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Article Summary The Use of Celebrity Endorsements Can Be a Good Way

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Article Summary
The use of celebrity endorsements can be a good way to promote a brand, as long as the brand fits the celebrity. The article discusses three reasons why a company should use celebrity endorsements:
1. Celebrities have a large range of followers, giving them the ability to build brand equity which created product differentiation to consumers.
2. Companies can reach a global audience since celebrities have worldwide fan bases, and an endorsement can link the product to a celebrity's skills, making fans feel closer to and more like the celebrity.
3. Celebrity endorsements increase consumers' awareness of a product, since consumers are more likely to remember an ad linked to a celebrity.
However, not all celebrities are the right fit for all products. Endorsements can backfire if the celebrities are promoting something they would never use, giving the impression of nothing more than a sponsored advertisement.
Source: Erika Warne, "Why Brands Should Use Celebrity Endorsements," weareanthology.com, April 20, 2017.
-Refer to the Article Summary.Economists refer to an increase in sales due to celebrity endorsements as being the result of

Definitions:

Variable Expenses

Costs that vary in direct proportion to changes in an activity level or volume, such as raw materials and direct labor.

Sales

Sales refer to the revenue generated from the exchange of goods or services for money or other assets between a seller and a buyer.

Net Operating Income

The profit generated from a company's regular business operations, excluding expenses like taxes and interest.

Divisional Segment Margin

A measure of the profitability of a particular division or segment within a company, calculated as the segment's revenue minus its direct costs.