Case No.

: 7
Batch
: 32nd Batch
Faculty Name : Prof. Dr. N.J.Chavan

Sub
: Advertising & Media Planning
Semester: III

CELEBRITY BLUES: SIYARAM EXPERIENCE

THE CRONJE SCANDAL

In April 2000, the New Delhi police unearthed one of the biggest scandals ever to hit the world
of cricket. While investigating a local corruption case, officials recorded phone conversations between
Hansie Cronje (Cronje), the captain of the South African cricket team, and Sanjeev Chawla, a London- based
Indian businessman. The conversation in the tapes seemed to implicate both men in illegal betting
on a match played in February 2000 in India. After initial denials, Cronje conceded that he had accepted $
15,000 to fix the match.
Siyaram Silk Mills Ltd. (Siyaram), one of India s leading textile companies, was also affected badly
by this controversy. Hansie Cronje was one of the key celebrity endorsers for Siyaram s J.Hampstead
brand of clothing. The campaign featuring Cronje had been running on the print, electronic and
outdoor media from March 2000. Siyaram and its advertising agency, Percept, watched in dismay as
their celebrity endorser turned into an internationally hated sportsman overnight. The issue raised a
heated debate in corporate and media circles regarding the perils of using celebrity endorsement.
Siyaram pulled down all the billboards featuring the entire South African team across the country. The
J.Hampstead campaign was completely withdrawn, almost 20 days before it completed its scheduled
run on hoardings and television. The match-fixing scandal seemed all set to force Siyaram and
other Indian companies to rewrite the rules of using celebrity endorsement as an integral part of their
media plans.
BACKGROUND NOTE
Siyaram was a part of the Siyaram Poddar Group of companies, which had a turnover of $ 209
billion in 2000-01. The group, founded in 1954, was into the textile (yarns, fabrics and garments),
paper/paperboards and tyre (rubber tyres and tubes) businesses. Siyaram s businesses comprised fabrics
and readymade garments. Its popular brands included Oxemberg (shirts, trousers and jeans) and J.Hampstead
(wool fabric).
Siyaram was incorporated in June 1978 as a private limited company and was converted into a
public limited company in 1980. Siyaram Finance, its subsidiary, was into the financial services
business. Siyaram manufactured and marketed textiles, cotton, woollen synthetics and synthetic blends
the main product being polyester blended worsted fabrics.

