Product Placement on Social Media a study on how Generation Y's brand perception and purchase intention are influenced MASTER THESIS WITHIN: Business Administration NUMBER OF CREDITS: 15 PROGRAM OF STUDY: International Marketing AUTHORS: Lisa Gageler & Jolien van der Schee TUTOR: Darko Pantelic JÖNKÖPING: May 2016 Acknowledgement We would like to thank our tutor, Darko Pantelic, for the valuable advice and feedback he has provided to us. This research would not have been possible without him. In addition to that, we would like to thank our fellow students who, through seminars, have given us valuable feedback and ideas on how to improve this thesis. Last but not least, we would like to express our appreciation to all who participated in our survey. We are thankful for the support, valuable guidance, knowledge, and advice provided to us throughout the research from our families, friends, and academic staff. This all enabled us to conduct this thesis paper and fulfill our thesis purposes. ______________________ ______________________ J vd Schee Lisa Gageler Jolien van der Schee Jönköping International Business School 2016-05-23 Master’s Thesis in Business Administration Title: Product Placement on Social Media: a study on how Generation Y's brand perception and purchase intention are influenced Authors: Lisa Gageler and Jolien van der Schee Tutor: Darko Pantelic Date: 2016-05-03 Subject Terms: Brand Perception, Consumer Behavior, Generation Y/Millennials, Product Placement, Purchase Intention, Social Media Abstract With increasing restrictions, saturated advertisement markets and advanced technology, the conditions of the communication politics have significantly changed and outdated the classical instruments. In order to bypass these developments, marketers started to strategically promote their products through appearances in movies and television than through conventional commercial spots. Additionally, social media has developed to one of the latest and most effective communication tools, especially among Generation Y, which businesses try to take advantage of. The combination of these two instruments created product placement on social media. Extensive market research on product placement in movies and television has shown that it can be an effective marketing tool if applied correctly. However, the research on product placement on social media is limited. Therefore, this paper will investigate whether product placement on social media is as effective as in movies and television, by answering the following research question: What is the impact of product placement on social media on the end-consumer’s brand perception and purchase intention? To address this issue we developed an online survey based on the theoretical background and methodology. The target group was set to social media users of the Generation Y worldwide. Subsequently, within a timeframe of three weeks we collected 217 valid responses that were analyzed with SPSS in order to answer the research questions and give managerial implications. Our analysis shows that product placement on social media can have a positive influence on consumer brand perception and purchase intention. This is particularly compounded if the celebrity is liked. However, the analysis also indicates clear signs that the Generation Y perceives product placement on social media as unethical. However, all in all, it can be said that product placement on social media is a good marketing tool if several suggestions and restrictions are taken into account. Table of Contents 1. Introduction .......................................................................................... 1 1.1 Background ........................................................................................................ 1 1.2 Problem Discussion ............................................................................................ 1 1.3 Research Purpose ............................................................................................... 2 1.4 Delimitations ...................................................................................................... 2 1.5 Contribution ....................................................................................................... 2 1.6 Disposition ......................................................................................................... 3 1.7 Thesaurus ........................................................................................................... 3 2. Theoretical Background ...................................................................... 4 2.1 Literature Review ............................................................................................... 4 2.1.1 Social Media ............................................................................................... 4 2.1.1.1 History ...................................................................................................... 4 2.1.1.2 Social Media Usage .................................................................................. 5 2.1.2 Product Placement ...................................................................................... 6 2.1.2.1 History ...................................................................................................... 6 2.1.2.2 Effectiveness of Product Placement ......................................................... 7 2.1.2.3 Legal Issues and Critics ............................................................................ 8 2.2 Concepts and Models ......................................................................................... 9 2.2.1 Balance Theory ........................................................................................... 9 2.2.2 Brand Perception ....................................................................................... 10 2.2.3 Purchase Intention ..................................................................................... 10 2.2.3.1 The Buyer Decision Process ................................................................... 11 2.3 Hypotheses ....................................................................................................... 12 3 Methodology........................................................................................ 14 3.1 Research Philosophy ........................................................................................ 14 3.2 Research Approach .......................................................................................... 15 3.3 Data Collection Method ................................................................................... 15 3.4 Research Design ............................................................................................... 16 3.5 Research Method .............................................................................................. 17 3.6 Sampling Method ............................................................................................. 19 3.7 Research Quality .............................................................................................. 20 3.8 Summary .......................................................................................................... 21 4 Empirical Findings and Data Analysis ............................................. 22 4.1 Data Extraction and Cleaning .......................................................................... 22 4.2 Demographic Data ........................................................................................... 22 4.3 Social Media Use ............................................................................................. 23 4.4 Variable Analysis ............................................................................................. 24 4.4.1 Product Placement .................................................................................... 24 4.4.2 Purchase Intention ..................................................................................... 25 4.4.3 Brand Perception ....................................................................................... 25 4.4.4 Attitude Towards Celebrities .................................................................... 26 4.4.5 Ethics ........................................................................................................ 26 4.5 Hypotheses Tests .............................................................................................. 27 4.5.1 Variable Correlation Test .......................................................................... 29 4.5.2 The Influence of Product Placement on Social Media on Brand Perception ................................................................................................. 31 4.5.3 The Influence of Ethical Issues on Brand Perception ............................... 32 4.5.4 The Influence of the Attitude Towards a Celebrity on Brand Perception 33 4.5.5 The Correlation Between Product Placement on Social Media and Purchase Intention ..................................................................................... 34 4.5.6 The Influence of Attitude Towards a Celebrity on Purchase Intention .... 36 4.6 Summary .......................................................................................................... 37 5 Conclusion ........................................................................................... 38 5.1 General Conclusion .......................................................................................... 38 5.2 Discussion