Product Placement as an Effective Marketing Strategy

By John Dudovskiy
June 20, 2012

product placementProduct placement is a marketing strategy that has accidentally evolved a few decades ago. Nevertheless, the efficiency of the product placement has been spotted by professionals and since then various companies engage in product placement activities in various levels with varying efficiency. One of the main differences of product placement from other marketing strategies is the significance of factors contributing to it, such as context and environment within which the product is displayed or used.

Implementing an efficient marketing strategy is one of the essential conditions for a product to be successful in the marketplace. Companies may choose different marketing strategies including advertising, channel marketing, internet marketing, promotion, public relations, product placement and others. Each of one of these marketing tools has its advantages and disadvantages and the rationale behind the choice among these tools relates to the type of the product, type of the market and the marketing strategy of the company.

Product placement among them is one of the marketing strategies which have evolved recently. In product placement a product is placed in a movie or television show in exchange for payment of money or other promotional consideration by the marketer (Gupta & Gould, 1997).

According to Cowley& Barron (2008, p.91), as taken from Parrish, auto industry has been among the very first industries to use product placement as a marketing strategy.  One of the automobile companies which use product placement strategy heavily to promote its cars is Aston Martin – a British manufacturer of luxury cars.

There have been many researches on the subject of product placement undertaken by different authors at different points of time. The use of product placement as an effective marketing strategy has intensified mainly during the last three decades. According to DeLorme& Reid(1999), until recently studies on product placement have been generally focused on three main areas:

1. The nature and prevalence of product placement in movies.

Major studies focused on the nature and prevalence of product placement can be found in the works of DeLorme& Reid (1999), Sapolsky& Kinney (1994), Avery & Ferraro (2000) and others. The main conclusions from all above studies were that a) product placement was fairly common in movies b) majority of product placements were for low-involvement products, and c) automobile industry accounted for 18% of all product placements (Sapolsky& Kinney, 1994)

2. The beliefs and attitudes regarding product placement.

The works of Gupta & Gould (1997), Nebenzahl&Secunda (1993), Ong&Meri (1994) and others have mainly concentrated on the beliefs and attitudes of audience (viewers) regarding product placement. The summary of findings from all of these works can be described as that in general viewers (studies were undertaken in United States), do not object to the practice of product placement.

3. The effects of product placement in movies and television.

This last area is the one most of the researches have been focused on. And major works on the effects of product placement in movies and television include the works of Ong&Meri (1994), Babin& Carder (1996a) and Vollmers&Mizerski (1994).

However, very recently, according to McCarty (2004, p.72) research has emerged which tries to analyse the complexity of product placement.

 

Definitions

There are many authors, most of them marketing professionals who wrote on the topic of product placement. And, equally, there are so many definitions as well. Many of these definitions are the same in the meaning and the author lists only several the most notable definitions below.

Product placement is defined by Lehu and Bressoud (2008, p.1084) as a marketing tool where a product is put into a movie scene, or its brand name is heard.

“Product placement is a promotional tactic used by marketers in which characters in a fictional play, movie, television series, or book use a real commercial product” (wordiq.com, 2010).

Alternative definition of product placement is provided by Balasubramanian (1994, p.29),  as a paid product message which is aimed at influencing movie or television viewers through planned and discreet entry of a branded product into a movie or television program.

Transformational advertising, as defined by Puto and Wells (1984, p. 638) is a kind of advertising which transforms or changes the experience of using a product in a way that it becomes its perception becomes more welcomed.

Lifestyle advertising, as explained by Solomon and Englis (1994, p.3) associates a product with a way of life, focusing on the presentation of the product within a comfortable life context.

Reverse product placement, as defined by Gutnik et al., (2007, p.18), is creating a fictional brand in a fictional environment and then releasing it into the real world.

 

The Evolution of Product Placement as a Marketing Strategy

The practice of product placement has undergone a process of evolution which according to most researchers covers the period of several decades. However, there are some authors who state that product placement started even earlier than only a several decades ago.

According to Brennan et al. (1999) the whole idea of the product placement in movies was originated due to producer’s effort to increase the reality of movies by adding to them real brands and products. However, once products started appearing in movies it was followed by increase in sales for that particular product and it caught marketers’ attention as a new promotional channel.

