PROJECT REPORT

ON

BRAND LOGO AND ITS IMPORTANCE

Submitted in partial fulfillment of requirements for

the award of the Post Graduate Diploma in Management (PGDM)

SUBMITTED BY

PGDM
Registration No:-

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 CERTIFICATE OF ORIGINALITY
This is to certify that the project titled “Brand logo and its importance” is an
original work of the Student and is being submitted in partial fulfillment for the
award of the Post Graduate Diploma in Management in ___________ University.
This report has not been submitted earlier either to this University or to any other
University/Institution for the fulfillment of the requirement of a course of study.

SIGNATURE OF GUIDE SIGNATURE OF STUDENT

Place: Place:
Date: Date:

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 ACKNOWLEDGEMENTS
There are a number of important people I want to thank, without whose support, guidance,
encouragement, and help this work would not have been possible. I would also like to give my
greatest thanks to God who deserves the ultimate praise and credit for all good things in my life.

First and foremost, I want to thank………….. (Guide Name), who has been my advisor and
mentor throughout my studies. Without sir’s patient criticism, continual support, effective
teaching, and constant challenge and encouragement to give my very best efforts to my
undertakings, I would not have learned what I needed to nor been prepared to complete this
dissertation and future work. Much of what I have learned about the craft of research has come
from Sir, and I am forever grateful for the opportunity to have studied under his guidance.

I would not have made it through this research without the support, encouragement, teaching, and
friendship of fellow students in the program.

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 ABSTRACT

This paper aims to study how logo design characteristics influence consumer response. Based on
an in-depth literature review on consumer responses to logo design, the authors included in this
research one fundamental dimension of logo design, namely naturalness, and investigated the
influence of the different types of natural logo designs on affective response.
Design/methodology/approach - Ninety-six logos were selected as design stimuli. The logos
were previously classified, according to the naturalness of the logo design, as having an abstract,
cultural or organic design. Responses were gathered through a survey in Portugal, including two
studies with 220 participants. Findings - Results show that naturalness is an essential logo design
element which significantly influences consumer affective responses to the logo, and that natural
logos are clearly preferred to abstract logos. Additionally, this research indicates that, within
natural logos, organic designs are favored over cultural designs. Practical implications – The
findings presented suggest that affect toward unknown organic logos is at the same level as
affect toward well-known abstract logos This is a relevant finding from a managerial point of
view, since familiarity, an essential cognitive response toward the brand that has a cost for the
firm, can be replaced cost-free with unknown organic logos. Originality/value – This paper is a
first exploration of responses to different types of natural logo design. The results should guide
managers in selecting or modifying logo designs for achieving a positive affective response.

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 INDEX

S.no Chapter Particulars Page No.

1. Chapter 1 Introduction 6

2. Chapter 2 Background 18

3. Chapter 3 Methodology 28

4. Chapter 4 Conclusion & Recommendations 55

5. Chapter 5 Limitations of the Study 59

6. References 62

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 CHAPTER 1
INTRODUCTION

The main value attached to logos has traditionally focused on

the identification and the differentiation of the brand from its
competitors (MacInnis et al., 1999). However, recently,
research on logos has highlighted other derived consumer
outputs such as consumer affective reactions, emphasizing that
logos can generate positive emotions, as well as convey the
meaning of the brand (Van der Lans et al., 2009). Lutz and Lutz
(1977) were the first to present logos as triggers of affective
reactions, prior to the cognitive process. Similar ideas are
conveyed in Park et al. (2013). They point out that “logos can
be more than simple tools for identification and differentiation”
in order to ensure consumer commitment and improve firm
performance (Park et al., 2013, pp. 180). Authors from other
disciplines, such as Ramello and Silva (2006), in Economics,
also indicate the relevance of studying the evolution of
trademarks beyond quality and as a symbol with emotional

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meaning. Baudrillard (1968), in Sociology, states that a good is not
consumed because of any tangible need associated with that good
but because of the semantic content it conveys.

Companies invest significant amounts of time and money

promoting, updating and changing their logos (Colman et al., 1995;
Henderson and Cote, 1998; Spaeth, 1999), and marketing
managers could benefit considerably from understanding the
principles of designing, selecting and modifying logos.
However, despite the high managerial relevance and important
recent research on brand and product design or marketing
aesthetics (e.g. Grohmann et al., 2013; Henderson et al., 2004;
Orth and Malkewitz, 2008; Reinmann et al., 2010; Shapiro and
Nielsen, 2013), little systematic research has been undertaken
to examine the effect of logo design on affective response
toward the brand.

This study aims to address this research gap by examining

consumer response to logo design, and, in particular the influence
of the different types of natural designs (organic and cultural) on
consumer affective response. Additionally we explore whether
socio-demographic variables are sources of differences in such
reactions.

The paper is structured as follows: there is a review of the

relevant brand and logo literature followed by a discussion about
specific design theory relating to this study. Next, the research
methodologies of the two studies are presented, the findings
discussed, the limitations noted, and future research avenues
outlined.

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Brands are important intangible assets that significantly impact
firm performance (Morgan & Rego, 2009; Rao, Agarwal, &
Dahlhoff, 2004). Indeed, customers can develop deep, meaningful
relationships with a brand (Fournier, 1998; Park, Jaworski, &
MacInnis, 1986; Schau, Muñiz, & Arnould, 2009; Thomson,
MacInnis, & Park, 2005), which result in increased brand purchase
(Park, MacInnis, Priester, Eisingerich, & Iacobucci, 2010), reduced
customer price sensitivity (Ailawadi, Lehmann, & Neslin, 2003),
and lower marketing costs (Mizik & Jacobson, 2008). Yet, the
harsh business reality for firms remains that customers view many
brands as indistinguishable and commonplace. A brand's logo has
typically served as a means for resolving the problem of
indistinguishability. As one of the most salient visual elements of a
brand (Wallace, 2001), logos facilitate the identification of the
brand and its differentiation from competing alternatives
(Janiszewski & Meyvis, 2001; MacInnis, Shapiro, & Mani, 1999).
Throughout history, logos have enabled the efficient identification
of individuals (e.g., in ancient China, emperors used the dragon as
a symbol of imperial power) and groups or movements (e.g., the
cross is used on top of church buildings and the swastika on some
Buddhist temples). However, logos can be more than simple tools
for identification and differentiation. The Christian cross
symbolizes sacrifice and life's victory over death, while in
Buddhism the swastika embodies auspiciousness and good luck—
hence suggesting that logos can, among others, convey key
information about the brand they stand for. In fact, prior research
on branding notes that logos act as the primary visual
representation of a brand's general image and meaning (Henderson
& Cote, 1998; MacInnis et al., 1999; Swartz, 1983). As a result,
logos can shape the brand's reputation (Baker & Balmer, 1997;
Olins, 1989; Van den Bosch, de Jong, & Elving, 2005) along with

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consumers' attitudes, their purchase intentions (Woo, Chang-Hoan,
Hyuck Joon, 2008) and their brand loyalty (Müller, Kocher, &
Crettaz, 2011). Brand logos also have an impact on the financial
value of a company (Schechter, 1993; Van Riel & Van den Ban,
2001). However, no available research investigates the specific
nature of these relationships. This paper builds on extant research
by examining the impact of brand logos on customer commitment
and firm performance and extends current research in three critical
ways. First, this study investigates the mechanism(s) through
which logos, as the summary representation of what a brand stands
for, strengthen customer commitment and firm performance above
and beyond the mere brand identification benefit noted in past
work. Second, since no prior work studies when logos are more
effective at engaging customers beyond enhancing brand
identification, this study explores the role of brand logo type in
offering benefits to customers.

Specifically, logos may show the brand name alone (e.g., Intel,
Ford, Samsung, IBM), or in combination with a unique visual
symbol (e.g., McDonald's golden arches, Mercedes-Benz's three-
pointed star). In this latter case the symbols serve as the actual
brand logos, such that the brand names appear as complements
alongside the symbols, or may even be dropped altogether in favor
of the visual sign (e.g., Apple, Target). This study assesses whether
or not logos showing brand names alone and brand names
accompanied by separate visual symbols have differential effects
on providing customer benefits that go beyond mere brand
identification. Third, given that brands frequently use extensions to
other product categories to leverage their current customer base
and parent brand image (e.g., Aaker & Keller, 1990; Broniarczyk
& Alba, 1994), this study addresses the question of how the

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frequency of such extensions influences the positive effects of
brand logos. In sum, the overall purpose of this study is to identify
how brand logos contribute to customers' brand commitment and
firm performance, and when such impact is most pronounced. An
important caveat to the present study exists. Specifically, this study
does not assume brand logos' effects to be independent of a brand's
marketing efforts, nor does it intend to test the contribution of
logos relative to other marketing strategy elements (such as
product quality, distribution power, pricing). Instead, the study
relies on the assumption that a firm's marketing activities are
reflected in consumers' understanding of the firm's brand logo(s).
The following sections discuss the purpose and conceptual
background of this study and then introduce a set of formal
hypotheses. Afterward, the research method and results follow.
Finally, a discussion of the findings' implications for management
practice and future research ensues.