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Siyaram had a strong presence in the lower and medium segment of the domestic suitings market. Siyaram
had a 4% market share in the Rs 50 billion suitings and shirtings market. The other players included Vimal,
Mayur, Raymond, Digjam, Gwalior and Reid & Taylor etc.
Siyaram retailed its products through 25 exclusive showrooms, besides its distributor network of about
400 wholesale dealers and 50,000 retailers across the country. (The number of exclusive showrooms
was to be increased to 75 by August, 2002.) The company also exported its products to Europe, South
America, South Africa, the Far East and the Gulf countries. Siyaram s sales increased from Rs 20
million in 1978 to Rs 3252.6 million in 2000-01.
Siyaram was one of the few non-FMCG companies in India that was known for its lavish
advertisements. The Coming Home To Siyaram campaign was reported to be one of Indian
advertising s costliest campaigns. The company believed that good commercials helped it to effectively
position its suitings on a global platform. Siyaram officials said the company s focus on marketing was
responsible to a great extent for its growth over the years.
Percept had conceptualized the Coming Home to Siyaram campaign in the early 1990s. Over the years, the
campaign established the brand s association with true love for the motherland, by showing
successful men maintaining lasting, strong ties with their families. Analysts commented that the campaign
was largely responsible for Siyaram s high brand recall and positive consumer feedback.
As part of its brand-building initiatives, Siyaram also organized major sporting events like the
triangular cricket series Siyaram s Cup, 1997 and Siyaram s Celebrity Soccer 1998. The company
also held Siyaram fabric shows, aimed at increasing awareness among its target audience about the company
s range of products. For 2001-02, Siyaram had increased its advertising and promotion budget to Rs
300 million from the 2000-01 level of Rs 200 million.
THE J.HAMPSTEAD STORY
J.Hampstead was a very popular suiting brand in Europe, renowned for its premium 100% wool
suitings woven from rich natural fibers. In 1995, Siyaram tied up with J.Hampstead for marketing its
suitings in India. It was priced in the range of Rs 1,500-1,600 per meter. In September 1997,
Siyaram decided to begin manufacturing the brand at its plants with technical assistance from
J.Hampstead. The product was slightly different from the imported version and was priced in the range
of Rs 275-1000 per meter.
Siyaram earmarked around Rs 50 million for the marketing, sales and promotion of J Hampstead. The
first phase of this promotion was in the form of commercials featuring Indian tennis superstars Leander Paes
and Mahesh Bhupati.
In September 1999, Siyaram held a tennis carnival to promote J.Hampstead. Soon after, Siyaram
faced problems with the tennis duo when they decided to break their partnership, reportedly due to
personal problems. However, the company continued running the advertisements. Company officials
justified this, claiming that the sport was bigger than the players.
In February 2000, Siyaram signed the South African cricket team for promoting the brand. The
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multi-media promotion was spread over television, satellite channels, print, outdoor and point of purchase
advertising. Gangadhar said, We have taken this opportunity to associate ourselves with the number one
ranked cricket team as they will be popular in the coming series of cricket matches. And this will
enable the brand to be globally focused. The idea of such a campaign is also to send the message that the
product is of international quality. In India where cricket is almost a religion, these models can be easily
identified by both the masses as well the classes. Siyaram had decided to use the South African team on
the recommendation of Percept.
Within a month of the campaign being released in the national media, the Cronje controversy
surfaced. Siyaram continued to run the advertisements in newspapers for a few days after the scandal
broke. However, the company decided to withdraw the campaign completely soon after.
Siyaram s strategy of opting for multiple brand endorsements seemed to have diluted th e impact of the
scandal on the brand. The company began working on a new series of commercials featuring the
Leander/Mahesh duo, but dropped them as the brand ambassadors in October, 2000. Though company
sources denied that they had given up the celebrity endorsement route for J.Hampstead, the perils of
celebrity endorsement began to be seriously examined by Indian companies and advertising agencies.
THE CELEBRITY ENDORSEMENT ISSUE
Celebrity endorsements began way back in the 19 century with UK s Queen Victoria endorsing Cadbury
s Cocoa. Using celebrities for promotion has been a common marketing communications strategy, practiced
globally. Marketers believe celebrity endorsers are more effective than non- celebrity endorsers in
