Product placement and activation – Recommendations for Danish brand holding companies Cand.merc.IMM master thesis by: Andreas R. Glud 200582‐XXXX Christopher W. Franck 190983‐XXXX Advisor: Arne Lycke Department of Management, Politics and Philosophy Hand‐in‐date: November 26th 2009 Characters with spaces: 253,285 equivalent to 111.5 pages 1 Executive summary The placing of products in different media has been around as an alternative and subtle marketing tool for many years. In Denmark, however, the use of product placements by brand holding companies has been rather limited due to both legal and moral restrictions. Though, in recent years this has changed and de‐regulation from the EU and a more nuanced position on product placement is gaining support. Considering this recent interest in product placement and many Danish brand holders’ lack of experience with it, this thesis seeks to give these brand holders an overview of how product placements work, how the industry works and how they can maximise their benefits from using placements and activation. Such an overview has the potential to help brand holders decide whether or not product placement and activation is something they will profit from utilizing. The thesis ends up bringing forth a number of recommendations for Danish brand holders considering using product placement and activation. The thesis covers both the theoretical and the empirical research done on product placement and activation. Furthermore, the authors have conducted a significant amount of research themselves through interviews with industry stakeholders and questionnaires. After having analysed both the theoretical aspects of product placement and activation, and the results from the interviews and questionnaires the authors conclude that there is a great potential in product placement and activation for Danish brand holders. If the brand holders want to go into the world of product placements they should first of all realise that a product placement standing alone will at best lead to increased brand awareness and image. If the brand holders’ objective is to increase sales, they should focus their attention on using the placement as a platform for a broader promotional campaign that can serve as activation of that placement. They should further seek to integrate their activation efforts in this campaign in order to obtain a number of advantages such as improved efficiency, network development, less brand image confusion and a higher level of consistency. Brand holders should also collaborate with agencies through out the process since they are the ones with the greatest amount of knowledge and experience. The agencies typically also have the best relations and connections within the industry giving brand holders easier access to the rights placement opportunities. 2 Content List of figures ................................................................................................................................................. 9 1.0 Introduction ........................................................................................................................................... 11 2.0 Problem identification ........................................................................................................................... 12 2.1 Problem formulation .......................................................................................................................... 14 2.2 Delimitations ..................................................................................................................................... 15 2.3 Structure of thesis .............................................................................................................................. 17 3.0 Methodology ......................................................................................................................................... 18 3.1 Primary data ...................................................................................................................................... 18 3.3 Choice of theory ................................................................................................................................ 19 3.4 Data collection and validation issues ................................................................................................ 21 3.5 Interview design ................................................................................................................................ 22 4.0 Introduction to product placement......................................................................................................... 23 4.1 Insight into the world of product placement definitions .................................................................... 24 4.1.1 Different views on product placement ...................................................................................... 24 4.1.2 Chosen definition of product placement ..................................................................................... 25 4.1.3 Definition of product placement:................................................................................................ 25 4.2 Product placement history in brief .................................................................................................... 26 4.3 Legislative issues of product placement ................................................................................................ 27 4.4 The product placement industry structure ......................................................................................... 29 4.4.1 The production companies ......................................................................................................... 29 4.4.2 The brand holders ...................................................................................................................... 29 4.4.3 The agencies ............................................................................................................................... 29 4.4.4 The consumers ........................................................................................................................... 30 4.4.5 The product placement industry illustrated ............................................................................... 30 3 4.5 Industry characteristics ...................................................................................................................... 31 4.6 Product placement typology .................................................................................................................. 32 4.6.1. Typology ................................................................................................................................... 33 4.6.1.1 Prominence .............................................................................................................................. 33 4.6.1.2 Modality .................................................................................................................................. 35 4.6.2 Branding terminology description .............................................................................................. 36 4.6.3 Research on product placement effectiveness .......................................................................... 37 4.6.4 Necessary considerations before engaging in product placement .............................................. 39 4.6.4.1 Brand match ............................................................................................................................ 39 4.6.4.2 Target audience fit ................................................................................................................... 39 4.6.4.3 Coverage .................................................................................................................................. 40 4.6.4.4 Setting ..................................................................................................................................... 40 4.6.4.5 Celebrity endorsement factor ................................................................................................. 40 4.7 How can product placement affect viewers ................................................................................... 41 4.7.1 The Consumer Decision Process ................................................................................................. 41 4.7.2 The Hierarchy of Effects Model .................................................................................................. 42 4.7.3 The Elaboration Likelihood Model ............................................................................................. 44 4.8 Audiences’ attitudes toward product placement. ............................................................................ 45 4.9 Partial conclusion of product placement theory ............................................................................... 47 5.0 Introduction to activation ..................................................................................................................... 48 5.1 Definition of product placement activation ...................................................................................... 49 5.2 Role of activation in the product placement industry ...................................................................... 49 5.3 Activation typology ...........................................................................................................................