The effectiveness of product placement for the automobile industry and its impact on consumer behavior

A cross-cultural perspective


Master's Thesis, 2005

76 Pages, Grade: A (1,0)


Excerpt


Table of Contents

I. Introduction
1.1 Objective of the Study
1.2 Research Purposes

II. Background of Study
2.1 Conceptual Framework
2.2 Theoretical Foundations
2.3 Development of Research Questions
2.4 Hypotheses Development

III. Research Methodology
3.1 Information Needs and Data Collection Methods
3.2 Development of Questionnaire
3.3 Sample Design

IV. Data Analysis and Findings
4.1 Descriptive Statistics
4.2 Results from Quantitative Research
4.3 Other Findings

V. Conclusion
5.1 Discussion
5.2 Limitation of the Study
5.3 Future Research

VI. References

VII. Appendix

List of Tables

Table 1: Automobile Brand Appearances in American Television

Table 2: The Effectiveness of Product Placement with Regards to Awareness in the Different Media Types

Table 3: Product Placement Preference and Consumer Behavior Correlations

Table 4: Product Placement Preference and Consumer Behavior Model Summary

Table 5: Product Placement Preference and Consumer Behavior ANOVA

Table 6: Product Placement Acceptance in Different Media Types

Table 7: Product Placement Awareness, Comfortability and Image Correlations

Table 8: Product Placement Awareness, Comfortability and Image Model Summary

Table 9: Product Placement Awareness, Comfortability and Image ANOVA

Table 10: Product Placement Perception among Cultures

Table 11: Product Placement Acceptance among Cultures

Table 12: Summary of the Results

Table A1: Hofstede’s 4 Dimension Model

Table A2: Nationality Distribution

List of Figures

Figure 1. Consumer Based Brand Equity Framework

Figure 2. The Associative Network Memory Model

Figure 3. The Purchase Decision-Making Process

Figure 4. Kids Influencing Car Buying Parents

Figure 5. Recall of Brands

Figure 6. Product Placement Attitudes

Figure 7. Gender Distribution

Figure 8. Educational Status

Figure 9. Ethnicity

Figure 10. Annual Income Level

Figure 11. Movie Frequency

Figure 12. TV Frequency

Figure 13. Print Media Frequency

Figure 14. Video Games Frequency

Figure 15. Awareness of Car Brands in Movies

Figure 16. Awareness of Car Brands in TV Programs

Figure 17. Awareness of Car Brands in Print Media

Figure 18. Awareness of Car Brands in Video Games

Figure 19. Factors that Influence Consumers’ Research / Decision Making

Figure 20. Other Factors

Figure 21. Past and Future Car Brand Purchases

Figure 22. Reasons for Purchase

Abstract

The use and practice of product placement – also referred to as brand placement – has risen dramatically over the last few years. Here, especially the automobile industry is a major player by spending millions of dollars for strategically placing products and brands not only in blockbusters and movies, but increasingly also in various television programs, print media, and video games. This research paper investigates the effective of product placement for the automobile industry and its actual effect on consumer behavior. However, consumers’ attitudes, perceptions, and values tend to differ depending on their culture; thus, further research shall concentrate on the possible differences between American, European, and Asian consumers. First, the introduction will state the objective of the study as well as research purposes. Next, the background of the study will present a conceptual framework, theoretical foundations on which the research will be based, development of research questions that are to be answered, and a hypotheses development. As it follows, the research methodology will formulate the information needs and data collection methods, the questionnaire development, and the sample design. The data analyses and findings part will use descriptive statistics and present the results from the quantitative research as well as other findings. Ultimately, in the conclusion the findings and results will be discussed, limitations of the study will be acknowledged, and possibilities for future research will be stated.

Executive Summary

Many marketers today believe that it is becoming increasingly difficult to effectively reach a target audience through traditional marketing means like advertising, due to a changing environment in which consumers show an increasing dislike of overt and obtrusive advertising through active and passive avoidance; in addition, new technological improvements such as digital video recorders (DVRs) allow for easy skipping of television commercials (Lawrence, 1989; Olney et al., 1991; Alwitt and Prabhaker, 1994; Zazza, 2002). Thus, marketers have to look for ways of how to better reach their audience, one of them being product placement, which can be defined as the “inclusion of branded products or brand identifiers, through audio and/or visual means, within mass media programming” (Karrh, 1998). Here, especially the automobile industry today is one of the main driving forces to use this practice, where companies see it as an “integral part of [their] communications strategy.” (Spiegel Online, 2004). Similarly, the number of car brands placed in various media has risen dramatically over the last few years and television programs have experienced a hike of placements of 49 percent for the first six months of 2005 alone, compared to 2004, totaling to about $784 million (Edwards, 2005).