generating actual sales from the customers, and positively influence the consumption of the products
they are associated with. The fact that celebrities remain in constant media focus helps create high
recall rates for the commercials that feature them. Their attractive qualities are transferred to the product
being promoted. Some of the main reasons for companies using celebrity endorsers are given in below.
Major Reasons f or Utilizing Celebrity Endorsers
Celebrity advertisements stand out amidst the other advertisements
They facilitate attention getting
Celebrity values define and refresh the brand image
Celebrities add new dimensions to the brand image
Celebrities give the brand instant credibility
The use of celebrities gives the brand enhanced PR coverage
The use of celebrities make it easier for the agencies to convince clients about the campaign s
success

However, selecting the right celebrity endorsers is usually a tough task. A wrong choice can ruin the image
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of a brand. The acceptance of an advertisement message is largely determined by the attractiveness of

the celebrity presenting the message. Also, the message conveyed by the celebrity must match the
product message. Relevance is a very important factor in celebrity endorsements. If there is very little fit
between the celebrity and the brand personae, the advertisement could prove counter-productive.
Interestingly, the selection of Hansie Cronje for J.Hampstead was criticized on these very grounds
by an executive from the advertising agency Ogilvy & Mather. He said, Cronje is such a casual
chap and he looks so awkward and uncomfortable in a suit. The man behind the popular Pepsi
ads, filmmaker Prahlad Kakkar said, J Hampstead is a perfect example of using a celebrity without a
script.
In India, celebrity endorsements are believed to be particularly useful as the average consumer
reportedly identifies more strongly with celebrities than in other countries. Film stars and sports
personalities (especially cricket players) are immensely popular among the masses. This has
encouraged the widespread use of celebrities in advertisements over the decades.
However, celebrity endorsements could become a double-edged sword for most companies. A
popular star can help immensely in improving brand image and recall. But the same star can cause major
problems for the brand if he or she lands in trouble either in their careers or in their personal
lives. Pepsi faced this problem with two of its most popular celebrity endorsers pop singers
Michael Jackson and Madonna. In 1989, right after Pepsi aired the first Madonna commercial, the
singer released her sexually explicit and reportedly anti-Christianity music video Like A Prayer on Music
Television. The video led to widespread protests against the singer and Pepsi had to pull out the
advertisement after airing it just twice. Michael Jackson was signed by Pepsi in 1983 in what was
the largest individual sponsorship deal in history. In 1993, Michael Jackson was charged with child
abuse. Though the charges were not proved, Pepsi had to pull out of the contract after unprecedented media
outrage against the brand s association with the singer.
Another peril associated with celebrity endorsement is the vampire effect, when the celebrity
overshadows the brand. Also, whether the celebrity endorsing a brand actually uses the brand or not
is an issue of concern.
THE AFTERMATH
Cronje had to resign from the South African team and was barred from playing cricket ever again. In South
Africa, the Spur Restaurant Chain in Johannesburg ended a multi-million rand more Indian and
international cricket players being named as parties to illegal match fixing. It was reported that the Board of
Control for Cricket in India (BCCI) and the Mumbai/Dubai underworld were also involved in the scandal.
There were even rumors of South Africa and India suspending diplomatic ties.
The Indian companies who sponsored cricket matches and utilized cricket players as endorsers were
however, reported to be unfazed by the developments. Asserting that the J.Hampstead for one moronic
guy. By the end of the year, the Cronje scandal seemed to have died a natural death and cricket
sponsorship by Indian corporates continued.
Siyaram meanwhile, revealed its plans to achieve a turnover of Rs 4 billion for the fiscal 2001-02.
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J.Hampstead s contribution to the turnover was expected to rise from Rs 400 million in 1999-00 to Rs 750
million. In September 2001, the company launched a new campaign for J.Hampstead, with Instead;
international models were featured to reinforce the fabric s global appeal.
Media analysts were quick to point out that having learnt its lessons from the Leander/Bhupati and Cronje
issues, Siyaram was deliberately trying to play it safe this time around by avoiding celebrity
endorsements for J.Hampstead.

