The empowerment of social media has driven the growth of the celebrity industry. Through their on- and off-stage performances, celebrities create the brand identities, associations, images, traits, and personalities that define their brands. In this context, the term celebrity brand has emerged to describe well-known, high-profile people who generate brand equity and profit from their fame. One of the most popular ways of doing this is through the launch of new product lines under their name and image, which may be considered as brand extensions of these celebrities. This not only increases their brand value, but also enhances their relationships with consumers. Without doubt, celebrities drive a multi-million-dollar industry.
In an increasingly global economy, these brand extensions cross country borders – in fact, these brands are usually launched internationally – so an understanding of how cultural differences influence the consumers perceptions of these products becomes necessary.
To evaluate the impact of cultural differences on celebrity brand extensions, we created, together with professors Ma. Eugenia López and Ernesto del Castillo, the research article “Authenticity, fit and product type: Testing a celebrity brand extension model cross-culturally,” recently published in the Journal of Retailing & Consumer Services. This cross-cultural study between Spain and Mexico raises the concept of brand authenticity in order to understand the acceptance process of celebrity-branded products.
When celebrities place themselves at the service of brands, through endorsement agreements or products bearing their image, these can become their main source of income, well above earnings generated from their principal activity, according to information from Forbes magazine and its annual World’s 100 Highest-Paid Celebrities List.
A brand extension is distinctive to an endorsement strategy. In brand extensions, the product is likely to have the celebrity's name and involvement, while an endorsement simply consists of promoting a third-party brand in exchange for payment. The brand extension business model may be riskier, but implies greater financial rewards, as well as opportunities for publicity and media exposure. It is also assumed that the celebrity will have more control over the offering when launching their own products than when endorsing third parties, which probably make them be perceived as more authentic by consumers. In addition, some retail chains have created exclusive celebrity-branded product lines, in collaborations that go beyond traditional endorsements and are considered the future of retail.
Some authors claim that the interaction between culture and consumption creates a system of meanings that are passed from the socio-cultural context to celebrities, from celebrities to the goods they promote, and from the goods to the consumers. In this way, consumers hold the underlying meaning of the product. Therefore, it is important to study the connection between the consumer and celebrities to understand the latter’s ability to influence consumer behavior and promote consumption.
Despite living in a globalized world, local cultural dimensions are essential for understanding consumer perceptions of brand extensions. Even with a shared language, history, and religion, as in the case of Spain and Mexico, there are significant cultural differences. We use the concepts of individualism and power distance to explain these differences.
Individualism is related to a low power distance and collectivism to a high power distance. People in cultures with high levels of individualism tend to be more independent, their social behavior is guided by their personal goals, and they have an explicit and direct style of communication. In contrast, people in collectivist cultures are interdependent with each other, value more their group membership, and rely on high-context, indirect verbal communication. People raised in individualistic and collectivist societies tend to adopt distinct thinking styles: analytic and holistic, respectively.
Thinking styles influence the way in which consumers evaluate the brand extension. For example, holistic thinkers will likely judge the brand extension and its context as a whole, whereas analytic thinkers will separate it from its context, focusing on the brand extension’s attributes.
Power distance refers to the degree to which the less powerful members of a society accept and expect that power will be distributed unequally. Cultures with high power distance view celebrities as more trustworthy role models whose products are considered attractive and aspirational. Therefore, power distance can influence the trustworthiness and experience transferred to the product, allowing consumers to respond differently to their brand extensions. In sum, the meanings that celebrities bring to their brand extensions through their symbolism can differ according to culture.
When it comes to celebrity brand extensions in particular, authenticity has a positive and direct relationship with the valuation of the products they offer, which explains the willingness to purchase and to pay a higher price.
Consumers commonly perceive that a brand extension may hold a certain degree of similarity with the original product or brand (the celebrity in this case). Therefore, it is believed that the likelihood of success of an extension is based on the extent of its fit with the original brand.
In our research, we tested a model that relates, in addition to the traditional measure of fit, the extension authenticity and celebrity-consumer connection as predictors of product valuation. The objective is to compare two different cultural profiles and two different product types: functional and hedonic.
In Mexico, similar results were obtained for the evaluation of functional and hedonic products. Brand extension authenticity was the strongest predictor for product valuation, followed by celebrity-consumer connection, and, lastly, the degree of celebrity fit. Distinction and celebrity allure are appreciated more, which makes brand extensions equally appealing: Mexican consumers feel more connected with their favorite celebrities, reason enough to justify the purchase of the product. Furthermore, a holistic thinking style enables Mexican consumers to perceive the product's fit to the celebrity effortlessly, decreasing its relative importance in product valuation.
However, in Spain, the results differ according to the product type. For functional products, fit is the most important predictor of valuation. Furthermore, celebrity-consumer connection is not predictive of brand extension acceptance. However, for hedonic products, the opposite happens, fit is not a significant factor in product valuation, but authenticity is. Therefore, hedonic products offer greater potential for brand extensions, regardless of fit, as long as the extension is perceived as authentic.
It is important to point out that brand extension authenticity is the only variable that was significant in products and countries. This result is consistent with the increasing relevance of authenticity as a desirable attribute of celebrity brands. Perceptions of authenticity are apparently less culturally influenced and represent a consistent, universal predictor of the commercial success of celebrity brand extensions.
The authors are research professors in the Department of Marketing and Business Intelligence, EGADE Business School.