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1.1 The problem statement
Based on the importance of brand awareness and brand image to
the company’s surviving and carrying with the curiosity to the
inexistence of Starbucks’ business in Sweden which is the big
importer of coffee, we manage to investigate to what extent the
Swedish youths know about the brand of Starbucks (brand
awareness) and what kinds perception of the brand of Starbucks as
reflected by the brand association held in target customers’
memory (brand image).

1.2 The purpose

Carrying with the conception of brand awareness and brand image
packaged into the case of Starbucks brand, we aim to investigate
the degree of Starbucks brand awareness among the Swedish
youths’ mind (brand awareness) and the perceptions of Starbucks
brand as reflected by the brand association held in target
customers’ memory (brand image).

1.3 Company Side Brand Image

The brand name of Starbucks has the power of influence to other
people. The reasons are like these. The coffee is a daily habit for
many people and many people are affected by Starbucks’s logo. It
is possible to get more customers by using the brand name of
Starbucks. “Howard is the architect of the Starbucks brand and the
visionary behind the unique customer experience that is at the heart
of this remarkable company’s success,” said Craig Weather up,
chairman of the Starbucks, “we are recommitting ourselves to what
has made Starbucks and the Starbucks Experience so unique:
ethically sourcing and roasting the highest quality coffee in the
world; the relentless focus on the customer; the trust we have built
with our people, and the entrepreneurial risk-taking, innovation

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and creativity that are the hallmarks of our success.” Starbucks has
so much to offer, importantly its locations, consumers, brand
image and a distribution network. Starbucks is no longer just
offering the functional benefit of coffee, but selling a lifestyle,
allowing consumers to trade up and feel their aspirations for a
better life. Starbucks is not merely a coffee store but rather a media
property with an intrinsic value to brand partners. Starbucks has
developed an emotional attachment with its customers and
restoring the connections with its customers who have with
Starbucks coffee, its brand, people and with its stores.
(www.starbucks.com) Starbucks’ passion for doing coffee business
is that it has complete focus on the customer and relationship with
the customers. (www.starbucks.com)In doing so, Starbucks will
rely on the continued efforts and dedication of its partners all
around the world, who have and will continue to contribute so
much to the Starbucks success story. (www.starbucks.com)
“Past campaigns have established Starbucks as a third place to sit
and chat, while enjoying great coffee. Starbucks is about
stimulating relaxation - a pick me up but in a calm environment, in
other words, fast and convenient but comfortable, familiar and an
inspiring discovery”, said by Craig Weatherup, chairman of the
Starbucks. Starbucks strives to create an inviting, enriching
experience that is stylish and elegant and that provides people with
respite, time out and a personal treat. The experience is designed to
enhance sensory signals. Involvement and personal interaction is
the key to the Starbucks experience. Starbucks strives to be
authentic and stand for something through passionate and
committed employees. It promotes treating people with respect and
dignity. (Excerpted from Nancy Barnet's) For a brand to succeed,
the product offerings with respect of the design process must be
effective and consistent. The value proposition must be delivered

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 according to the product attributes.
(www.brandingstrategyinsider.com) Design of product and brand
name both works very actively to create value proposition from
which a customer can associate with. Those brands which have
strong relationship with its design are most successful in their
product categories and in their relative industries, such as Absolute
Vodka, Intel and Starbucks. The design of these products had
played a significant role in the success of these brands. And also
with the well brand strategy has helped these products in targeted
market and segmented at right customers.
(www.brandrepublic.com)

1.4 Choice of selecting the topic

The answer to the question, ‘Why is Branding important?’ is quite
simple and straightforward. Effective branding helps in higher
sales for the organization and contributes directly towards the
growth of the company. This single most important factor has
many companies investing time and money in improving their
branding strategy so that more customers can buy their products
which subsequently results in better sales and more profits. It is
quite safe to say that the branding exercise is profit-driven. The
decision of focusing on brand awareness and brand image is due to
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 the fact that nowadays we believe brand and positioning to being
sometimes more important than the physical product itself,
becoming the main reason why a brand is chosen among all its
competitors. The brand and image of a business are vital to its
success. As consumers, we don't really think about the importance
of branding. We just seem to go with the flow of brand names that
have become synonymous with our daily living. But the impact of
a name reinforces the importance of branding when we promote
our business. Think about one of the world's most popular athletic
shoe companies, Nike. The importance of branding is exemplified
by the fact that when you hear Nike, you think athletics and "Just
Do It." A great brand name and association has catapulted Nike to
the top of its industry.

1.5 Choice of Selecting the Company

Regarding the choice of the company, after a long evaluation of
alternative coffee brands in Sweden we decided to pick a coffee
house shop of Starbucks which is surprising to know us that there
is not even a single outlet of Starbuck. However, being the
international brand, the value embedded into the Starbucks
contributes huge to the company’s prosperity. Therefore, we think
Starbucks fits our survey perfectly.

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Starbucks has built a strong brand on a quality product and a
unique experience. Its brand has allowed it to transcend its core
business and branch into more profitable licensing deals, which
have made the moat around the business deeper.
(www.starbucks.com) Starbucks has done building a worldwide
brand. It has set a new standard in the retail industry for ubiquity.
There is a Starbucks just about everywhere you go: every mall,
every airport, every block in the big city -- maybe even twice or
three times a block. It's in virtually every Barnes & Noble
bookstore. It is also in virtually every grocery store, in the form of
whole beans, ice cream, or little cafés. (www.starbucks.com)
Starbucks has so much to offer, importantly its locations,
consumers, brand image and a distribution network. Starbucks is
no longer just offering the functional benefit of coffee, but selling a
lifestyle, allowing consumers to trade up and feel their aspirations
for a better life. Starbucks is not merely a coffee store but rather a
media property with an intrinsic value to brand partners. Starbucks

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 has developed a emotional attachment with its customers and
restoring the connections with its customers who has with
Starbucks coffee, its brand, people and with its stores.
(www.starbucks.com)

1.6 The choice of researching object

After the huge data collection, we find out that there are many
counties are ignored by Starbucks to open an outlet, even including
Italy which is the cradle land of coffee culture. Yet, this is not the
only significant market that Starbucks have avoided. Sweden is,
although with a population of only nine million people, one of the
major coffee drinking nations in the world together with their
neighbors, Denmark, Norway and Finland. However, Sweden has,
historically, been very much a filter coffee drinking nation and has
also been heavily influenced by the pour and serves method used
in North America. The espresso coffee culture is today very much
alive in the major cities of Sweden but not so much in the
countryside. Sweden, it should not be forgotten, is a very vast and
long country with very sparse populations outside the major areas.
Furthermore, there are more private, individual coffee shops in
Sweden than there are coffee chains. The Italian influence became
strong in the ninties, particularly in Stockholm. Therefore, Sweden
became a kind of mini Italy in it’s espresso coffee drinking culture.
There is a strong so called coffee break culture in Sweden at the
work place. These breaks are very important for bringing
colleagues together in working life so that many institutions have
their own coffee bar. This culture automatically spills over into the
society as a whole so that the Italian style coffee bar/shop concept
is the norm.

1.7 Target Audience

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Talking about the audience we are aiming to, we consider the
company Star bucks that have to deal with the brand awareness
and image of its brand, are all the local coffee houses that have to
deal with branding strategies and everyone working with
international marketing being our primary target. The results of our
analysis can be used by this specific audience in order to have a
frame of reference on which base future decisions. Moreover, an
academic audience such as scholars and marketing students could
be also interested in improving their knowledge about the chosen
topic. This target group might find our work useful to deepen the
familiarity with this topic, and use the paper as a starting point for
further related studies. Lastly, we wish our paper to reach the
interest of the focal company itself in order to use an brand
awareness of star bucks in Sweden.