Surprisingly, however, as of today research on the subject of product placement in the automobile industry is scarce at best. Hence, this research paper shall address and answer a number of questions that are associated with (a) the effectiveness of product placement in the automobile industry, (b) its impact on consumer behavior, and (c) possible cross-cultural differences among American, Asian, and European consumers. In order to answer these questions, a self-administered questionnaire was developed and distributed among 265 students of Hawaii Pacific University, who were representative of the university’s culturally diverse population and of the automobile industry’s primary target group of potential customers, i.e. 95.6 percent of respondents were in the target age bracket of 18 to 35 years, while 46.8 percent were undergraduate students and 49.1 percent graduate students.

The research showed that (1) product placement of car brands tends to be most effective in silver screen movies and television programs with regards to consumers’ awareness and acceptance; (2) product placement can have an impact on consumer behavior and positively affect consumers’ perceptions of a certain brand’s image as a purchase factor to some degree; and (3) product placement of automobile brands was perceived slightly more favorable among American consumers, while Asian and European consumers showed only marginally lower levels of comfortability, and thus standardization of product placement seems to be acceptable in this product category with regards to consumers’ sentiments.

I. Introduction

1.1 Objective of the Study

During the last decade, the practice of placing brands and products in movies or television series has become increasingly popular; and, although having been around for some decades, it only rather recently has attracted greater research scrutiny. Product placement, also often referred to as brand placement, can be defined as a “paid product message aimed at influencing movie (or television) audiences via the planned and unobtrusive entry of a branded product into a movie (or television program)” (Balasubramanian, 1994). However, this definition is not entirely accurate, since product placement is not restricted to only movies and television programs, but recently extended to other media such as radio programs and game shows, print media (LaReau, 2005), and computer games (Schneider and Cornwell, 2005). And, considering movies like “James Bond” or “Transporter 2”, especially product placements of automobile brands usually are anything but unobtrusive, but rather highly visible and strategically placed. Also, placements do not necessarily have to be for paid in hard dollar terms by the marketer, but instead can include cross-promotions and mutually beneficial marketing campaigns, or simple, unpaid product or brand inclusions (Gupta and Gould, 1997). Hence, a more appropriate definition would be the “inclusion of branded products or brand identifiers, through audio and/or visual means, within mass media programming” (Karrh, 1998).