There are also some authors who link the origins of product placement in movies to even earlier periods. For example, Sutherland (2005, online) claims the origins of the effectiveness of product placement to go back to 1934, illustrating his claim with the film “It Happened One Night”, where the actor Clark Gable was featured not wearing undershirt, which resulted in fall in the sale of undershirts by 40%. However, this example does not really illustrate the efficiency of the product placement, as the author claims; it simply illustrates a significant influence of movies and role models to the audience.

Galician (2004, p.17) links the evolution of product placement with interdependence of studio executives, seeking help in expenses and marketing executives of companies, looking for new ways of advertising their products. This explanation illustrates best the primary reasons of the evolution of product placement as an efficient marketing strategy.

When the volume of ticket sales decreased and the amount of film budgets have increased significantly, according to Magiera (1990, p.43), movie executives became increasingly dependent on product placement as a source to support their budgets.

McCarty (2004, p.64) informs that product placement in movies has actually been around since the 1940s, although it “essentially remained a casual business, an afterthought to most marketers’ and a low priority for studios” (McCarthy, 1994, p. 30).

Segrave (2004, p.1) admits that at the initial period of the practice, the product placement was always hidden and never was admitted, and the opposition to the practice declined only by the end of 1970’s, when it became “a way of life for Hollywood movies” (Segrave, 2004, p.2)

It is understandable by through comment that product placement that initially the overall attitude of consumers and the public at large has been negative towards the practice of product placement. However, once product placement started to benefit both movie producers and companies advertising their brands significantly, it started to be practiced massively and thus public became more tolerant towards the practice of product placement.

According to Karrh (1998, p.p.32), the producer of Reese’s Pieces – Hershey claimed 65% increase in the sales of the product when it featured in E.T., and after that, starting from 1980s product placement started to attract the attention of marketers as a strategic marketing tool. Apart from Karrh many researcher within the literature reviewed as well credit the film E.T. and Hershey with the discovery of the potential product placement presents as a marketing strategy.

An estimation by Marshall (1998, p.16) found out that product placement was utilised as a part of overall advertising mix by approximately 1000 brand marketers in 1998. This finding seemed to be a colossal number in 1998, however, further estimations by various authors reveal that even more number of companies have been starting to implement product placement as their marketing strategy since that time. For example, Karrh et al. (2003, p.1) inform that the practice of product or brand placement has grown significantly during the past 20 years.

Pointing to the size of spending, Pope (2008) informs that total spending for product placement in 2007 reached $2.9 billion in United States, with auto industry claiming the biggest share. One of the possible explanations why auto industry claim the biggest share of the product placement may be that because of their size and financial resources automobile manufacturing companies can afford huge bills of placing their products in popular TV programs and blockbuster movies.

Discussing the development of product placement and its firm establishment as a source of income for film and program producers McCarthy (1994, p.30) inform that nowadays product placement agencies review the scripts aiming to find product placement opportunities in them for companies. This fact can be considered as evidence that the practice of product placement has firmly established itself as an efficient marketing strategy.

 

Product Placement and Mental Models 

Many researches have been undertaken in order to find out the mechanisms of product placement that is to identify reasons behind the fact why product placement has been so efficient to make the audience to buy brands that have been advertised through product placement. One of the explanations offered was the influence of product placement to the viewers through mental models. Since that discovery further researches have focused on the various aspects of mental models like how the information is sent from the source, how it is perceived by the receiving individual, what possible noises do affect on that information, and how to minimise those noises in order to increase the efficiency of the message.

Television programme, movies and other media viewers all of them have their mental models. It means that each of them comprehend the information being passed in a way that is unique to him/her due to a range of factors. In his study on mental models Garnham (1997, p.152) concludes that mental models represent following components:

a)      Situation  in real or imaginary worlds; space and time;

b)      Entities found within situations and the conditions of those objects;

c)      Casual and intentional relationships between entities and situation;

d)     Events that take place within those situations

As Zwaan and Radvansky (1998, p.169) explain, mental models allow audience to understand information send through television shows.

Gentner& Stevens (1983, p.8) summarise their work on mental models on following points:

Firstly, mental models are incomplete. They always go through the process of transformation due to the vast range of factors affecting them.

Secondly, people have limited control over their mental models. The formation of a mental model of an individual has taken all his lifetime influenced by the conditions he was surrounded and many other factors, therefore they have a very limited control over their mental models whatsoever.

Thirdly, mental models are unstable. An individual’s mental model can be transformed by the influence of external factors like crises, loss of a close person, personal injury etc.

Fourthly, there are no boundaries in mental models, meaning that individual mental models can comprehend according to its characteristics, and analyse any kind of information received.