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 CHAPTER 2
BACKGROUND

Conceptual background and hypotheses: brand logos and

customers' brand commitment and firm performance
This study posits that from the customers' viewpoint, brand logos
reflect the meaning of a brand and therefore serve as summary
information about a brand's marketing efforts (Henderson & Cote,
1998; MacInnis et al., 1999; Van Riel & Van den Ban, 2001). How
this summary information affects customers' relationship with a
brand and subsequent firm performance is the key issue addressed
in this research (see Fig. 1).
Brand commitment and firm performance are two dependent
variables theoretically linked to each other. Strong customer
relationships are critical drivers of a firm's future cash flow, which
in turn impacts the firm's financial performance and shareholder
value (Srivastava, Shervani, & Fahey, 1998). Commitment,
measured as the willingness of customers to stay with a brand and
to sustain their brand relationship in the future, has been noted by
prior research as one of the key measures of strong customer
relationships (De Wulf, Odekerken-Schröder, & Iacobucci, 2001).
Thus, this study expects customers' commitment to a brand to
mediate the impact of strong brand logos on firm performance.
To the extent that brand logos (names only or with symbols)
are the key visual representations of a brand, customers'
understandings and judgments of a logo will affect their
relationships with a brand in several ways. First, brand imagery
bombards today's customer and a barrage of different and
sometimes contradictory marketing messages surrounds customers
(Luo & Bhattacharya, 2006). In such an environment, logos often
create value to customers by making brand identification easier

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and enabling faster decision-making (Henderson & Cote, 1998;
Janiszewski & Meyvis, 2001).
In addition to the well-documented benefit of enhanced
brand identification, this study identifies the following three
related but distinct mechanisms through which a brand logo creates
value for customers, hence enhancing customers' brand
commitment and strengthening firm performance: the facilitation
of customer self-identity/expressiveness benefits, the
communication of a brand's functional benefits to customers, and
the provision of aesthetic appeal. The study discusses these three
distinct mechanisms in greater detail below.

2.1. Brand logos and customer self-identity/expressiveness

benefits
Brands have the ability to help express or define individuals' actual
or desired selves (Chaplin & Roedder John, 2005; Escalas &

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Bettman, 2005) and to differentiate customers' selves from those of
others (Kleine, Kleine, & Allen, 1995). For instance, a brand may
reflect various parts of customers' identities, such as core
beliefs/values (e.g., Rolex for uncompromising precision and
attention to detail) or lifestyles (e.g., Quicksilver for a young-
minded, individual, casual style) they adhere to (Escalas &
Bettman, 2005). Brands also become relevant to customers by
connecting the individual to others who share similar values and
beliefs (Schau et al., 2009).
Since logos visually represent what the brand is and what
it stands for, they have the potential to serve as a focal point of
connection for customers by communicating and reinforcing a
brand's core values. In other words, a brand's logo can be a critical
tool for conveying associations between the brand and the self,
which in turn helps people see the brand as part of themselves
(Walsh, Winterich, & Mittal, 2010). Moreover, since logos provide
brands with a face and may thus enhance a brand's authenticity and
intimate appeal to customers (Henderson & Cote, 1998), logos
have the potential to not only express such brand-self associations,
but also to reinforce and strengthen them, thus enhancing
customers' willingness to exert effort and invest resources towards
sustaining their relationship with the brand (Park et al., 2010;
Thomson et al., 2005). The importance of establishing a symbolic
association with a brand can be particularly critical in an
environment in which customers resent or even attack corporations
that are perceived as faceless or distant from customers' selves, but
develop a considerably stronger affinity towards brands that foster
self-relevant relations with their customers (Escalas & Bettman,
2005).
H1a. Brand logos' self-identity/expressiveness benefit associates
positively with customer brand commitment.

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2.2. Brand logos and the functional benefits of a brand
Park, MacInnis, and Priester (2006) indicate that brands can be
managed to reduce uncertainty in individuals' lives and enable their
selves by facilitating control and efficacy in attaining (avoiding)
desirable (undesirable) outcomes. Hence, brands can create a sense
of an efficacious and capable self, helping individuals handle daily
tasks more effectively. Logos, as visual representations of brands,
are capable of reminding
customers of a brand's
functional benefits and/or
communicating such benefits to
them (Fischer, Schwartz,
Richards, Goldstein, & Rojas,
1991; Loken, Joiner, & Peck, 2002). Nike's “Swoosh” logo, for
instance, suggests the superior physical form that athletes strive for
(Goldman & Papson, 1998) or consider Red Bull's logo of two
charging bulls in front of a bright sun and the brand's promise to
“vitalize body and mind”.

Given that customers perceive firms that address their

needs–hence making their lives easier–as fair exchange partners
(Schneider, Goldstein, & Smith, 1995), and are less likely to
switch from such firms (Bhattacharya & Sen, 2003; Eisingerich &
Rubera, 2010), this study expects logos that convey a brand's
functional benefits to encourage customers to reciprocate and rely
on the brand as a solution for certain problems, hence enhancing
customers' brand commitment. Therefore, brand logos may have
the potential to communicate and reinforce a brand's promise to
assist customers in their daily lives, and in so doing, those logos
will strengthen customers' relationships with the brand.

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H1b. Brand logos' functional benefit communication associates
positively with customer brand commitment.

2.3. Brand logos and aesthetic appeal

Aesthetic appeal and design have been of interest to human beings
and have captured their imagination throughout history. The
crafting and admiration of idols with attractive forms is as old as
human civilization itself (Bloch, 1995). Not surprisingly, therefore,
prior research underscores the role of brand logos in offering
pleasing aesthetic qualities to consumers (e.g., Goldman, 2005;
Pittard, Ewing, & Jevons, 2007). However, in addition to providing
visual gratification, aesthetically appealing brand logos can prompt
customers to develop an emotional bond with what they perceive
as near and dear to themselves.

As Goldman (2005) suggests, brands high in aesthetic

attractiveness are more likely to build connections with their
customers than are brands with low or unappealing aesthetic
qualities. For instance, Walt Disney's logo, which includes the
image of a fairytale castle, effectively provides visual gratification
and an emotional connection to customers. Similarly, Hello Kitty,
the appealing white cat with a red bow and no mouth, manages to
build deep relationships with customers worldwide based on

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kawaii (Japanese for “cute”) design and looks (Economist, 2011).
Thus, the aesthetic appeal of brand logos is an essential component
of a brand's ability to endear customers and emotionally connect to
them, thereby enhancing their commitment.
H1c. Brand logos' aesthetic appeal associates positively with
customer brand commitment.

2.4. Brand logos' impact on customer commitment through

identity expressiveness, functional, and aesthetic benefits vs.
brand identification
As De Wulf et al. (2001) note, commitment represents customers'
willingness to exert effort on behalf of their relationship with a
brand. Mere identification bears hardly any relationship to
commitment—that is, simply because one can successfully identify
a person does not mean one will be committed to him/her. Brand
logos can help customers identify and choose a brand out of
convenience (e.g., the brand is easier to find), which, however,
does not mean that customers are willing to invest their own
resources towards maintaining a relationship with the brand. In
contrast, brand logos' self-identity/expressiveness and functional
benefit communication as well as their aesthetic appeal will help a
brand build deeper relationships with customers. The positive
impact of these three benefits on customer commitment should
hence be greater than that of enhanced brand identification.
H1d. Brand logos' self-identity/expressiveness, functional benefit
communication, and aesthetic appeal are more strongly associated
with customer commitment than the brand identification benefit is.

2.5. Separate visual symbols vs. brand names as logos

Firms frequently decide whether to employ brand names only (e.g.,
Ford) or in combination with separate visual symbols (e.g.,

23
Starbucks' mermaid) as logos for their brands. Visual symbols may
personalize a brand and provide customers with a sense of
connection better than brand names alone do, possibly because
symbols are an effective means of communicating information to
people (MacInnis et al., 1999), and, to the extent that they are
perceived as richer and more tangible representations of a firm
than words or names are, symbols work better for brand
differentiation (Swartz, 1983).
Symbols with an appealing visual design can help brands
become more salient and vivid in individuals' minds, hence
facilitating favorable attitude formation and memory retrieval
(Fischer et al., 1991; Henderson & Cote, 1998), and eliciting
strong affective and behavioral responses (Bloch, 1995). Symbols
more easily signify a brand's benefits and transcend language
barriers than text or names. Therefore, brand logos that incorporate
visual symbols should be more effective than purely brand name-
based logos at offering self-identity/expressiveness benefits,
representing a brand's functional value, and providing aesthetic
appeal.
H2. Separate visual symbols as logos are more effective than brand
names as logos at offering self-identity/expressiveness benefits,
functional benefit communication, and aesthetic appeal.

