends and society

(Francis and Yaz danifard, 2013).

 39

Media: According to (Ibok, 2013) media exposes the audience to a lot of

information each new day. It has got a lot of influence in that we are most likely to

believe in what we see, hear or read. We take it with a lot of concern and put it into

practice or rather give it a trial. Media plays a major role in agenda setting in the

society, informing and this process has a cognitive approach.

(Muda et al., 2014) there are differences found in cognitive responses responded

by receivers of information. In the non celebrity conditions receivers focused more

on brand and its features whereas in celebrity endorsement conditions receivers

concentrate on the celebrity in the advertisement. On the contrary (Nasir et al.,

2016) argue that celebrity endorsers produced more positive attitudes towards

advertising and greater purchase intentions than a non celebrity endorser. (Nelson,

2010) suggested that celebrity endorsement strategy is effective in selling products

and services as status symbols since celebrities are individuals of indisputably high

status and in endorsements such individuals invite consumers to join them in

enjoying products.

2.1.11 Operational Variables

Debt to Equity Ratio: Nwude (2003) cited in John, Iyidiobi, and Ezejiofor (2017)

defines debt to equity ratio as a measure of the proportion of debt to shareholders

funds in the total financing of a business. Items such as accumulated losses and

deferred expenditures are eliminated from the shareholders’ funds before using it
 40

as the denominator. The ratio indicates how much naira was raised as debt for N1

of equity. Enekwe (2012) continues that debt to equity ratio is a financial ratio

indicating the relative proportion of equity and debt used to finance a company’s

assets which is an indicator of the financial leverage. It is equal to total debt

divided by shareholders’ equity. When used to calculate a company’s financial

leverage, the debt usually includes only the total debt. A high debt to equity ratio

generally means that a company has been aggressive in financing its growth with

debt. This can result volatile earnings as a result of the additional interest expenses

as well as volatile cash flow as principal payments on debt come due. If this were

to increase earning by a greater amount than the interest on debt, then the

shareholders benefit as more earning are being spread among the same amount of

stock. However, as stated increased interest and the need to repay the principal on

borrowed fund can for outweigh the benefit, it is used to measure the net worth of

the organization. Debt to equity ratio = Total Liabilities Shareholder’s Funds or

Total equity. This is one of the most important metrics to measure and manage as

you create strategic plans.

Return on Equity (ROE): Return on equity represents profitability of shareholders

of the firm after meeting all expenses and taxes (Horne & Wachowicz 2005 cited

in John et al., 2017). ROE is net earnings per equity capital. Higher ROE means

better managerial performance. But higher ROE can be due to financial leverage.
 41

Higher leveraged firms have higher ROE which increases risk too (Ross,

Westerfield & Jaffe 2005). Usually ROE is higher for high growth companies.

ROE = Net Profit / Shareholders’ Equity.

Earnings per Share (EPS): Is one of the measures of managerial efficiency as well

as firm performance. The debate on whether EPS has any predictive power on

stock prices is not very clear in financial literature. Some analysts believe that, EPS

has predictive power on stock prices. This argument holds the view that, EPS has

influence on stock prices. While the other argument is that, only positive

information regarding EPS cause the demand for a stock which result to increase in

stock prices. When viewed over long periods the share prices are directly related to

EPS of the firm. Over short periods, especially for younger or small firms, the

relationship between stock prices and EPS is quite unmatched (NSEC, 2006 cited

in Rajin, 2012).

2.2 Theoretical Framework

Cognitive perspective theory

The study was anchored on the Cognitive perspective theory. This theory is

propounded by Aaron Beck in 1939. The theory states that cognitive psychology

follows behaviorism by understanding the mind through scientific experimentation,

but it differs from it by accepting that psychologists can study and understand the

internal workings of the mind and mental processes (Milford & Nwulu, 2015).
 42

According to (Black Jay et al, 1995) the psychologists study learning to consider

how people interpret the events and stimuli around them, fashioning of their

actions according to their individual understandings. These understandings,

thoughts, expectations and perceptions are known as cognitions that is mental

process. This involves decision -making and language. According to (Sartaghu et

al., 2014) persons interactions are strongly affected by the images a person forms

in his mind and begin shaping self image, perception, responses and behavior.

Once the person finds a match to a significant other, this will determine how the

person will respond to a celebrity endorsing a product (Nelson et al.,

2012)According to this analogy the mind takes in information, process it in various

ways and produce output in the form of codes, words and behaviors. (Patra and

Datta, 2012)This theory is in support of celebrity endorsement in advertisement on

consumers because the more information is mentioned or displayed to audience the

more they are influenced and perceive the information is true and suitable for them

to guide in consumption of products.

43