Fifthly, mental models are obscure. Mental models cannot be formulated specifically but only can be perceived in an obscure manner.

Sixthly, mental models are miserly.

In their major work on connection between mental models and brand placement Yang et al (p.113) came to following conclusions:

  1. Landscape model specifies the degree to which the brand placement is recalled by viewer during a later period of time.
  2. Mental model analysis helps researchers to evaluate the effects of brand placement on an individual.
  3. The brand placement does not influence the attitude of viewers towards the brand.

 

The Benefits of Product Placement and How Does It Work

According to Moriarty (1996, p.333) the increase within integrated marketing communication has resulted in the creation of “circle of synergy” for viewers, because messages are sent through various communication channels, including the ones which are not normally considered to be marketing channels.

In a study undertaken by Sapolsky and Kinney (1994, pp. 1-22) the objective was to identify what forms of product placement was the most effective in boosting the product recall. The result was that a combination of visual cues and verbal references to the brand in the scenes of a movie was the most effective, although the most expensive at the same time. Also, product recall was found to be high when product appeared jointly with a major character or the main character in the film which provided greater visibility for the product.

Delorme and Reid (1999, p.91) concluded in their study that product placement influences the audience to develop familiarity and a sense of being associated with the brand appeared in the movie. It was also concluded that the context in which the brand appears is important and that young people are the most susceptible for product placement.

Product placement can be described as a hybrid message, according to Balasubramanian (1994, p.33) due to the fact that it contains both – advertising and publicity.

Beckstead (1995, p.21) mentions about an extensive research by Coleman which found out the relationship between different forms of product placement and product recall by the viewers:

•           32% of viewers recall the product if the item is visually placed;

•           53% of viewers recall the product if the item is actually used;

•           60% of viewers recall the product if the item is verbally mentioned;

•           71% of viewers recall the product if the item is verbally endorsed;

•           81% of viewers recall the product if the item is mentioned and used;

Nebezahl and Jaffe (1998, p.807) argued that product placement can be contrasted with traditional advertising methods along two dimensions:

  1. The degree to which the fact that paid product placement is taking place is disguised and the name of the sponsor is disguised.
  2. The comparison between the persuasive message and the main message of the communication in terms of obviousness.

Opinions differ in regard to whether product placements help for the brand to be remembered by viewers. Researchers like Babin and Carder (1996b, p.143) and Vollmers and Mizerski (1994, p.99) strongly believe that product placements cause the brand name to be remembered among viewers for a long period of time, whereas, authors like Karrh (1994, p.92) doubt in that aspect of product placement for a longer term period.

As supported by d’Astous and Chartier (2000, p.79) the goal of brand placement is not limited to increasing the sales of a product, but also includes increasing audience’s familiarity with the brand.

A focus group study undertaken by DeLorme and Reid (1999, p.82) revealed that participants in the study were more inclined to notice mainly those brand placements, the products of whom they were already liked and were using. This finding partially justifies the view that product placement will be especially efficient if it is not used on its own, but is being practiced together with other marketing tools.

Avery and Ferraro (2000) undertook a research on brands and products shown on TV following prime-time television programs for the duration of one week which revealed following results:

•           61 % of brand appearances took place during news programs and shows based on games;

•           39% of brand appearances took place during programs involving pre-scripted storylines;

•           43% of brand appearances were only visual.

•           39% of brand appearances were only verbal;

•           18% of brand appearances combined both – visual and verbal descriptions of a product.

Weaver (2000, p.26)  informs about a study at Pennsylvania State University in 2000, which revealed the results indicating that the combination of advertising and the product placement resulted in a higher recognition of the brand compared to the brand recognition achieved through advertising of that product separately or brand recognition achieved through product placement alone.

Russel (1998) coined the term “Tripartite Typology of Product Placement” which categorized product placements according to three dimensions:

1.         Visual. This type of dimension involves the appearance of the product on the screen and can be varied according to number of appearances, camera shot style, etc.

2.         Auditory.  Auditory dimension of product placement consists of the name of the brand being mentioned in a dialogue. Variations within that type of dimension include tone of voice, frequency of mentioning and the general context.

3.         Plot connection. Third product placement dimension includes the product being integrated within the plot of the storyline. Identification of Aston Martin cars with James Bond movies is a clear example for that type of dimension.

McCarthy (1994) explains that prices of product placement depend on the nature of the placement of the movie, and, “can range from nothing to several million dollars” (Fournier and  Dolan, 1997).