2.6. Customer commitment and firm performance

A number of factors influence a company's market performance,
including the firm's strategic insights and how effectively the firm
implements its chosen strategy. However, one of the key drivers of
a firm's performance is the customers' commitment to the firm's
brand (Srivastava et al., 1998). The extent to which customers are
loyal to a firm's brand clearly influences the stability and growth of

24
the firm's revenues and profits over time, effectively protecting the
firm from competitive threats.
H3. Brand commitment mediates the positive impact of brand
logos on firm performance.

2.7. Brand extensions and the effects of brand logos

Firms frequently attempt to extend their brands to different product
categories. Brand extensions enable firms to expand their customer
base and to take advantage of business opportunities in different
product markets (Aaker & Keller, 1990; Milberg, Park, &
McCarthy, 1997). However, brand extensions can potentially harm
a parent brand by diluting or altering its core meaning (Gürhan-
Canli & Maheswaran, 1998; Loken & Roedder John, 1993). This
study posits that when brand logos facilitate customers' self-
identity/expressiveness, represent a brand's functional benefits, and
provide aesthetic appeal, brand extensions to different product
categories can further strengthen the positive impact of these brand
logo benefits on firm performance. In other words, the
aforementioned positive effects of brand logos on customer
commitment and firm performance are stronger, not weaker, when
firms extend their brands. This is because people naturally want to
be close to an entity they are self-connected to (Bowlby, 1980;
Park et al., 2010; Thomson et al., 2005), and by offering additional
connection points in daily life (e.g., Arm & Hammer shower gel in
the morning in addition to the use of baking soda in the kitchen or
in the fridge), brand extensions allow people to consume and be
close to their favorite brands in a variety of contexts.
Similarly, extensions enable consumers to enjoy the pleasant
aesthetics offered by a logo more frequently and can thus make a
brand logo's pleasant design even more salient in customers'
minds. Finally, since customers attach value to feeling capable and

25
in control of daily life activities (Park et al., 2006), the positive
impact of a logo representing the functional benefits of a brand is
more pronounced when customers see the brand helping them with
different tasks and problems.
Taken together, extensions to different product categories
create additional connection points and consumption experiences
that should not weaken, but rather strengthen, the positive effects
of the brand logo benefits. This study expects the number of
extensions of a brand to influence the positive effects of the brand
logo benefits on firm performance either directly or through brand
commitment. Specifically, the more often consumers expose
themselves to the symbolic meaning and aesthetic appeal of a
brand, the more committed they become to the brand, as people
gain additional value and pleasure from being close to a brand they
share a self-connection with (Park et al., 2010) or whose aesthetics
they adore (Bloch, 1995). Additionally, since people frequently
struggle to keep up with different daily tasks and often end up
feeling at a loss, they should be more committed to a brand that
appears to make one's chores somewhat easier or more bearable in
a variety of contexts. Such an increase in customer commitment
should in turn enhance the firm's performance.
In addition to their positive financial effect through
commitment (which represents an indirect effect), brand extensions
should also strengthen the direct impact of the brand logo benefits
on firm performance, as a logo's self-identity/expressiveness
benefit, communication of functional benefits, and aesthetic appeal
contribute to the intangible value of a firm, while extensions
increase a firm's strategic flexibility and risk diversification
(Wernerfelt & Montgomery, 1998). Despite the difficulty in
predicting a priori which effect (direct or indirect) is stronger, this
study expects both to be present for the three brand logo benefits.

26
 The above argument does not imply that any type of brand
extension can enhance the positive effects of brand logos on firm
performance. Certainly, when a brand makes inappropriate
extensions (i.e., extensions very low in fit; see Aaker & Keller,
1990), the presence of such extensions may decrease or even
eliminate the beneficial impact of the brand's logo on commitment
and performance. However, by and large, most firms typically
make generally appropriate extensions (i.e., extensions with a
reasonable level of fit with the parent brand) in reality.
H4. The higher the number of a firm's brand extensions, the
stronger the positive impact of the firm's brand logo on customer
commitment and firm performance.

27
 CHAPTER 3
METHODOLOGY

Pilot study
The aim of the pilot study is twofold. First, the study intends to
verify that the three proposed brand logo benefits have external
validity, as perceived by both consumers and brand managers.
Secondly, given that no scales specifically capture the benefits
offered by brand logos, the study further aims to create a set of
scales that best reflects these benefits, while tapping a wide range
of industry perspectives. For this purpose, 94 customers and 37
managers agreed to participate in face-to-face, in-depth interviews.
During these interviews, participants indicated which brand logos
they perceived as most and least effective in offering any kind of
benefits, and explained their rationale using open-ended responses.
Two trained coders who were not part of the research team
subsequently coded the open-ended responses.
The coded data revealed substantial evidence for each of the
three brand logo benefits proposed by the authors. More
specifically, participants did indeed describe the ability of logos to
foster self-association with a brand (e.g., “Black is my favorite
color. The Harley Davidson logo is me”), reflect a brand's
functional benefits (e.g., “The logo of BMW reminds me of an
aircraft propeller, performance, agility…I can see myself soaring
through the air; it's like BMW engines are so reliable and powerful
they could be used for airplanes”), and provide aesthetic appeal
(e.g., “I adore the Apple logo. It is so gorgeous. I want to bite it”).
Next, based on the responses collected, the authors generated
a pool of 20 items to account for different shades of meaning
(Churchill, 1979) of the brand logo benefit scales, and pretested the
generated items with a sample of 112 undergraduate students from

28
a large research university. Participants pointed out any
ambiguities in responding to the individual items, upon which the
authors followed Thomson et al.'s (2005) procedure to remove
poorly understood items. Each brand logo scale included one
reverse-coded item, so as to minimized yeaor nay‐saying response
bias (Baumgartner & Steenkamp, 2006).
Next was a final pretest of the three brand logo scales (logo
self-identity/expressiveness, functional benefit, and aesthetic
appeal) with a different sample of 165 undergraduate students from
the same university. The results confirmed that the retained items
minimally loaded .70 on their respective hypothesized factors and
maximally loaded .35 on other factors. All loadings were
significant (pb.01) (Table 1 lists detailed scale items anchored by
(1) = “not at all” and (9) = “completely”). In support of the scales'
reliability, Cronbach's alphas for all scales were uniformly high
(α>.80) and composite reliabilities were all greater than .80. The
average variance extracted exceeded the recommended threshold
of .70, indicating convergent validity (as Table 2 shows).
Correlations appear in Table 3. Furthermore, the squared
correlation between any pair of constructs was indeed less than the
respective average variance extracted for each of the constructs,
thus supporting discriminant validity (Fornell & Larcker, 1981).
Finally, the measurement model for the constructs listed in
Table 1 demonstrated a good data fit (Comparative Fit Index
(CFI)= .99; Tucker–Lewis index (TLI)= .98; Root Mean Square of
Approximation (RMSEA)= .05), thus suggesting that a three-factor
solution accurately represents the brand logo benefit scales
developed as part of this pilot study.

29
Table 1:

Main study
Following the development and validation of a set of scales for
measuring the three benefits provided by brand logos, the main
study aims to show that these benefits can explain the relationship
between brand logos and customer commitment/firm performance,
and to examine the effectiveness of logo type (brand name as logo
vs. brand name accompanied with a visual symbol as logo) and
number of extensions as potential moderators of the relationship
between brand logos and customer commitment and firm
performance.

30
Stimuli
For the stimuli, the authors randomly drew a sample of 77
corporate brands from the Fortune 500 published listing, for which
all required data was available through COMPUSTAT. The sample
was representative of the Fortune 500 firms as a whole, since the
selected firms did not differ from the remaining Fortune 500 firms
on any critical financial or marketing indicator, including average
market value, number of acquisitions and patent citations, and
advertising-to-sales ratios (p=n.s.). The focus was on corporate
rather than product-level brands since no data are available for
examining the relationship between brand logos and firm
performance at the individual product level (e.g., product brands
such as Häagen-Dazs and Butterfinger are owned by Nestlé, which

31
owns and manages several hundred other product brands
worldwide). After selecting the brands, securing official brand
logos from the companies' websites and annual reports occurred
next. Forty-four of the 77 brand logos consisted only of the
company name, while the rest included visual symbols.

Sample and procedure

Four hundred and fifty undergraduate students participated in the
study. Based on random assignment, each participant evaluated ten
different brand logos in a paper-and-pencil questionnaire. The
questionnaire included one logo on every page, followed by the set
of items shown in Table 1. Each logo in the sample received
roughly the same number of responses.