QUESTIONS FOR DISCUSSION:

1. As a media planner, comment on the efficacy of celebrity endorsements in general and about
their effectiveness in India in particular. Do you think advertisement agencies use these
campaigns because they are an easy way of attracting attention?
2. What should be the criteria for identifying & selecting celebrities for endorsements?
3. Examine the remarks of Prahlad Kakkar on the efficacy of celebrity endorsements?
4. Why do you think Siyaram did not opt for the celebrity endorsement route for its September 2001
J.Hampstead campaign? Do you think the company had made a mistake in its choice of celebrities
earlier? Give reasons to justify your stand.

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Case No.
:8
Batch
: 32nd Batch
Faculty Name : Prof. Dr.N.J.Chavan

Sub
: Advertising & Media Planning
Semester: III

PROHIBITING SURROGATE ADVERTISING OF LIQUOR

BANNING LIQUOR ADVERTISEMENTS AGAIN
In June 2002, the Information and Broadcasting (I&B) Ministry of India ordered leading television (TV)
broadcasters to ban the telecast of two surrogate ads1 of liquor brands, McDowells No. 1 and Gilbeys Green
Label. The Ministry also put some other brands Smirnoff Vodka, Haywards 5000, Royal Challenge
Whiskey and Kingfisher beer on a watch list. The surrogates used by these advertisements ranged from
audiocassettes, CDs and perfumes to golf accessories and mineral water.
By August 2002, the I&B Ministry had banned 12 advertisements. Leading satellite TV channels, including
Zee, Sony, STAR and Aaj Tak were issued show-cause notices asking them to explain their reason for
carrying surrogate liquor advertisements.
These developments led to heated debates over the issue of surrogate advertising by liquor companies.
Analysts remarked that the governments policy was hypocritical. Meanwhile, the government also seemed
to be in dilemma. On the one hand, it had to encourage the sales of liquor and tobacco because they were
the highest taxed sectors of the Indian economy. On the other hand, there was also the need to take the high
moral ground and reduce the consumption of such products.
THE INDIAN LIQUOR INDUSTRY
The Indian liquor industry can be divided into two broad segments: Indian Made Foreign Liquor (IMFL)
and country-made liquor.
During 2008-09, the multi billion Indian liquor industry grew at the rate of 12-15%. While IMFL was
consumed by the middle and upper classes of society, country-made liquor was consumed by the
economically backward classes.
The liquor industry was heavily regulated by the government. Companies were not allowed to expand
capacity without prior approval from the concerned state government. The distribution of liquor was also
controlled in many states through auction system, the open-market system and the government-controlled
system.
States following the open-market system gave companies freedom to choose their distributor and to
determine the price and the discounts. In the government-controlled system, liquor was distributed by state
agencies such as BEVCO (in Kerala) and the Andhra Pradesh Beverage Corporation (in Andhra Pradesh).
There were around 25,000-27,000 licensed retail sales outlets in the country, in addition to the bars, pubs,
hotels and restaurants serving liquor. There were restrictions on the location of these outlets and their
business hours.
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Liquor producers spent heavily on advertising on the electronic media because of the reach of satellite and
cable TV. Though the broadcasters were bound by a 30-year old advertising code which banned them from
airing advertisements that related to or promoted cigarettes and tobacco products, liquor, wines and other
intoxicants, the telecast of such advertisements continued blatantly over the years. This was because the
code was only a code of conduct, not a legally enforcing code. Doordarshan, the state-owned TV channel,
was the only one that adhered to it. The broadcasters were also bound by the Cable TV Act, 1995. However,
as most of the channels were uplinked from outside India, the Act did not apply to them. Moreover, satellite
channels did not want to follow this code because they garnered about 50% of their advertisement revenues
from liquor. In the peak seasons for the sale of liquor, this revenue almost doubled. Since liquor ads
generated such high revenues, Doordarshan also planned to air such ads in 2000. With a reach of 70 million
homes, it expected to acquire a significant share of liquor advertisement revenues. Doordarshan estimated
that its revenues would increase three times from cricket matches alone if it were permitted to air liquor
advertisements.
Even as Doordarshan was considering the above option, the I&B Ministry barred TV channels from
telecasting liquor and cigarette advertisements in September 2000. With pressure increasing from public
interest groups to ban liquor advertisements, the government had to make amendments to the Cable TV Act
1995. While the Indian government could not take action on most of the channels for violating the codes,
as they did not uplink from India, the cable operators were punishable under Indian law.
ABOUT SURROGATE BRANDS
Even after the ban, liquor companies continued to advertise their drinks in the form of surrogate
advertisements. In this type of advertisement, a product other than the banned one is promoted using an
already established brand name. Such advertisements or sponsorships help in brand building and contribute
to brand recall. The product shown in the advertisement is called the surrogate. The surrogate could either
resemble the original product or could be a different product altogether, but using the established brand of
the original product. The sponsoring of sports/cultural/leisure events and activities using a liquor brand
name also falls in the category of surrogate advertising.
In late 2000, a group of broadcasters, who were members of the Indian Broadcasting Foundation (IBF),
submitted their recommendations on surrogate advertising to the I&B Ministry. Under the recommendation,
surrogate advertising would comprise the products of the liquor companies, which do not have a minimum
turnover of Rs 10 million and where the products are not manufactured in bulk quantity. The broadcasters
also urged the government to allow them to telecast socially responsible advertisements sponsored by liquor
companies. They requested permission to telecast such advertisements because the Indian television
industrys revenues had reportedly decreased by about 7-11% (about Rs 1 billion per annum) after liquor
and tobacco ads were banned. After more than six months, in mid-2001, the I&B ministry accepted the
recommendations of the broadcasters.
In the mean time, some liquor producers entered new segments under the liquor brand or advertised these
products under the liquor brand. Most of liquor producers entered into the packaged water segment, such
as Kingfisher Mineral water. Some companies seemed to be using the ban to their advantage. McDowells

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mineral water and soda brands served as surrogates for their liquor brand and also generated additional
revenues for the company.
In early 2001, SWC started marketing its range of golf accessories under the liquor brand Royal Challenge.
It also launched a new range of golf accessories, including graphite shafted golf sets (with lifetime
warranty), golf bags, caps, and gloves. It also announced that Indias flagship Golfing Event the Indian
Open would be sponsored by the company till 2006. In late 2001, SWC announced its decision to enter
the packaged water market, under its well-known beer brands Hi-Five and Lal Toofan. In 2002, it named it
soda water Royal Challenge Premium Sparkling Water6 to leverage the companys flagship liquor brand
Royal Challenge. According to industry watchers, SWC was launching Sparkling Water to use it as a
surrogate for its liquor brand. They were of the view that, following the ban on advertising, liquor
companies were forced to look at innovative ways of building their brands.
The number and range of surrogate advertisements increased as liquor producers started sponsoring movies,
music shows, and other programs attracting youth. For instance, Seagrams Royal Stag was promoted by
sponsoring movie-related activities and Indian pop music under the banners Royal Stag Mega Movies and
Royal Stag Mega Music. It promoted its 100 Pipers brand by sponsoring a series of performances by fusion
music artists under the name 100 Pipers Pure Music. Blenders Pride sponsored a series of performances
by troop dancers and artists under the banner of Blenders Pride Magical Nites. Seagram also sponsored
events such as the Chivas Regal Polo Championships and the Chivas Regal Invitational Golf Challenge for
corporates.
In late 2001, television broadcasters began airing socially responsible advertisements sponsored by liquor
companies, even though the government had not issued any notification permitting the airing of socially
responsible ads on TV. Star TV and Sony were among the leading broadcasters telecasting such
advertisements included STAR TV and Sony. The advertisements were telecast during Christmas and New
Years Eve. One of these ads by Seagram wished the viewers with Seasons Greetings. Another
advertisement of Seagram read, Tonight, when its one for the road, its got to be coffee.
Soon, liquor companies that had not entered into any agreements with satellite channels for airing socially
responsible and for surrogate advertisements started processing such agreeme