Researchers agree that the practice of product placement was widely recognized and revived through the tremendous success of Reese’s Pieces candy in the 1982’s hit-movie “E.T.”, which led to sales increases of 66 percent shortly after the release of the movie (Reed, 1989; Gupta and Lord, 1998; Gupta et al., 2000; Karrh et al., 2003). Since then, a myriad of products and brands have been shown and placed in movies, TV programs and other media; however, as far as the automobile industry is concerned, BMW’s placement of its Z3 roadster in the 1995 blockbuster “James Bond: GoldenEye” was the starting point for the industry, which made the Z3 the company’s most recognized car in its history (Spiegel Online, 2004). Likewise, after featuring its products in the next James Bond movie “Tomorrow Never Dies” in 1997, BMW’s new motorcycle R1200c became the best-selling motorcycle in 1998 (Castelligasse, 2005). Since then, product placement became somewhat of a new trend in the automobile industry, which placed its various products and brands most often highly visible in a number of movies and TV programs. For instance, after using the three consecutive James Bond movies “GoldenEye” (featuring the Z3 roadster), “Tomorrow Never Dies” (featuring the 750iL and R1200c), and “The World is not Enough” (featuring the Z8 roadster), BMW placed a whole mini fleet of MiniCooper in 2003’s movie “The Italian Job”, which resulted in the company being unable to serve the great demand for the car (Castelligasse, 2005). The latest James Bond movie, “Die Another Day”, featured a whole number of car brands, including the Aston Martin DB9 Vanquish, Jaguar XK8, Range Rover, Ford Thunderbird, and Volvo, all of which are owned by Ford Motor Company (Stone, 2002). For 2004’s blockbuster “I, Robot”, Audi designed a completely new, futuristic car named RSQ for the lead character plaid by Will Smith (Spiegel Online, 2004), and in 2005 the company struck a major deal with the production company EuropaCorp to feature its new A8 W12 luxury sedan, in a key role driven by the lead character, as well as the A3 Sportback 3.2 Quattro and a Lamborghini Murciélago roadster in minor appearances. Here, the stylish yet powerful A8 seemed to be a perfect fit for the main character played by Jason Statham. As Tim Miksche, marketing manager of Audi AG, puts it: “The combination of the superior handling of the A8 and these sporty driving scenes makes this project fit perfectly with our younger target group.” (Motor Trend, 2005). And further: “Product Placement now is an integral part of our communications strategy.” (Spiegel Online, 2004). This also seems to be the case at Cadillac, which increased the number of placements quite aggressively over the last few years: while 2003 represents the most busy movie product placement year for the Cadillac brand, its cars appeared in a total of eleven movies including "2 Fast 2 Furious", "Bad Boys 2", "Bringing Down the House", "Bruce Almighty", "Cradle 2 the Grave", "Dickie Roberts: Former Child Star", "Kangaroo Jack", "Phone Booth", "Scary Movie 3", "Terminator 3: Rise of the Machines", and " The Matrix Reloaded" (Brand Channel, 2005), especially the latter was the company’s largest product placement effort so far. It featured Cadillac's upcoming CTS sedan and Escalade EXT models, which were still one year away from being marketed to the mass market, in a 14-minute long high-speed and big-action chase scene (Job, 2003). A rather negative example, instead, would be Volvo’s placement of its S80 sedan in the 2005 movie “The Weather Man”, starring Nicholas Cage: although the S80 is featured a number of times throughout the film, the viewer would probably evoke negative associations with this particular placement due to the fact that the movie’s tone is quite depressing, showing how man’s life is falling apart. This movie also features a number of other, questionable product placement in scenes where various fast food items are hurled at the character (Cage), such as McDonald’s apple pie, Dairy Queen Slurpy, or 7-Eleven Big Gulp. While these placements are highly visible and prominent, i.e. an audio-visual combination (Gupta and Lord, 1998), they are neither meaningful nor plot connection congruent and thus unlikely to have any positive effect consumers’ brand memory and attitude (Russell, 2002).

Also, the appearance of various automobile brands in television programs has hiked dramatically during the last few years, with an increase of 49 percent for the first six months of 2005 alone, compared to the whole year of 2004 (Edwards, 2005). Edwards estimates that the value of this exposure (see table 1 below) would total to about $784 million (Edwards, 2005).

Table 1:

Automobile Brand Appearances in American Television (Edwards, 2005)

illustration not visible in this excerpt

Similarly, placing products in print media – e.g. Lexus placing its LX470 and SC430 cars in articles that are not about cars at all, like fashion photo shoots (LaReau, 2005) – and video games is getting more attention; as Ian Beavis, head of marketing for Mitsubishi Motors Corporation North America, says:

Gamers are part of our company folklore. [..] When the original version of Gran Turismo came out, they put pressure on us to bring the Lancer Evo to America. We finally brought it in and today we sell 500 of those a month to a very young audience. And they are all gamers. (Lienert, 2004).

Reasons for the increase in use of product placement mainly refer to an “oversaturated and fragmented advertising landscape” (Russell, 2002), where for the marketer’s message it has become far more difficult to reach the target audience. Mentioned factors include active avoidance of TV advertisements by zapping away (Olney et al., 1991), passive avoidance (i.e. not paying attention) of TV advertisements, fragmentation of TV audiences, and TV clutter (Lawrence, 1989), as well as increasing dislike of TV advertising (Alwitt and Prabhaker, 1994). In addition, a relatively new “threat” to traditional advertising is the development and rapid penetration of digital video recorders or DVRs, also referred to as personal video recorders or PVRs, a relatively new medium which digitally records TV programs and lets viewers simply skip the commercials (Mack, 2004). While in 2003 about 2.7 percent (or 2.9 million) of US American households used DVRs, it is estimated that by 2014 the number will rise to about 49.2 percent (or 62 million); thus, it is questionable whether companies like DaimlerChrysler will keep spending $850 million on TV ads (Mack, 2004), considering that DVR users skip commercials up to 72.3 percent of the time, but recall product placements four times as much (Zazza, 2002).

