IJSSHE-International Journal of Social Sciences, Humanities and Education

Volume 1, Number 4, 2017

ISSN 2521-0041
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DOES CELEBRITY ENDORSEMENT INFLUENCE THE
CORPORATE LOYALTY: MEDIATING ROLE OF
CORPORATE CREDIBILITY?

Salman Arshad
University of Sargodha Gujranwala Campus, Pakistan
Maryam Ikram
University of Education Lahore, Pakistan
Muhammad Yahya
University of Sargodha Gujranwala Campus, Pakistan
Qasim Ali Nisar
Universiti Utara, Malaysia

ABSTRACT
Celebrity endorsement in product marketing and advertising is one of the most important factors in
companies’ promotion strategies. Celebrities as one of the major tools in advertising can lead to
encouraging consumers to use specific products and corporate loyalty because of their special and
unique abilities or characteristics. The purpose of this study is to examine the effect of celebrity
endorsement on corporate loyalty by concentrating on the mediating role of corporate credibility.
Questionnaire survey method was adopted for data collection and data have been collected by
applying simple random sampling technique. Study result revealed that the celebrity endorsement
has a positive effect on corporate credibility and corporate loyalty. Moreover, corporate credibility
has a positive effect on corporate loyalty. Moreover, corporate credibility significantly mediates
the relationship between celebrity endorsement and corporate loyalty. At the end of this article,
obstruction of this study, implementation, and outlines for another research also provided.

KEYWORDS
Celebrity endorsement, corporate loyalty, corporate credibility, Trustworthiness, Expertise,
Attractiveness.
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1. INTRODUCTION
The purpose of this study is to examine the role of Celebrity endorsement on corporate loyalty by
considering the mediating role of corporate credibility. Everyday consumers are uncovered to
thousands of ads Thornson (1990) and this will hinder companies to create a single position and
obtain attention from consumers. Using celebrities can help companies to create exclusive ads and
stimulate a positive effect on the attitude and sales intention towards the brand (Shekarchizade,
Ranjbarian & Momeni, 2010). Celebrity endorsement has been useful for many years. Already in
1979, one in every six commercials used a celebrity and in 2001 that percentage grew to 25%
Erdogan et al. (2001). The usage of celebrity endorsements has increased in the last decades and at
the same time also the corresponding cash flows grew. In the year 1996 US companies rewarded
more than 1 billion dollars to celebrity endorsers for endorsement deals and licensing rights Lane
(1996). The rationale of the study is that the consumers do not use products because they do not
know the products. Due to celebrities’ endorsement, people know about products, so they purchase
and consumer products. In this way, the sale of products is increased, and it enhances the business
of companies, so it is the main cause of adopting Celebrities. Celebrities as the members in position
groups due to their exclusive and individual abilities can change somebody's mind consumers to
use special products. Kotler in his marketing management book has described the reference groups
in this way: reference groups are urban from the groups who influence their behavioural viewpoint
in a direct or indirect way Kotler (2006). According to Solomon et al. (2002), celebrities have been
predictable as the intellectual leaders who have the capability to carry out the consumers'
preferences on the way to a special product or brand. Efforts to acquire high levels of customer
retention conduct the marketers to examine the effect of celebrity on the consumer's understanding
of the corporate trust and loyalty to the company. The concept of loyalty to company relates to the
concepts such as corporate trust.

2. LITERATURE REVIEW
2.1 Celebrity Endorsement
Hundreds and many other of studies into the part of celebrities have been undertaken in various
fields as well as communication, medical care, advertising, marketing psychology economic
behaviour, politics, and sports management urban planning. Earlier research on the part of
Celebrities in advertisement contain classification of the characteristics of successful celebrity.
Spokes persons Magnini et al. (2008) and the character of celebrity endorsement on idea Image and
objective to re-examine Lee et al. (2008). The efficiency of advertising campaigns built on
celebrity endorsement has concerned increasing interest from researchers (Lin et al., 2008; Kim et
al., 2013). Earlier research has established that the contract of endorsement on factors as well as
corporate image, loyalty, and credibility are linked to the type of celebrity-worn.
Research into this problem has recognized a middle group of figurative scope that concludes the
level of customer certainty in celebrity endorsement is based on their expertise, trustworthiness,
appearance, personality, attractiveness, private life management, relationship, competency,
familiarity, likeability, recognition (Han & Ki, 2010; Amos et al., 2008). In relative to Celebrity
attributes a number of researchers have acknowledged expertise, trustworthiness, and attractiveness
as the most vital attributes of celebrity endorsers (Han& Ki, 2010; Amos et al., 2008).