Advertising formats are divided into two groups by Wells (1989) – lectures and dramas.

Lectures are advertisements that are spoken to audience, whereas dramas are advertisements that draw the audience itself into a story.

Law and Braun-LaTour (2004, p.92) list following factors influencing product placement:

  • Product centrality
  • Modality
  • Emotional context
  • Product category

Hart (2008, p.90) shows three ways in which product placement can occur:

1.         Product placement happens as suggested by actor, director, or set decorator to give a realistic touch to the scene.

2.         Product placement happens as a trade. For example, television director can agree to feature a specific brand of bottled water during a program in return to the water being supplied for free during casting.

3.         Product placement can be purchased. For instance, a product of a specific brand is used by the main character and the brand name of the company is clearly visible for the viewers.

Many respectable scholars have pointed out to the numerous advantages of product placement as a marketing strategy such as possibility have a “captive audience” (Cowley and Barron, 2008, p.91); “lack of clutter” (Belch and Belch, as cited in Lehu and Bressoud, 2008, p.1086); and “exposure, frequency, support of other media, source association, cost and recall such as other advertisements” ((Belch and Belch, as cited in Lehu and Bressoud, 2008, p.1087)

Cowley and Barron (2008, p.92) consider the communication potential of product placement in movies as a feasible and attractive branding method.

Yang et al. (2004, pp.98-99) consider the benefits of brand placement as following:

  1. Brand placement provides a continuity for  the advertisement
  2. Being associated with celebrities, brand placement can be perceived as being endorsed by them.
  3. Brand placement is a convenient advertising strategy to target specific audiences
  4. Lifespan of brand placements are considerably longer compared to other mediums of advertisement.
  5. Brand placements provide opportunity of manipulating with commercial speech due to a big amount of ambiguity in them.
  6. Generally audience’s attitudes towards brand placements are positive.
  7. Brand placements enjoy less critical responses from audiences compared to other advertisement means.

Discussing the advantages of product placement, Gutnik et al. (2007, p.9), mention the inability to avoid them by the viewers. Determining how effective product placements are has been focus of a study by Morton and Friedman (2002, pp. 33-38). The researchers explained that the brand performance of a product as a result of product placement strategy could be measured according to different variables: revenues, sales or hits at the official company website. The authors suggest that product placement is an effective type of product promotion. Audience receptivity as a result of product placement is a key to achieving sales and profitability objectives or not achieving them entirely. Morton and Friedman (2002) have also concluded that the role of marketing executive is to obtain access to opportunities for product placement and guarantee that the appearance of product works synergistically with the company’s image and market positioning.

According to Gutnik et al. (2007, p.8), during the television season of 2004-2005, the broadcast networks ABC, CBS, NBC, FOX, UPN, and the WB alone have shown over 100000 product placements and the value of the industry was estimated $4.24 billion in 2005

According to Honthaner (2010, p.276) the value of product placement can be assessed in several levels: amount of screen time, box office revenue, hands-on exposure, verbal exposure and the impression of the viewer.

 

Critiques of Product Placement 

There are some authors who held a negative view about product placement mainly due to ethical considerations.

Lamb (2005, p.1) stresses that viewers need to be able to distinguish what is an advertisement and what is not and considers the current practice of product placement to be unethical.

Another opponent of product placement is international marketing consultant Sutherland. According to Sutherland (2005, online) there were 8000 occurrences of product placement shown on TV, and he explains why does product placement work by arguing that although the media does not tell the viewers what to think, it does tell to viewers what to think about, and at the same time the material that is being offered to think about is shown to be extremely popular or cool

Pfanner (2005, online) states that product placement should be acknowledged to be a form of advertising, not interfering with editorial independence, at the same time increasing customer information, and illustrates in the case of Australia, where product placement is allowed with the condition of it being disclosed in the credits.

 

Product Placement in Aston Martin 

Aston Martin’s marketing strategy has been closely associated with James Bond franchise films. It benefited the company’s worldwide image enormously and this relationship is considered as one of the long-term successful business partnerships. Superband (2009) inform that it started with Aston Martin providing cars for Sean Connery in 1964 “Goldfinger” James Bond film and still continues with Aston Martin DBS appearing in “Casino Royale” film in 2007.

