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Can a great logo really improve company performance?

Think of a powerful company and it’s likely to have an equally powerful logo. Examples include the golden arches of McDonald’s, Starbucks’ mermaid and the bitten apple of – yes – Apple.

Writing for MIT Sloan Management Review, C. Whan Park, Andreas B. Eisingerich and Gratiana Pol explain how they studied 77 corporate brands from the Fortune 500 and interviewed 450 respondents about different brand logos. Their aim was to answer three questions:

1) What are the important benefits that logos can offer other than enhanced brand identification, and how can logos influence customers’ brand commitment and company performance?

2) Which type of logo has the most positive effect on customer commitment and company performance?

3) Can brand logos boost a company’s growth? Specifically, can brand logos help brand extensions succeed?

Whan Park, Eisingerich and Pol found that a logo’s ability to make a product stand out among competing offerings doesn’t have a significant effect on customer brand commitment, and has a limited effect on financial performance of the company.

However, when a logo expresses the brand’s symbolic, functional or sensory benefits, it has a significant positive effect on customer commitment and, in turn, on revenues and profits.

VISUAL OR TEXT?

Some brands, such as Samsung, IBM and Goldman Sachs, comprise just the brand name, while others, like Nike and Arm & Hammer, combine a visual symbol. Others don’t feature the brand name at all and have just a visual – examples include Apple and Mozilla Firefox.

Whan Park, Eisingerich and Pol discovered that separate visual symbols used as logos are usually more effective than brand names when it comes to creating a sense of emotional connection with consumers.

BRAND EXTENSIONS

Whan Park, Eisingerich and Pol point to a “critical symbiotic relationship” between logos and brand extensions. They insist there is a significant strategic advantage offered by brand logos when it comes to extending a brand name to additional products or services.

Once these brand extensions have been successfully introduced, they increase the visibility and prominence of the logo, reinforcing the key benefits of the brand.

The authors’ research indicates that a brand logo’s positive influence on customer commitment and company performance is stronger when brands are extended with the same logos.

CONNECTION POINTS

Brand extensions with the same logo offer “additional connection points in daily life” and strengthen customer relationships with all products.

Whan Park, Eisingerich and Pol offer the example of someone using Arm & Hammer shower gel in the bathroom, and the company’s baking soda in the kitchen.

LOGO POWER

The authors emphasise that great logos are not essential to a brand’s success, but they can help to build stronger customer brand commitment and, therefore, improve performance.

Source
The Power Of A Good Logo
C. Whan Park, Andreas B. Eisingerich and Gratiana Pol
MIT Sloan Management Review