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By early 2002, there were many surrogate advertisements of liquor brands on satellite TV channels.
The I&B Ministrys decision to ban such advertisements was thus viewed as a logical and necessary step
by their critics.
THE DEBATE
The banning of surrogate advertisements for liquor brands became a very controversial and sensitive issue.
Liquor producers felt that while the government allowed them to do business, it did not allow them to do so
in a profitable manner. They said that TV was the most effective medium of advertising for these products
and thus the restriction would hamper brand building. However, some analysts were of the opinion that the
ban could turn out to be advantageous for domestic players. According to a WTO agreement signed in
March 2001, MNCs had unrestricted license to sell their products. After the ban, these MNCs would not
have access to the quickest and most effective form of advertising the TV. Thus MNCs who had recently
entered the Indian industry were expected to face difficulties in building their brands. The ban would also
affect the entry decisions of MNCs that were planning to enter the Indian liquor industry.
Moreover, some analysts argued that the ban would not affect the established domestic players severely. It
would only affect new launches and new brand building activities of these companies. Players who already
had very strong brands (E.g. McDowell No. 1, KingFisher, Haywards and Royal Challenge) would not be
affected by the ban. Apart from reducing foreign competition, the ban was also expected to improve margins
for these players, as these companies had already spent heavily on advertising and other promotional
activities.
On an average, liquor companies spent about 10-12% of sales revenue on advertising, including direct
consumer promotions programs; sponsorships; and print and electronic media advertisements. On TV
alone, companies reportedly spent about 3-4% of sales revenue. This meant that after the ban, companies
could save 3-4% sales or gain in margins. For instance, McDowells operating margins ranged between 57% and after the ban, were expected to increase by 50%. The smaller companies in the domestic market
also seemed to have an advantage. Industry watchers felt that since distribution and reach would become
more vital after the ban, smaller companies might be acquired by the larger ones for their distribution
network, if not for their brands.
The restrictions on the liquor industry were viewed by many critics as attempts by the government to
disassociate itself from the social evils associated with alcohol consumption. However, some critics
observed that while the government imposed many restrictions on the liquor company; it also earned a
significant portion of its revenues (Rs 200 billion in 2000 for the whole country) through levies on liquor
sales.
WHAT LIES AHEAD?
In August 2002, broadcasting industry sources revealed plans to put in place measures for self-regulation
and monitoring, even before the I&B Ministry took concrete steps in this regard. The broadcasters who
were members of the IBF, announced that they would come up with an advertising code specific to surrogate
advertising IBF set up a sub-committee. Apart from formulating the advertising code, the committee would
monitor the advertisements that appeared on the TV channels.
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Around the same time, apart from the 12 ads banned earlier, the I&B Ministry was in the process of issuing
show-cause notices to AXN and Zee for two advertisements promoting Aristocrat Apple Juice and
Whytehall. The controversy surrounding debate surrounding surrogate advertising was undoubtedly the
result of the governments and liquor industrys age-old tussle of revenues versus morality. Ashoke
Bijapurkar, President, B-MRP Communications said, This brings us to the question being debated: should
surrogate advertisements be banned? I feel the real question to be asked is: should liquor and tobacco
advertising be banned?

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QUESTIONS FOR DISCUSSION:

1. By banning advertisements for liquor, the government is trying to disassociate itself from the social
evils associated with alcohol consumption. Critically comment on this statement in light of the ban on
direct and surrogate advertisements for liquor.
2. Do you think surrogate advertisements by liquor companies were banned because of the criticism they
received? Give reasons to support your answer. Also, discuss the advantages and disadvantages of using
surrogate advertisements (for a liquor company in particular and also for any other type of company).
3. As a part of a team responsible for the marketing of a leading liquor brand, what measures would you
suggest to overcome the limitations imposed due to the ban on surrogate advertising? Does the use of
socially responsible advertisements go against the interests of a liquor company? Analyze.

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