The Power of a Good Logo

Think about legendary brands such as McDonald’s, Apple, Aflac, Michelin and Starbucks, and one of the first spontaneous associations is often with the brand logo: the golden arches, bitten apple, Aflac duck, Michelin man or Starbucks mermaid. Red Bull’s two charging red bulls in front of a yellow sun differentiate it from numerous competing brands and signify the brand’s promise to provide energy.

Differentiating your brand from others is critical to business survival. So is communicating the benefits of your brand. Our research suggests that brand logos offer a viable, albeit often neglected, means to help brand managers achieve these tasks. We found that the brand logo can be an integrator of the marketing efforts of the brand, a reflector of such effort and the icon of what the brand means to its customers. In short, a good logo can be a synthesizer of a brand that is readily used by customers for identification, differentiation and positive associations.

In our research, we found that the enhanced identification benefit offered by a brand logo (in other words, making it easier to identify a brand in the sea of competing offerings) has no significant impact on customer brand commitment and only a small impact on company financial performance. In contrast, when they express a brand’s symbolic, functional or sensory benefits, logos have a significant positive effect on customer commitment to a brand — and thereby a significant impact on company performance in terms of revenues and profits.

The goal of our research was to answer the following questions:

1. Which important benefits can logos offer other than enhanced brand identification, and how can logos influence customers’ brand commitment and company performance?
2. Which type of logo most effectively strengthens customer commitment and company performance?
3. Can brand logos promote the company’s growth? Specifically, do brand logos help brand extensions succeed?

To explore these questions, we first did several pilot studies in which we conducted face-to-face, in-depth interviews with customers of varying age, gender and ethnicity, as well as with managers across different industries. The interview responses were coded by two trained coders. Our interview findings then informed the formulation of questionnaire items, which were subsequently pretested with 165 respondents. Our main study of 77 corporate brands from the Fortune 500 involved 450 respondents, each answering questions about different and randomly assigned brand logos. Tobin’s q, defined as a company’s market value over the replacement cost of its assets, was used as a measure of company performance because it is a forward-looking, cumulative measure that facilitates comparisons across companies in different industries.

A Point of Connection

Throughout history, logos have been an important part of cultural and religious rituals. Roman legions of the ancient Roman Republic proudly carried SPQR (for “the senate and the people of Rome”) standards. Under the Meiji constitution, no one but the Emperor of Japan was allowed to use the Chrysanthemum or Imperial Seal. The Jolly Roger flag (with skull and crossbones) that ship crews flew to identify themselves as pirates symbolized the pirates’ ferocity and willingness to fight until the bitter end.

As the visual representation of a brand, corporate logos have the potential to communicate and reinforce a brand’s core values and principles, which we call its symbolic benefits. Logos thus play a critical role in serving as a point of connection between a company and its customers.

For example, Polo Ralph Lauren’s swinging polo horseman logo conveys the brand’s exclusive, casual-chic style, while the logo of Patagonia, Inc., featuring a mountain range against the background of the sky, helps the brand communicate its connection to the environment and free-spirited ruggedness. Nike Inc.’s swoosh logo visually communicates activity, flow and energy. Even the word “swoosh” stands for moving with or making a rushing sound. The tagline “Just Do It!” further reinforces Nike’s call for action. Apple Inc.’s logo, the bitten apple, in and of itself effectively communicates a company that is different and unique and does things its own way. It was a very unusual and radically different logo for a high-technology company. The U.S. Marine Corps logo of the eagle, globe and anchor strikes a chord with young people to become one of “the few and the proud.”

However, surprisingly few companies trade upon the opportunity that logos represent; most logos fall short in visually expressing a brand’s values and principles.

In our research, we found that logos are capable of communicating and underscoring a brand’s functional benefits. Consider Arm & Hammer’s logo, which clearly expresses the brand’s ability to get things done — be it in baking or in getting rid of odors in the refrigerator. Similarly, Swiss Army Knives’ bold, equilateral cross logo suggests quality and dependability, reinforcing the company’s Swiss craftsmanship and problem-solving capability in a way that makes consumers feel self-confident and helps them in their quest for self-reliance.

Or consider Glock’s stylized safe-action gun trigger logo that symbolizes the firm’s focus on firearms engineering, design and manufacturing quality. It gives consumers “confidence to live your life.” Brands that are able to create a sense of capable and efficacious self in customers are likely to be rewarded with deeper, more meaningful customer-brand relationships.

It is surprising how unappealing many logos are. Yet logos are capable of offering fun, aesthetic appeal and pleasure to consumers, which we call sensory benefits. For example, Aflac Inc.’s now-famous duck logo helps to create warm feelings toward an industry (insurance) generally perceived as rather cold and boring. Logos that are aesthetically pleasing or fun have a positive impact on customer relationships.

Visual Logos vs. Text Logos

Some logos consist only of the brand name. Think of IBM, Goldman Sachs, Oracle or Samsung. Other logos use the brand name in combination with a unique visual symbol, such as Nike’s swoosh or Arm & Hammer’s flexed muscle arm with rolled-up sleeve. Others drop the brand name altogether and rely on a visual for their logo, such as Apple’s apple or Mozilla Firefox’s stylized fox.

Our research found that separate visual symbols used as logos tend to be more effective than brand names at creating a sense of emotional connection with consumers. This may not come as a big surprise, because symbols have long been considered more effective than words as communication tools. Symbols better overcome language barriers and are easier to interpret than words. However, despite the commonly understood benefits of symbols versus text, surprisingly few companies take advantage of separate visual symbols. Logos with separate visual symbols thus represent a largely untapped opportunity in reaching out to consumers.

Strengthening a Logo with Brand Extensions

There is a critical symbiotic relationship between brand logos and brand extensions. First, brand logos can offer an important strategic advantage that facilitates the success of extending a brand name to other product or service categories. Once successfully introduced, brand extensions make brand logos more visible and prominent, reinforcing the brand’s key benefits. Indeed, our research findings indicate that the positive effects of brand logos on customer commitment and company performance are stronger when companies extend their brands with the same logos.

By offering additional connection points in daily life (for example, Arm & Hammer shower gel in the morning in addition to the use of baking soda in the kitchen or refrigerator), brand extensions with the same logos strengthen customer relationships with both old and new products.

Unleashing the Power of Brand Logos

We are not arguing that great logos are imperative for a brand’s success. A business can do well despite having a seemingly weak logo — one that is not aesthetically appealing or fun, that does not communicate a brand’s functional benefits to consumers and that does not express its core values. We also do not suggest that brand logos themselves automatically create meaningful positive associations between a brand and consumers.

These associations must be created for a brand through marketing, such as taglines and advertising. However, once such associations have been created, brand logos can further reinforce them. What our research shows is that effectively managed brand logos can help companies to build stronger customer brand commitment and thus allow a brand to improve its financial performance.

Logos offer a frequently untapped opportunity for companies to communicate and symbolize a brand’s essence to consumers, thereby building closer relationships with them, creating strong positive emotions and facilitating top-of-mind recall. Overall, logos are the most crucial visual synthesizers of a brand that consumers turn to on a daily basis. We strongly encourage managers to rethink their use of brand logos to help them strengthen customers’ commitment to a brand, facilitate new brand extensions and thus trade upon new business opportunities in the future.