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Trustworthiness refers to the measure to which the viewers perceives that the celebrity can
communicate a sense of honesty, believability, and integrity through the medium of advertising
Tripp et al. (1994). The second celebrity attribute is capability, defined as the degree to which an
individual’s skill or expertness, knowledge, experience or required by others to support in decision
making (Lord & Putrevu, 2009; Amos et al., 2008). Proficiency is linked with authoritativeness
competency, expert ability, qualification, expertness and mastery (Magnini et al., 2010; Han& Ki,
2010). The third characteristic is attractiveness clear as the sum of a celebrity’s physical
appearance, etiquette, beauty, dress and accessories, elegance, manners, and sexual appeal (Lord
&Putrevu, 2009; Han& Ki, 2010). Briefly, earlier research has established that physical features or
images resultant from the celebrity may be transferred to the product or company they endorse and
as an outcome, influence of corporate credibility.
2.2 Corporate Credibility
Credible refers to “believable” “convincing” or “reliable” and is based on status, esteem and
expertise. From the corporate point of view, credibility is the degree to which consumers identify
that the company has the capability to apply management activities based on its trustworthiness,
expertise, and knowledge. Most studies that have attempted to determine corporate credibility have
used one dimension using items such as “confidence” “expertise”, “reputation”, “convincement”
“favourability”, “reliability”, “pleasantness”, or “trustworthiness” (Goldsmith & Lafferty, 2004,
1999). Corporate credibility is measured to be matching with celebrity credibility when celebrity
endorsement is applied in corporate advertisement Carlson and Donavan (2008). Corporate
credibility contributes to edifice brand loyalty forties products or services and finally leads to
improved sales (Goldsmith& Lafferty, 2004; Ewin, 1993). In contrast, a need of positive corporate
credibility may result in a collapse to attain an increase in demand, effective advertisement or
brand preference Ketchen et al. (2008). As a result, a victorious choice of celebrity endorsement
will support the brand image and then emphasize corporate credibility and finally produce an
increase incorporate loyalty.
2.3 Corporate Loyalty
Loyalty to a company is an optimistic emotional reaction and attachment emotional which is
produced during frequent transactions with a company and its goods and services Ewin (1993).
Creating corporate loyalty is a groundwork strategy for any company that seeks to enlarge
profitability through seeking loyalty from customers and company employees Ewin (1993). In this
Research, buyers can be viewed as stakeholders including customers, shareholders, supporters or
employees of the Novel leather company. To develop corporate loyalty, a company must be
capable of suggesting the consumer something that they feel is valuable. Once a possible customer
expresses awareness the company must be able to follow through with brilliance or cost usefulness
to draw the consumer to the brand depending on how it fits their wants or needs. Corporate loyalty
is resistant by Corporate credibility when the company provides good or services (Lafferty &
Goldsmith, 2004; Ewin, 1993). In accumulation, it is also promoted by advertising using celebrity
endorsement (Kim et al., 2013; Amini et al., 2012). As an outcome, better loyalty through
corporate credibility or advertising is reflected through objective to purchase or repurchase,
recommendations to others, positive word-of-mouth, compliance to pay more and a decrease In
complaints (Ohanian, 1991; Kim& Kim, 2004).

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2.4 The Relationship between Celebrity Endorsement, Corporate Credibility, and

Corporate Loyalty
Based on earlier studies (Kim et al., 2013; Amos et al., 2008), this research defines attributes of
celebrity as expertise, trustworthiness, and attractiveness. Firstly, trustworthiness is avital attribute
in clothing industry where the client recurrently makes a booking without first seeing the product
and for this cause relies on the truthfulness of company marketing guarantee websites, gossip
advertisement or endorsement by a celebrity (Lin et al., 2008; Ketchen et al., 2008). According to
‘match-up assumption’, advertising using a celebrity endorser influences consumer attitudes and
their assessment of the involvement between the celebrities on the company. To facilitate is,
celebrity endorsement that promotes trustworthiness produces the best “fit” in generating optimistic
customer views on the company’s move toward to social responsibility, its marketing capacity, and
provides adeclaration that the company is consistent Kim et al. (2013). At the commercial level,
trustworthy celebrity endorsers are an efficient means of communicating optimistic messages to
customers about the company and its products, its input to society and corporate capability Fink et
al. (2012).
Secondly, successful endorsement by a striking celebrity has the likely to improve corporate image
by diluting negative attitudes in the direction of the company including thinking that the company
is environment-leaning, useful for revenue-generation, knowledgeable for marketing Amos et al.
(2008). This view is supported by the ‘representative communications model’ which explain the
procedure where behaviour of the celebrity endorser is used to relocate qualities such as ‘fashion
ability’, ‘luxury’, ‘elegance’ or ‘modernization’ onto the company (Van der Veen, 2008; Magnini
et al.,2008). This modeless comparable to the ‘meaning-move model’ where attributes of celebrity
spoken as icons or cryptogram are transferred to the cognition-system of consumers in a procedure
of decoding meaning of this cipher (van derVeen, 2008; Lord&Putrevu, 2009). As an outcome, the
distinctiveness of the celebrity is able to confer credibility to the company and enhances corporate
loyalty (Putrevu&Lord, 2009). The better the perceived level of expertise the celebrity endorser is
seen to have in the advertised product the more efficient or believable the advertisement is likely to
be (Magnini et al., 2008, 2010). Where there is a victorious connection between the celebrity and
their perceived level of expertise in the product there is usually a boost in meaning to purchase, in
part based on the guarantee given about service quality (Kim et al., 2007; Amos et al., 2008). For
example, Amos et al. (2008) describe how mechanized companies can achieve a celebrity-
transferred halo effect of ‘competency’, ‘professionalism’, ‘state-of-the-art’ or ‘master ship’
technology by using artisans as endorsers. correspondingly, effective endorsement of companies
with cutting-edge technology has generated enlarged corporate credibility and loyalty (Busler&
Till, 2000). In sum, the attendance of a celebrity on a clothing advertisement rapidity effect of
transferring the representative imagery of that celebrity to the company and through this process
has the possible to increase the corporate credibility of and corporate loyalty near the company
being endorsed. However, it has also been establishing that the effect of celebrity attributes on
corporate credibility, and corporate loyalty is likely to fluctuate according to the characteristics of
the celebrity endorser. On the basis of above mentioned literature, following hypotheses are
proposed:

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H1. Celebrity endorsement has significant and positive relationship with corporate loyalty
H2. Corporate Credibility significantly mediates the relationship between Celebrity endorsement
and corporate loyalty.
2.5 Relationship of Corporate Credibility to Corporate Loyalty
As earlier research via the ‘meaning transfer model’ designate, attributes of celebrity endorsement
are transferred to consumer’s self after he/she is showing to corporate advertising (van der Veen,
2008; Putrevu & Lord, 2009). As the ‘symbolic communications model’ indicates, corporate
credibility that has been improved by celebrity endorsement. Contributes to the spiralling of
corporate loyalty Stallen et al. (2010). The authority of corporate credibility on corporate loyalty
through the ‘halo effect’ of celebrity endorsement can be completed by the ‘match-up theory’
which postulates a helpful a relationship between the brand and the endorser. Corporate credibility,
when improved through efficient endorsement, helps to make a positive brand approach such as
target to purchase and brand loyalty (Donavan & Carlson, 2008). The connection between
corporate loyalty and corporate credibility can be ascertained by the advertising ‘schema theory’
which argues that a theoretical memory arrangement helps consumers to systematize and identify
new promotional information based on preceding experience or conventional wisdom (Fink et al.,
2012; Donavan& Carlson, 2008). For this reason, company credibility will be harmfully
pretentious by a turn down in the trustworthiness of a celebrity endorser because of the design of a
negative connection between brand loyalty and credibility. Changes in company credibility twisted
by endorsement can be calculated by substitute variables such as the goal to purchase or positive
recommendations. Based on this review of the related literature the subsequent hypothesis was
generated.
H3. Celebrity credibility has significant and positive relationship with corporate loyalty.
2.6. Theoretical Model

3. METHODOLOGY
The purpose of current study is to explore that how Celebrities endorsement influence the corporate
loyalty by considering the mediating role of Corporate Credibility. The study is descriptive and
quantitative in nature. Questionnaire survey method was adopted to collect the leaders’ responses.
Data have been collected from 200 leaders of 150 selected Sectors from all over the Pakistan by
applying simple random sampling technique.
3.1 Data Collection Procedure
Sectors have been selected for data collection, therefore, target population includes employees of
all Sectors working in Pakistan. 150 Sectors have been shortlisted according to their financial