 

The Practice of Product Placement in Other Companies

There are many examples of the product placement to be engaged in by other companies as well. Pope (2008) informs that other companies also benefited from product placement, pointing to Reese’s candies which were used in the movie “ET: The Extra-Terrestrial” and BMW AG Z3 roadster featured in 1996 Bond instalment “Golden Eye”. Sometimes, even extra marketing measures are undertaken to link the product or brand being promoted with the movie it features in. For example, Fournier and Dolan (1999) inform that the appearance of BMWZ3 roadster in the James Bond instalment Golden Eye included also advertising in media, a Nieman Marcus catalogue offer and a press launch in Central Park.

Another example of successful product placement is described by Fournier and Dolan (1997) as Rayban sunglasses’ placement in film Risky Business, as a result of which its sales tripled.

According to Grossberg (2002) a large part of Spielberg’s film “Minority Report” is devoted to product placements – 15 product placements took place in the film, and, therefore, money generated from product placement covered was around 25 million dollars.

Lindstrom and Seybold (2004, p.227) list the following cases of product placement:

•           Domino’s Pizza in Mutant Ninja Turtles;

•           Nintendo Video Games and Mattel Inc.’s Power Glove in The Wizard;

•           Chevrolet, Hardees, Coca-Cola and Exxon in Days of Thunder;

•           GAP, Nokia and 28 other brands in Minority Report;

•           Burger King and Coors Beer in Gremlins;

•           McDonald’s and Coca-Cola in Mac and Me;

•           Toyota, Miller, Nike, AT&T, USA Today and Pizza Hut in Back to the Future II;

•           Ray-Bans and Seagrams Champagne in Top Gun;

•           Sanyo, Wheaties and Nike in Rocky III;

•           Miller Lite in Caddyshack II.

 

Product placement in UK 

Until very recently United Kingdom was the only country besides Denmark where the practice of product placement in television and radio was not legal (Hobson, 2010).

Monaghan (Telegraph-online, 2010) informs that by the end of 2010 product placement will be allowed in UK films, TV series, entertainment shows and news programmes. However, product placement will not be allowed in programmes created for children, news programmes, current affairs programmes created in UK, consumer affairs and religious programmes. Also, product placement will still be banned for the promotion of such products as tobacco, alcohol, gambling, foods or drinks containing high amount of sugar, salt or fat, baby milk and medicines. According to Monaghan (Telegraph-online, 2010), the ban for the placement of products and services which is not allowed to be advertised on television, is also being proposed by Ofcom.

 

Controversies and Inefficiencies in Product Placement 

However, before deciding on a product placement marketing executives have to analyse the wider context and forecast the impressions the product is likely to install to viewers. An example of product placement producing unwanted effect is brought by Johnson (1994), as Coca-Cola being shown in a bloody murder scene in the contradictory film Natural Born Killers.

Another example of inefficiently placed Coca-Cola brand is described by Yang et al. (p.108), when in film Falling Down when highly depressed man, played by Michael Douglas drinks Coca-Cola in several occasions during the film.

Gutnik et al. (2007, p.9) classify product placement in James Bond instalment Casino Royale an unsuccessful, branding it “one long commercial”. “Although Casino Royale featured less than half the number of product placements used in other movies released at the same time, something about the ways the products were featured led to ad-resentment; the audience to felt like they were being cheated and the whole movie was an ad” (Gutnik et al., 2007, p.9)

Some cases of the product placement which have been inefficient or contradictory have been studied closely by some large multinational companies in order not to repeat their mistakes. Because multinational companies spend big amount of financial resources to place their product, they cannot afford for the placement to produce reverse results. Therefore, no cases of contradictory or inefficient product placement have been found that took place recently.

 

New trends in product placement 

Product placement is a dynamic marketing tool, therefore new trends will be evolving within product placement at all times, as well as, new forms of product placement.

Bannan (2002, p.6) pinpoints to the tendency of product placements beginning to be used in video games as well. “Spending on in-game product placement was estimated at $300 million this year, with projections of $1 billion in spending by 2010” (Gutnik et al., 2007, p.13).

Gutnik et al.(2007, p.19) inform about clothing retailer American Apparel which launched its jeans in online virtual world Second Life, prior to launching them in real-world stores, and Aloft, new brand from Starwood Hotels and Resorts launched in Second Life before being launched in the real world. This form of product placement, known as the reverse product placement is becoming more popular now.

Another trend within product placement is product linking or “plinking” which is “adding a link to a product to visible object within a video” (Gutnik et al, 2007, p.9). Plinking provides the viewer’s ability to stop the video and tag an area where a product is placed to get more information about the product and to buy it.

 

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Category: Marketing
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