Measures
In order to measure customer commitment, the authors adapted 3
items from the scale by De Wulf et al. (2001). The scale measured
customers' willingness to stay with a brand and make efforts to
sustain their brand relationship into the future (Cronbach's α= .94).
The scales developed in the pilot study measured the brand logo
benefits. For the number of brand extensions, the authors relied on
Hoover's database, from which they obtained the number of
industry segments in which each firm operates (i.e., number of
separate North American Industry Classification System operating
codes). This approach resulted in a proxy measure for the number
of brand extensions. For validation purposes, the authors followed
the same procedure using the COMPUSTAT database and found
no difference between the two resulting measures (p=n.s.).

32
 For the examination of firm performance it was important to
select a forward-looking and cumulative measure that is
comparable across corporate brands in different industries. In this
regard, Tobin's q has received wide acceptance in the current
marketing literature as an appropriate measure of performance
(e.g., Anderson, Fornell, & Mazvancheryl, 2004; Luo &
Bhattacharya, 2006; Morgan & Rego, 2009). Tobin (1969) defined
the value of a company's q as the ratio of the company's market
value to the current replacement cost of its assets. Chung and
Pruitt's (1994) approximation served as a basis for measuring each
company's q. In Eq. (1) below, the numerator represents a firm's
market value, while the denominator captures the replacement cost
of the firm's physical assets. When a firm's market value exceeds
the replacement costs of the firm's assets, the firm creates
shareholder value; thus, the higher Tobin's q, the better the
company's performance.

33
Since multiple potentially confounding factors for the examination
of brand logos' impact on customers' commitment and firm
performance exist, the present analysis controlled for several
factors, as indicated below.
First, participants indicated their familiarity with individual
brand logos (anchored by 1 = “not at all familiar” and 9 =
“strongly familiar”). Controlling for familiarity is important since
some customers' brand commitment may be a result of having a
long history of purchasing a certain brand or simply knowing much
more about the brand than about its competitors.
Furthermore, the analysis controlled for the advertising
spending to sales ratio, which measures a firm's efficiency at
employing marketing resources. The lower this ratio, the more
firms can invest in other measures that might further strengthen
commitment and firm performance (Barth, Clement, Foster, &
Kasznik, 2003).
A range of intangible benefits can influence customer
commitment and firm performance including a firm's ability to
provide innovative and meaningful benefits to customers (Sethi,
Smith, & Park, 2001). Therefore the analysis controlled for a firm's
innovativeness by using patent citation counts. As previous
research indicates, simple patent counts and research and
development expenditures are weaker measures of the true worth
of a firm's intangible assets than patent citations (Hall, Jaffe, &
Trajtenberg, 2001). A patent citation count reflects the number of
times subsequent patent applications cite the original patent when
trying to win an award for a new patent. The more important or
fundamental an innovation, the more will subsequent patent
applications cite the original patent protecting that innovation.
Thus, citation counts can serve as a good proxy for the worth of a
firm's intangible assets. In order to obtain the exact patent citation

34
count for each firm in the sample (for the year preceding the data
collection in this study), the authors used Delphion, an online
database that provides Derwent World Patents Indices. The
analysis also controlled for a firm's operating margin, leverage, and
past revenue growth. Arguably, the higher a firm's operating
margin, the greater investors' expectations of the firm's future cash
flow and value (Barth et al., 2003). The ratio of net income before
depreciation to total sales was the measure of operating margin.
Furthermore, the analysis controlled for financial leverage, which
can have a positive influence on firm performance by enabling
firms to trade upon tax benefits by deducting interest costs and,
therefore, to benefit from higher cash flows. The ratio of a firm's
long-term debt to total assets was the measure of financial
leverage. Finally, since previous revenue growth may significantly
influence a firm's Tobin's q (Barth et al., 2003; Rao et al., 2004),
the firms' revenue growth over the previous three years served as
another control in this study. 4.4. Analysis and results 4.4.1. Brand
logo benefits and customer commitment the first analysis
examined whether brand identification or the three proposed brand
logo benefits have a stronger impact on customer commitment.
Due to the nested structure of the data (i.e., multiple participant
responses for each brand logo) and to overcome the limitations of
traditional methods in analyzing such nested data (Hofmann,
1997), the model estimation relied on full maximum likelihood and
empirical Bayes procedures in hierarchical linear modeling (HLM;
Bryk & Raudenbush, 1992). In examining the predictors of
customers' brand commitment, the authors followed Raudenbush,
Bryk, Cheong, and Congdon's (2004) recommendation to balance
theoretical comprehensiveness (i.e., a valid depiction of reality)
with model parsimony. Using the HLM 6 software package
(Raudenbush et al., 2004) the authors evaluated the incremental

35
nested models in different phases, as shown in Table 4. With
mean-centered variables, inflation factors were less than 2.0,
indicating no multicollinearity. Model 1 contains only an intercept
term, with no customer- or brand-level predictors. An evaluation of
this model reveals that customer commitment varies significantly
among brands. Model 2 includes, in addition to the intercept term,
the main effects of customer- and brand-level variables along with
random slope effects. This model is meant to examine any
significant differences in customer brand commitment for brands
with varying levels of brand logo benefits. Table 4 shows that
Model 2 explains 21% of the variance in brand commitment. By
examining the difference in deviance statistics (−2 log-likelihood
criterion) between Models 1 and 2–a difference that has a chi-
square distribution with degrees of freedom equal to the difference
in the number of estimated parameters between the two models
(Kreft & Leeuw, 1998)–the authors find that, considering the
degrees of freedom lost, Model 2 represents a significant
improvement in variance explained over Model 1 (ΔDev=1057.19,
df=12, pb.01). The results in Table 4 illustrate that the ability of a
brand's logo to enhance brand identification is not significantly
related to brand commitment (ŷ=−.01, p=n.s.). In contrast,
commitment is significantly associated with each of the three
suggested logo benefits: facilitating brand self-associations (ŷ=.12,
pb.01), representing the functional benefits of a brand (ŷ=.19,
pb.01), and providing aesthetic appeal (ŷ=.18, pb.01). The results
hence provide support for H1a–1c. Together, these findings further
support H1d, since the self-identity/ expressiveness, functional,
and aesthetic benefits of brand logos are all positively associated
with customer commitment (pb.01) while brand identification
through logos is not (p=n.s.). The effect of familiarity on brand
commitment is not significant, a finding that is in line with the

36
authors' original expectations, as basic familiarity should not
suffice to impact customers' willingness to stay with a brand and to
sustain their brand relationship in the future. Finally, the other
controls have no significant effects either (p=n.s.).

Brand names and symbols as brand logos

To determine whether logos consisting of brand names or visual
symbols are more effective at creating brand-self associations,
communicating functionality benefits, and offering aesthetic
appeal, the authors split the sample into two groups and conducted
a series of t-tests. The results indicate that logos based on brand
names accompanied by visual symbols (as opposed to brand names
only) offer greater self identity/expressiveness benefits (M= 7.9
versus 4.7, respectively; t(75)= 2.02, pb.05), functional benefit
communication (M= 5.9 versus 4.2, respectively; t(75)= 2.42,
pb.05), and aesthetic benefits (M=7.9 versus 3.5, respectively;
t(75)= 2.38, pb.05). Together, these results support H2.

Brand logos, customer commitment, and firm performance

37
A structural equation modeling (SEM) analysis assessed whether
the above mentioned brand logo benefits affect not just customer
commitment, but also firm performance. To allow for the potential
lagged effects of the logo benefits on performance, the authors
calculated firm performance (Tobin's q) one year following the
collection of the survey data. Normality and heteroskedasticity test
statistics indicate that the standard assumptions are met. The SEM
results show that the brand logo benefits have a positive and
significant impact on customer commitment (γ=.78, pb.001),
which in turn positively influences firm performance (Tobin's q)
(γ= .54, pb.001).
Additionally, the results reveal a significant, direct influence
of the brand logo benefits on firm performance (γ= .31, pb.001),
indicating that customer commitment acts as a partial mediator in
the brand logo benefits–firm performance relationship. Together,
these results support H3. With regard to the control variables, as
expected, revenue growth acts as the strongest determinant of firm
performance (γ= .78, pb.001). In addition, a firm's advertising-to-
sales ratio (γ= .09, pb.05), operating margin (γ= .11, pb.01), and
leverage (γ= .08, pb.01) positively influence performance, though
no positive effect exists for familiarity and patent citations. The
brand logo benefits that this study examines and the set of controls
explain a significant amount of variance in firm performance (.75),
and the model fits the data well (Comparative Fit Index (CFI)=.98;
Tucker–Lewis index (TLI)=.97; and Root Mean Square of
Approximation (RMSEA)=.06 (90% confidence interval= .05 to
.06)). The results empirically demonstrate the important
contribution of the three brand logo benefits to customer
commitment and to a firm's financial performance.