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performance, track record, and experience. Sampling frame includes the employees of 150 Sectors.
List of all employees obtained from concerned authorities of selected Sectors and after having
formal appointments responses have been collected. The sample size was 200. Questionnaires
floated in selected Sectors. Out of 200 questionnaires, only 160 were valid responded with 80%
response rate.
3.2 Questionnaire Design
This study adopted the questionnaire survey method to explore the affiliation of leadership styles
with organizational commitment as well as job satisfaction. The questionnaire is used in the survey.
A questionnaire based on two sections. 1st is demographic and 2nd is to check magnitude
behaviour of respondents.
3.3 Sample
The targeted population is employees of sectors and sampling techniques used in this study is
random sampling techniques. Sample size was 200.
3.4 Measures
The current study is used Survey method to ensure the relationship between in study variables. The
questionnaire used to gather information. All the scales use in the study taken from earlier research.
Section two requires information on leadership style about followers of Sectors. To create
information taking place leadership style, an adapted also a better version of Multifactor
Leadership Questionnaire (MLQ) by Bass (1985) be used. Transformational leadership 20 sales
items used, and servant leadership 23 items scales used in current study. Sections three importune
information on organizational commitment. The components of organizational commitment being
confined were continuance, affective and normative commitment. A rationalized apparatus by
Babin plus Boles (1998), Hartline and Ferrell (1996), Netemeyer et al. (1997) was customized to
get information on organizational commitment and job satisfaction job satisfaction adopted 5 items
scales and organizational commitment adopted 4 items scales. Section four required information on
employee participation to acquire data on employee participation, an adapted questionnaire by
Black JS, Gregersen HB, (1997), Lowin A (1968), Singh (2009) was used and its items scales
adopted 5 items.
3.5 Demographics
Study accomplishes in the banking sector and target population includes all the bank employees in
Gujranwala. Questionnaires float in 3 universities. Out of 200 questionnaires, only 160 were
inapplicable act in response with 80% response rate. Most respondents were among the age group
of 25 whose percentage is 81.3%. Following to this 18.7%, 0% and 0% were age group of 26-45,
age group of 46-55 and age groups of 56+ respectively. Furthermore, respondents were 55%,
43.7%, 1.2% and 0% belonged to Bachelors, Masters, Ph.D. and others group of educational stage
respectively. 45%, 46.9%, and 8.1% respondents were doing their jobs as contractual employees,
permanent employees and others respectively. 40.1% respondents have up to 1-year length of
service and 51.9%, 5% and 0% respondents have 2-5 years 5-10 years, and more than 10 years
length of service at visited banks respectively.

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4. RESULTS
4.1 Descriptive & Correlation Analysis
The purpose of this study is to examine the role of Celebrity endorsement on corporate loyalty by
considering the mediating role of corporate credibility. Everyday consumers are uncovered to
thousands of ads Thornson (1990)
Table 1

The above-mentioned table is representing the descriptive statistics, reliability and Pearson
correlation among all understudies variables. The highest correlation existed between Celebrity
endorsement and Corporate Credibility which is valued at 0.698. It is reflecting that Corporate
Credibility and Celebrity endorsement are positively related to each other with a moderate standard
deviation.
The other variable named as Corporate Loyalty is also correlated with each other. The mean values
are showing the trend of responses that most of them lie towards agreeableness. Results indicate
that alpha values for all variables are under acceptable range to prove data reliability.
4.2 Celebrity endorsement and corporate loyalty
Table 2

Table 3 results demonstrate that display of Celebrity endorsement has appositive and significant
relationship with Corporate loyalty with (R2= 27%, P<.05). In addition, analysis also indicates that
27% variance has been explained by the display of Celebrity endorsement in corporate loyalty. P
value for the beta coefficient of display of Celebrity Endorsement is .000 which is significant at 5%
level of significance and this means that beta value 0.680 is statistically significant and these
results support to H4.

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Table 3: Path Analysis

Table 2 signifies that all paths (a, b, c and c’) fulfil the condition of partial mediation. Results
indicates that Celebrity endorsement positively and significantly associates with Corporate
credibility (Path a) with (b= 0.24, t=5.21, p<0.05). Similarly, Corporate credibility also
significantly and positively relates with Corporate Loyalty (b= 0.72, t= 11.50, p<0.05) which
shows that path b is also significant.
Table 2.1 divulges that path c and c’ also significant by explaining the direct and total effects.
There is significant relationship between Celebrity endorsement and Corporate loyalty with (b=
0.49, t= 9.32, p<0.05) and coefficient value shows the direct effect of Celebrity endorsement on
Corporate loyalty (Path c). Total effect of Celebrity endorsement on Corporate loyalty is also
significant with (b= 0.67, t= 10.32, p<0.05) at presence of mediating variable. These results
illustrate that corporate credibility significantly and partially mediate the relationship between
Celebrity endorsement and corporate loyalty and it increases the positive impact of Celebrity
endorsement.

3. CONCLUSION AND DISCUSSION

The purpose of this study is to examine the effect of celebrity endorsement on corporate loyalty by
concentrating on the mediating role of corporate credibility. Study results elaborated that celebrity
endorsement has significant and positive association with corporate loyalty and supported to H1.
Findings concluded that corporate loyalty is significantly influenced by the characteristics celebrity
endorser. Moreover, results also enlightened that corporate credibility significantly mediate the
relationship between celebrity endorsement and corporate loyalty and supported to H2. Corporate
credibility plays great role to explain the association between celebrity endorsement and corporate
loyalty. Furthermore, study also highlighted that corporate credibility also significantly related to
corporate loyalty and supported to H3. This study highlighted the important of celebrity
endorsement and corporate credibility to boost up the corporate loyalty.

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© 2017 by the authors. Submitted for possible open access publication under the
terms and conditions of the Creative Commons Attribution (CC BY) license
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