Hence, the practice of product placement is becoming more and more popular among marketers, who spend millions of dollars on strategically placing their brands not only in movies and TV programs, but also in print media and video games, in which the automobile industry is a major contributor. It shall be the objective of this study to find out how consumers actually perceive product placement, i.e. how effective is product placement for the automobile industry and does it have any effect on actual consumer behavior and purchase decision making. In this regard it needs to be mentioned that both the effectiveness and its impact on consumer behavior (if at all) may vary significantly across different cultures. As Hofstede mentions, there are significant differences in terms of values, behaviors, and perceptions among different nations and cultures (Hofstede, 2001). Thus, this study will further evaluate possible differences of American, European, and Asian consumers.

1.2 Research Purposes

As of today, there are a number of research papers and studies that deal with the effectiveness of product placement, most of which, however, focus on general consumer goods like soft drinks, food brands, or electronics (Gupta et al., 2000; Russell, 2002; Gupta and Lord, 1998; Schneider and Cornwell, 2005). Surprisingly enough, although the automobile industry is a major player of strategic product placement, both in dollar terms and occurrence (Edwards, 2005), there is only very little research as to how effective the practice is for this industry in particular and whether it has any impact on consumer behavior, considering the nature of the product being high risk and high involvement with regards to purchase behavior and decision making (Mowen and Minor, 2000). Also, it is said that the demographic profile of most frequent movie-goers is dominated by young adults between the ages of 18 to 35 years (Johnson, 1981; Hulin-Salkin, 1989), which coincides with being one of the most important target groups of car manufacturers (Marketing Trend, 2005).

Hence, this research will investigate in how far the practice of product placement is effective for the automobile industry and whether it can have an impact on potential customers across three distinctive cultures, i.e. American, European, and Asian students between the ages of 18 to 35.

II. Background of Study

2.1 Conceptual Framework

The standing of researching the effectiveness and possible outcomes of product placement may be strengthened by adopting frameworks from marketing communications-based theory. In their book “Advertising and Promotion – An Integrated Marketing Communications Perspective”, Belch and Belch (2004) argue that product placement is most efficient if being part of an integrated marketing communication (IMC) approach, i.e. the strategic integration and coordination of the various communications functions instead of having them operate separately, thereby avoiding duplication, taking advantage of synergy effect, and developing more efficient and effective marketing communications programs (Belch and Belch, 2004). One such example would be BMW’s cross-promotion of the movie “James Bond: GoldenEye”, which featured its new Z3 roadster: while BMW spent ‘only’ about €3 million on movie promotion and advertising, e.g. through their website or TV and print ads, the company claims that through this the Z3 became the most recognized BMW car of all times, creating a brand equity of €184 million (about $222 million) value – i.e. the company would have had to spend €184 million for traditional marketing efforts in order to generate the same effect (Spiegel Online, 2004). BMW later used a similar approach by backing up the launch of its BMWFilms.com website: a couple of months prior to the premiere, a low-profile public relations (PR) campaign placed news and rumors about the project on Internet movie news sites, chat rooms, and fan sites. Also, BMWFilms.com was backed up by print advertisements, such as newspaper ads and movie posters, as well as by 30-second television ads (or movie trailers), all of which had the looks and appearances of regular movie ads but showing a link to the website instead. Ultimately, in the first year alone an estimated number of more than 13 million people watched the movies, with 94 percent recommended or showed the movies to others and 88 percent asking for additional movies (Moon, 2005). And, BMW was able to create an invaluable database, since 2.4 million people provided the company with their email contact details, and 40,000 people gave it permission to contact them (Modern Marketing, 2004); moreover, dealership visits and vehicle sales numbers increased notably (Belch and Belch, 2004). Another example for cross-promotions is the 2005 movie “Transporter 2”; while it featured highly visible the new Audi A8 W12 – Audi’s new top-of-the-line luxury sports sedan – as well the also new A3 Sportsback and Lamborghini Murciélago as part of the plot (one might say that actually the A8 played the lead part, instead of actor Jason Statham), Audi promoted the movie on its website (Audi, 2005).