The moderating role of brand extensions

38
To examine whether the number of brand extensions moderates the
impact of brand logo benefits on customer commitment and firm
performance, the authors split the sample of stimuli into four
groups. First, they created two groups of brands, based on whether
the brand logos showed brand names alone or in combination with
visual symbols. Each group further consisted of two subsamples of
firms, one with a high, and one with a low total number of brand
extensions. This procedure was meant to help verify whether the
moderating effect of brand extensions depends on the type of brand
logo (name vs. symbol). Testing metric invariance reveals that the
different factors do indeed measure the same underlying latent
constructs (brand logo benefits and commitment) in both the high
and the low number of brand extension groups (see Steenkamp &
Baumgartner, 1998).
SEM results show that, when firms use visual symbols as
logos, having a high (versus low) number of extensions strengthens
the relationships between brand logo benefits and firm
performance. Specifically, a high number of extensions result in a
stronger indirect effect (via customer commitment) of brand logo
benefits on firm performance (γ= .55, versus γ=.36, pb.001), as
well as a stronger direct effect (γ=.47, versus γ=.30, pb.001). The
same results also hold for firms that employ brand names as logos,
such that a high number of extensions enhance both the indirect
(γ=.36, versus γ=.19, pb.001) and the direct effect (γ=.34, versus
γ=.21, pb.001) of brand logo benefits on firm performance. The
difference between the two models (high vs. low number of
extensions) is significant in the case of both separate symbols
(Δχ2=276.54, pb.001) and brand names (Δχ2=252.39, pb.001) as
logos. Together, these results provide support for H4 by
demonstrating that extending a brand to several different product
categories enhances the positive impact of the brand's logo on

39
customer commitment and brand performance. Moreover, this
effect holds whether firms use the brand name or a visual symbol
as their brand logo. Taken together, the findings in this study show
that the impact of a brand's logo on customer commitment and firm
performance is greatest when brands use symbols (as opposed to
brand names only) as logos, and when firms have a high (vs. low)
number of extensions to different product categories.

Brand logo design

As a brand identity sign, a logo can refer to a variety of graphic or
typeface elements, ranging from word-driven, i.e. including word
marks or stylized letter marks, through to image-driven, i.e.
including pictorial marks (Henderson and Cote, 1998; Wheeler,
2003). In this study, we make use of the term “logo” to refer the
graphic element that a company uses to identify itself or its
products.
Some authors study the effect of logo design on brand evaluation
and preference, even though this research line is still in its early
stages. For example, Henderson and Cote (1998) showed that
design characteristics influence cognitive and affective reactions to
logos, before any promotional activity is implemented. Pittard et
al. (2007) specifically examined the degree to which preference
for a particular design characteristic, namely proportion, is
universal. More recently, Walsh et al. (2010 and 2011) examined
the role of brand commitment in relation to consumer response to
logo shape redesign (from angular to more rounded shapes). These
authors found that brand commitment negatively influences the
evaluation of logo redesign. Bloch (1995) and Goldman (2005)
suggest that brands with a greater aesthetic appeal not only provide
the pleasure of visual gratification, but are also more likely to

40
facilitate the formation of emotional bonds between the
company in question and its customers.
On the other hand, affective reactions to a logo are critical since
such reactions can be transferred from the identity signs to the
product or company with little or no processing (Henderson and
Cote, 1998; Schechter, 1993). Furthermore, in low-involvement
settings, the affect attached to logo is one of the few cues that
differentiate the product or the company (Hoyer and Brown, 1990;
Leong, 1993).
Brand affect is related to the emotions or feelings experienced in
relation to the brand (Schiffman and Kanuk, 1991), and there is
evidence that it is positively related to brand loyalty (Chaudury and
Holbrook, 2001). In addition, there is increasing support that brand
evaluations are based not only on objective judgements, but also
on affective responses to the brand (e.g. feelings and emotions
experienced during exposure to brand communications,
induced by the aesthetic qualities of the brand’s product or of its
the identity signs (Pham et al., 2001; Pham and Avnet, 2004).
Yeung and Wyer (2004) found that when consumers have to
make an appraisal of an object before they received detailed
information about it, the object’s appearance is likely to
stimulate them to form an initial affective response that they
might use as a basis for the judgments, independent of the
criteria they might otherwise apply.
As aesthetic appeal and design evolve to become an essential
component of corporate marketing
(Schmitt and Simonson, 1997), we understand that it is
important to determine the extent to which design elements
such as naturalness versus abstractness create different
affective responses.

41
Brand knowledge
A brand can be defined as "a name, term, sign, symbol, or design,
or combination of them which is intended to identify the goods and
services of one seller or group of sellers and to differentiate them
from those of competitors" (Kotler 1991 p. 442). Brand knowledge
can be conceptualized as consisting of a brand node in memory to
which a variety of associations are linked. According to the Keller
model of brand knowledge, we find out the relevant dimensions
that distinguish brand knowledge and affect consumer response are
the awareness of the brand (in terms of brand recall and
recognition) and the favorability, strength, and uniqueness of the
brand associations in consumer memory. These dimensions are
affected by other characteristics of and relationships among the
brand associations. For example, factors related to the type of
brand association (such as its level of abstraction and qualitative
nature) and the congruity among brand associations, among others,
affect the favorability, strength, and uniqueness of brand
associations. The structure of brand knowledge is depicted by the
picture underneath.

42
 Keller Model

Brand awareness
Brand awareness consists of brand recognition and brand recall
performance. Brand recall relates to consumers ability to retrieve
the brand when given the product category, the needs fulfilled by
the category, or some other type of probe as a cue. In other words,
brand recall requires that consumers correctly generate the brand
from memory (Keller 1993). Brand recognition relates to
consumers' ability to confirm prior exposure to the brand when
given the brand as a cue. In other words, brand recognition
requires that consumers correctly discriminate the brand as having
been seen or heard previously (Keller 1993). Brand awareness
plays an important role in consumer decision making for three
major reasons. First, it is important that consumers think of the
brand when they think about the product category. Raising brand
awareness increases the likelihood that the brand will be a member
of the consideration set (Baker et al. 1986; Nedungadi 1990)
Second, brand awareness can affect decisions about brands in the
consideration set, even if there are essentially no other brand
associations. For example, consumers have been shown to adopt a
decision rule to buy only familiar, well-established brands (Jacoby,
Syzabillo, and Busato-Schach 1977; Roselius 1971). Finally, brand
awareness affects consumer decision making by influencing the
formation and strength of brand associations in the brand image. A
necessary condition for the creation of a brand image is that a
brand node has been established in memory, and the nature of that
brand node should affect how easily different kinds of information
can become attached to the brand in memory. (Keller 1993). 2.3

43
Brand image The brand image is defined as consumer perception
of a brand as reflected by the brand association held in consumers’
memory. The Knowledge model described by Keller (1998) will be
adapted to Starbucks case. Keller’s (1998) model proposes that
brand knowledge is comprised of brand awareness and brand
image. Brand image is detailed to a greater extent within the model
because of its more complex nature. Brand image is said to result
from the favorability, strength, uniqueness, and types of brand
associations held by the consumer. Within the model, Keller
(1998) depicts various types of brand associations such as
attributes (product-related and non-product related), benefits
(functional, experiential and symbolic) and attitudes. In particular,
non-product attributes are categorized into: price, user/usage
imagery, brand personality and feeling and experiences.

