An Ingredient Branding Approach to Determine the Financial Value of Stars: The Case of Motion Pictures

55 Pages Posted: 20 Feb 2011 Last revised: 26 Apr 2013

See all articles by Thorsten Hennig-Thurau

Thorsten Hennig-Thurau

University of Muenster

Franziska Völckner

University of Cologne - Faculty of Management, Economics and Social Sciences

Michel Clement

University of Hamburg

Julian Hofmann

University of Cologne - Department of Marketing and Brand Management

Date Written: April 10, 2013

Abstract

Stars earn massive salaries for participating in movies and other media products. However, the successes of some movies that do not feature major stars have led practitioners and researchers to question the reasonableness of such investments. This research determines star value by interpreting stars as ingredient brands and accounting for (1) the sample selection bias that results from the differences between movies with stars and those without; (2) the existence of contingency factors (e.g., star or movie characteristics); and (3) the potential risk-reducing function of stars. The authors determine percentage estimates for the effect of stars that are positive for both the North American box office and global revenues but differ substantially with several contingency factors. They show that not accounting for sample selection bias exaggerates the effect of stars and that stars reduce the financial risk of movies. Managers can use the findings to estimate project-specific star value measures.

Keywords: Star Power, Motion Pictures, Propensity Score Matching, Financial Value

JEL Classification: M31, L82

Suggested Citation

Hennig-Thurau, Thorsten and Völckner, Franziska and Clement, Michel and Hofmann, Julian, An Ingredient Branding Approach to Determine the Financial Value of Stars: The Case of Motion Pictures (April 10, 2013). Available at SSRN: https://ssrn.com/abstract=1763547 or http://dx.doi.org/10.2139/ssrn.1763547

Thorsten Hennig-Thurau (Contact Author)

University of Muenster ( email )

Am Stadtgraben 13-15
Muenster, D-48143
Germany

HOME PAGE: http://www.marketingcenter.de/mm/en/index.php

Franziska Völckner

University of Cologne - Faculty of Management, Economics and Social Sciences ( email )

Richard-Strauss-Str. 2
Cologne, D-50923
Germany

Michel Clement

University of Hamburg ( email )

Allende-Platz 1
Hamburg, 20146
Germany

Julian Hofmann

University of Cologne - Department of Marketing and Brand Management ( email )

Albertus-Magnus-Platz 1
Cologne, 50931
Germany

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