Likewise, Ford Motor Company is known to combine its product placement in TV programs with other marketing communication tools such as advertising or promotions: in the popular series “Smallville” (Fall 2005), Ford featured its new Fusion by incorporating it into the plot a number of times and having the characters talk about the car and its features – plot connection congruence (Russell, 2002) and prominence (Gupta and Lord, 1998) – while during the commercial breaks advertising for the car was shown. While this is a good example for a combination of product placement and advertising, one example for its combination with promotion would be Ford’s sponsoring of a commercial-free “American Dreams” episode (2005), which would feature its 1966 Mustang in the plot – coinciding with the launch of its new 2005 Mustang – as well as a Ford commercial on a television unit in the background and a character reading a magazine containing a Ford print ad; while this episode was commercial-free, Ford showed a two-minute intro and a four-minute short-movie at the end of the show, featuring the new 2005 Mustang (Friedman, 2004).

Since the goal of both integrated marketing communications and product placement alone is to develop not only brand recognition and recall but, more importantly, a certain brand image and ultimately a favorable change of consumer behavior, the Consumer Based Brand Equity Framework (see figure 1 below) is applicable for a deeper insight into the matter (Keller, 2003).

illustration not visible in this excerpt

Figure 1. Consumer Based Brand Equity Framework (Keller, 2003)

In order to generate brand equity, the marketer uses brand elements (e.g. brand name, logo, slogan, etc.), the marketing program (4Ps, IMC, PPL), and secondary associations (about the company, country of origin, etc.) to develop brand awareness and brand image (Keller, 2003). Brand awareness here deals with depth – brand recognition and recall (see 2.2 Theoretical Foundations) – and breadth – purchase and usage of a product. Brand image affects customers’ associations with a brand, which preferably should be strong (relevance and consistency), favorable (desirability and deliverability), and unique (points-of-parity and points-of-difference) (Keller, 2003). Both brand awareness and brand image, in turn, affect consumers’ brand attitudes, which consist of cognitive (‘think’) components – the knowledge and judgments about a brand –, affective (‘feel’) components – the feelings and emotions about a brand – and behavioral (‘do’) components – the tendency to act in a certain way toward a brand (Keller, 2003). Brand attitudes, ultimately, decide over the outcomes, which in a most preferable situation are brand loyalty, less vulnerability to crises and competitor actions, larger margins, more elasticity to price decreases (gaining more customers) and more inelasticity to price increases (losing less customers), improved perceptions of product performance, brand extensions opportunities, greater trade cooperation (value chain), licensing opportunities, and increased marketing communication effectiveness and efficiency (Keller, 2003).

Another important model for the understanding of how product placement works is the Associative Network Memory Model, which deals with a process called “spreading activation” (Anderson, 1983; Wyer Jr. and Srull, 1989). Here, memory is viewed as a network of nodes and connecting links, nodes being stored pieces of information and links being the strength of association between one piece of information and another, making it possible to store any type of information in the memory network which is verbal, visual, abstract, or contextual in nature (Keller, 2003). Thus, according to the Associative Network Model, if BMW places its products in a movie, the appearance of these products and of the brand can evoke the following associations in figure 2:

illustration not visible in this excerpt

Figure 2. The Associative Network Memory Model (Keller, 2003)

Related to this is a study by Janiszewski, Noel, and Sawyer (2003), which focused on the relationship of advertising repetition and consumer memory, suggesting that “understanding how different types of repeated ad material are learned and remembered can provide insight into how to make advertising more effective” (Janiszewski et al., 2003). They found that a most effective communication strategy is one which combines “spaced exposures” alternating in more involving media like television commercials and less involving media like product placement (Janiszewski et al., 2003). Thus, it can be derived that a repetition of advertisements in combination with strategic product placement will create a mnemonic cue in the mind of the consumer, which – in a favorable case – will lead to a top-of-mind awareness of the brand (Belch and Belch, 2004). Furthermore, with increasing media exposure comes increasing potential for (unrecognized) observational learning from the media, i.e. the (unrecognized) subconscious influence of consumers through product placement (Johnstone and Dodd, 2000).

[...]

Excerpt out of 76 pages

Details

Title
The effectiveness of product placement for the automobile industry and its impact on consumer behavior
Subtitle
A cross-cultural perspective
College
Hawai'i Pacific University
Grade
A (1,0)
Author
Year
2005
Pages
76
Catalog Number
V114706
ISBN (eBook)
9783640148820
ISBN (Book)
9783640149100
File size
936 KB
Language
English
Quote paper
Frank Günnemann (Author), 2005, The effectiveness of product placement for the automobile industry and its impact on consumer behavior, Munich, GRIN Verlag, https://www.grin.com/document/114706

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