Types of brand associations

According the definition given by Keller, attributes are those
descriptive features that characterize a product or service -- what a
consumer thinks the product or service is or has and what is
involved with its purchase or consumption. Attributes can be
categorized in a variety of ways (Myers and Shocker 1981). Here,
attributes are distinguished according to how directly they relate to
product or service performance. Non-product-related attributes are
defined as external aspects of the product or service that relate to
its purchase or consumption (Keller 1993). Keller’s model under
the non-product-related attribution consist of four main categories,
they are (1) price information, (2) packaging or product appearance
information, (3) user imagery (i.e., what type of person uses the
product or service), and (4) usage imagery (i.e., where and in what
types of situations the product or service is used). The price of the

44
product or service is considered a non-product-related attribute
because it represents a necessary step in the purchase process but
typically does not relate directly to the product performance or
service function (Keller 1993). Price is a particularly important
attribute association because consumers often have strong beliefs
about the price and value of a brand and may organize their
product category knowledge in terms of the price tiers of different
brands (Blatberg and Wisniewski 1989). About the user and usage
imagery attributes, Keller gave a concrete explanation that is they
can be formed directly from a consumer's own experiences and
contact with brand users or indirectly through the depiction of the
target market as communicated in brand advertising or by some
other source of information (e.g., word of mouth). Given the
explanation above, Keller exemplify the user and usage imagery
respectively. Associations of a typical brand user may be based on
demographic factors (e.g., sex, age, race, and income),
psychographic factors (e.g., according to attitudes toward career,
possessions, the environment, or political institutions), and other
factors. Associations of a typical usage situation may be based on
the time of day, week, or year, the location (inside or outside the
home), or the type of activity (formal or informal), among other
aspects. User and usage image attributes can also produce brand
personality attributes. (Keller 1993)

Favorability of brand associations

Along with Keller’s theory, associations differ according to how
favorably they are evaluated. In other words, the success of a
marketing program is reflected in the creation of favorable brand
associations that is, consumers believe the brand has attributes and
benefits that satisfy their needs and wants such that a positive
overall brand attitude is formed.(Keller 1993) However, when we

45
imply this conception into the brand analysis on Starbucks, the
evaluation of brand association should be situationally or context-
depend and vary according to consumers’ particular goals in their
purchase or consumption decisions. An association may be valued
in one situation but not another (Miller and Ginter 1979), and just
as what the example offered by Keller said, speed and efficiency of
service may be very important when a consumer is under time
pressure but may have little impact when a consumer is less
hurried. Along with this deliberation, we plan to investigate which
ones are the customers’ favorites under some representative or
specific situations after the collection of perceptions of Starbucks
brand as reflected by the brand association held in customers’
memory. In other words, which associations under certain context
–depend situation involved into the brand can incite customers to
experience Starbucks in a responsive way.

Strength of brand associations.

Associations can be characterized also by the strength of
connection to the brand node. The strength of associations depends
on how the information enters consumer memory (encoding) and
how it is maintained as part of the brand image (storage). Strength
is a function of both the amount and quantity of processing the
information receives at encoding (i.e., how much a person thinks
about the information) and the nature or quality of the processing
the information receives at encoding (i.e., the manner in which a
person thinks about the information) (Keller 1993). For example,
the levels-or depth-of-processing approach (Craik and Lockhart
1972; Craik and Tulving 1975; Lockhart, Craik, and Jacoby 1976)
maintains that the more the meaning of information is attended to
during encoding, the stronger the resulting associations in memory
will be. Thus, when a consumer actively thinks about and

46
"elaborates" on the significance of product or service information,
stronger associations are created in memory (Keller 1993).

Uniqueness of brand associations

Since brand associations may or may not be shared with other
competing brands, the essence of brand positioning is that the
brand has a sustainable competitive advantage or "unique selling
proposition" that gives consumers a compelling reason for buying
that particular brand (Aaker 1982; Ries and Trout 1979; Wind
1982). About the approach how to express the distinction, Keller
brought up that it could be communicated explicitly by making
direct comparisons with competitors or could be highlighted
implicitly without stating a competitive point of reference. The
presence of strongly held, favorably evaluated associations that are
unique to the brand and imply superiority over other brands is
critical to a brand's success (Keller 1993). Yet, unless the brand
has no competitors, the brand will most likely share some
associations with other brands (Keller 1993).

Brand Management: A Holistic vs. Traditional Approach

Manufacturing or industrial companies have tried to achieve cost
leadership through minimizing costs in their processes, others have
strived to gain the business of a certain segment and using a focus
strategy. However, out of the strategies for creating competitive
edge, the most customer-oriented is the differentiation strategy.
Michael Porter describes this as one of the main generic strategies
for gaining competitive advantage in Competitive Advantage:
Creating and Sustaining Superior Performance. It involves
differentiating the company's products or services from the
existing ones through added value, generated by e.g. implementing
processes that are aligned with sustainable development, or

47
creating customer loyalty through differentiating the existence of
the company as something different. Other generic strategies are
costleadership and the focus strategy. Holistic branding brings an
organization-centric approach to branding, where the brand is built
by every day communication and activity. This is highly different
from the common or traditional approach, where branding involves
the tangible and visible elements of a company or product.

It is commonly thought that creating value for customers and

portraying a specific image of the company is the sole
responsibility of the marketing function. However, today
consumers are highly aware of what they buy and which company
they support. Brands have received much critique over the years
because some say that brands portray an untruthful picture of a

48
product or company, they are misplaced from their true context
and that they increase the amount of consumer materialism and
non-useful spending. One of the main advocates of the negative
sides of brands is the author Naomi Klein, who wrote the book No
Logo. Traditional views on branding do not involve the whole
company as such. In this view branding is the responsibility of the
marketing department, a way to increase sales for the company
through the pre-selling the product with ideas and mindsets. This
premise still holds true but needs to be extended into incorporating
the whole organization. A working example of this is the failed
launch of the new Ford Edsel that attempted to achieve greatness
with large hype and consumer interest. Even though consumer
interest was significant, the model could not live up to the hopes
and dreams provided by marketing. Overpromising and under-
delivering is still a problem for companies that have not waken up
to realize the importance of a holistic brand management process.
The holistic approach is only another term in the sea of terms for a
modern definition of brand management and understanding of
brands. This is clearly the future and small organizations should
follow suit with multinational corporations in their brand thinking.
A brand should be the embodiment of everything a company
represents and stands for. This notion is also supported by the
integration between marketing and communication. It is a
recognized fact in brand management that one of the main tools
that organizations and companies’ use is communication.
Communication is and should not be the responsibility of one
department or any single function of the company. Communication
is a process that uses the brand as its guiding principle and is
involved in every part and form of the company.

49
According to the holistic view on brand management, the brand is
the backbone, central guiding idea and the “DNA” of the company.
Every detail of the company has to be inline with the brand in
order to deliver maximum value to the customer. The holistic view
has changed the way brands are managed, not by a single part of
the company to portray something that may or may not be true, but
to portray something that the whole company lives and breathes. A
holistic view requires companies to understand that to reach their
goal of creating and maintaining a successful brand every function
of the organization must take part in the process. The ultimate
embodiment of the brand is the central governing figure, the CEO
and all the employees of the company. In the past, brands were
always related to the marketing department. The only method of
branding came through advertising. This created a view that brands
do not have any return or it was extremely difficult to measure.
The traditional view on branding would also consider it a heavy
cost for a company, resulting in undermining its importance. Even
though times have changed, this same mentality still exists in more
traditional companies where the management may not be as
enlightened on developments in this sector. Many companies still
fail to realize the point and importance of the brand. Through the
employees of a company, customers have personal contact with the
brand. Brand alignment should be a crucial factor for selecting
employees for the company as well as organizing training for
learning the best practices on how to provide service and
communicate with customers that best portrays and delivers the
brand experience. Employee selection should consider the
personality of the company and match that with the candidates to
find people who fit into the company profile both in their skill set
and general personality. Internal processes, communication and
marketing have a crucial effect on the external brand experience,

50
how customers think the company performs and how well they live
up to their promises. In short, for companies to create and maintain
a successful brand their total brand process must be inline with
internal processes.

Brand Communication
The holistic view of branding has highlighted communication as an
integral part of the brand management process. Everything a
company does as a part of managing its own brand or one of its
branded products involves communication. Brands communicate
with a wide variety of audiences. Advertising is one method of
communicating the brand to the target audience, with the objective
of increasing sales and enable consumers to become more of the
brand and what it represents. Even though many companies seek to
increase its sales through their advertising, it has been argued that
the main purpose of advertising is not to increase their sales by
itself, but to increase the overall “sale-ability” of the brand. This
simply means that the purpose of advertising and advertisements is
to communicate with their target audience in a way that forms a
positive connection with them and acts as a sales driver.
Companies that are managing brands or have recognized the
importance of brands also realize that consumers will be inclined
to purchase products of a certain brand or from a certain branded
company that they have positive feelings for and feel connected to
in an emotional and fundamental way. As stated in Radikaali
Brändi by Malmelin and Hakala, communication is often
misunderstood as a dialogue between a company and the media
and stakeholders. It is more integrated than ever. Companies
communicate both internally and externally, they manage their
networks and relationships with stakeholders and investor’s,
communicate with their environment in a way that most suitably

51
portrays everything the brand stands for. All communication
should be driven by the brand and how it should be managed.
Therefore one of the key tools in brand management is developing
and using modern, integrated marketing communications in a way
that most suitably communicates the brands promise, values and
fundamental philosophy to all affiliates. It is a well-known fact that
communication forms the majority of branding. However, it should
not be considered as a short-term sales driver or a tool for
increasing short-term profitability. If companies were to cut their
investments in communicating their brand, their short-term
profitability would most likely increase. This is due to the reason
that successful communication has a good long-term return-on-
investment (ROI). Communication is an excellent tool for creating
long-term brand equity. As previously mentioned, the purpose is
not to increase short-term profitability but to create achieve a
position in the minds of the consumers that will live on, even
through adverse and volatile economic conditions. Increased brand
equity creates a buffer for companies, through the psychological
incentive that it creates for its customers to support the brand.
Long-term equity will also form a barrier or buffer for dealing with
a number of other negative factors such as bad publicity. Major
audiences for brands' communications’ are shareholders and
potential investors. A company's share price is determined by the
market. The market consists of people; consumers, investors and
shareholders. This market will rely on the same fundamental
principles to drive their share purchases as general consumers.
Investors will require a strong belief in the brands profit generating
ability, their products, morals and principles and leadership. An
excellent example of a brand that has excelled even in an adverse
economy is Apple. Apple has such a strong brand that their share
price has increased significantly. The customers of Apple have

52
developed such a connection with the brand that they consider it to
reflect a part of their personality. The brand has become an
extention of its consumers and vice versa, through effective
branding by excellent communication in all aspects of the
corporation. Communication is everywhere in a company, from the
corporations CEO to every single employee of the company. Every
employee or affiliate of the company is a representation of the
brand and what it stands for. Every point of contact to the target
audience is a highly important as it all reflects the brand, thus
making communication a large part of the holistic brand
management process.

Brand Failure
Brands can inhibit the performance of companies if they are not
properly managed. For example, one mistake a new company can
make is to undermine the importance of the brand and dismiss
establishing a brand. Matt Haig points out in his book Brand
Failures: The truth about the 100 biggest branding mistakes of all
time, that brands usually fail because they break the established
bond between the brand and its customers. What the company fails
to realize is that if it is not of managing the brand, the brand will
manifest itself in the minds of the consumers, stakeholders and
general public. A brand will be created but it will not necessarily
be the type that the company would like to be seen as. Failure to
act in a proactive way when dealing with branding will result in a
negative impact on the company. Holistic branding has increased
the pitfalls of branding because of the increase of the brands
importance. A common error is to combine brand myths with
reality. These myths include notions that a good product will be
sufficient for success, a good brand will build itself or that a brand
does not need any managing. Companies may also try to rebrand

53
themselves as something different. This holds risks and not all who
try, succeed. Brand failure can also relate to the traditional view on
branding in the modern business environment. In the traditional
way of thinking, branding has been a concern of the marketing
department and advertising agencies. A valuable brand can be a
great asset to a company, but they also hold many traps. One
example of a branding failure is Coca-Colas New Coke in 1985.
The company tried to alter the formula of their successful
beverage, but experienced significant losses because consumers
had such a nostalgic feeling to the taste of Coca-Cola. This is the
result of insufficient understanding on consumer trends and why
the brand is successful. Branding can be harmful if the company is
being branded on the wrong basis. This includes branding on price,
level of service or quality. If a company is branded on price, the
basis of customers choosing that company over another is very
superficial. They are only interested in the price that you offer and
will be happy to pick another company next time. Quality and
service levels are not something that a brand promise should be
built upon, after all, they do not build a sustainable competitive
advantage. In the traditional approach to branding, companies treat
the brand as a visible and tangible element. It is considered a stamp
to the exterior of the company. This view does not prevail in
holistic branding, where the brand derives from within the
organization. Therefore companies may encounter problems with
their brand if they consider it as only an aesthetic element.

54
 CHAPTER 4
CONCLUSIONS AND RECOMMENDATIONS

The results of this research indicate that managers need to consider

brand logos as more effective and powerful tools in the
management of customer–brand relationships than previously
thought. More specifically, just because consumers can quickly
identify a brand based on its logo does not mean that they will
invest resources towards sustaining their relationship with the
brand. That is, brand logos that are easily recognizable, yet which
do not convey the brand's symbolic and functional benefits or do
not provide aesthetic gratification, fail to take full advantage of
their own potential. Visual symbols as brand logos offer an
untapped opportunity frequently. This study's findings indicate that
brands with symbols as logos are more effective at providing self-
identity/expressiveness benefits than logos that consist purely of
brand names. They are also more successful at communicating the
functional benefits of a brand than brand name-based logos are.
Finally, the finding that the aesthetic appeal of brand logos
significantly strengthens customers' commitment to a brand
answers the need for business academics to examine the positive
effects of visual attractiveness on consumers (e.g., Bloch, 1995).
Managers should further take note that visual symbols as logos
appear particularly effective at providing aesthetic appeal to
customers. Taken together, these results clearly demonstrate the
added value of using visual symbols for branding purposes.
Today's marketplace is very noisy. Brands must be particularly
clear about what they want consumers to remember about them.
This study shows that focusing on the management of brand logos–
as the summary representation of what a brand stands for–provides
marketers with a valuable, largely untapped tool in their efforts to

55
deepen customer–brand relationships and enhance firm
performance. In addition, contrary to what one might expect, a
brand's extension efforts to different product categories strengthen,
rather than weaken, the benefits of brand logos. This bodes well
for brands' future growth and rejuvenation strategies, as logos can
help customers connect with a brand across product categories. We
consider several limitations of the present research when
interpreting the results. First, the study controls for customers'
familiarity with a brand, the worth of a firm's intangible assets,
advertising spending-to-sales ratio, as well as operating margin,
leverage, and past revenue growth, all of which can affect firm
performance and customer brand commitment. Due to lack of data,
the authors do not account for changes to brand logos over time
(e.g., some corporate brands continuously modify their logos while
others do not alter them for long periods of time), which can
interact with customer commitment to impact firm performance
(Walsh et al., 2010). They do, however, acknowledge the
importance of testing the present model using longitudinal data,
and invite future research to explore how brand logos impact
customer–brand relationships over time. Second, since managers
can develop a brand's visual identity not only through logos
(including colors and shapes), but also through elements such as
packaging and product design, future research can expand the
model proposed in this research by accounting for the multitude of
ways in which brands connect to customers' selves, communicate
functional benefits, and offer aesthetic appeal. Third and finally,
the effectiveness of a visual logo likely depends on multiple design
properties of the logo (e.g., color, shapes, and sizes). Because an
analysis of specific logo design elements is beyond the scope of
the present study, the authors encourage future research that
addresses these shortcomings.

56
Suggestions for further research and the case company
As stated in the first chapter of this thesis, consumer perception
towards airlines is a very sensitive subject, from the point of view
of airlines. (D. Van Oudheusden, 1990) In this regard, the
continuation of researching this topic can benefit airline companies
to a great extent. In the future, the airline personnel together with
researchers should examine this topic more deeply in order to gain
deeper insights of consumer perceptions. Due to possessing greater
resources and interest towards this topic it is possible for airlines
themselves to carry out surveys and interviews to receive more
accurate results. According to Claire Watson (2003), creating
brand awareness is the first step towards building customer
understanding about the product or service as it can influence
opinion and motivating behavior. However, especially at an early
stage of introducing a product or service to the market, building
deep customer understanding is crucial to a product or service to
succeed. To build customer understanding, companies need to
investigate the most profound insights of customer needs by using
research methods, such as in-depth qualitative research. (Arken,
Andrew, 2002) This is why the future research suggestion for the
case company Finnair would be to try to find out the best tools for
increasing the abilities of customers to recognize and recall (brand
awareness) the brand Finnair among Indians by using qualitative
research methods since Indians are heavy users of social media.
The main tool in concentration of the investigation for the future
research for Finnair could be using social media in order to
strengthen the brand awareness. To support this, for example
Lufthansa uses Twitter to build brand awareness and it has nearly
95 000 followers. Finnair instead has only approximately 2,500
followers. Thus, intense use of social media could be used as an
effective marketing tool to reach consumers by following the steps

57
of improving brand awareness on Twitter by Carol Chapman,
which are e.g. creating own public timeline, creating multiple
accounts and posting tweets regularly and creating own Twitter
account for Indian people, for instance. In conclusion, the authors
of this thesis suggest that the case company Finnair should keep on
investing to improve its awareness in the Indian market in order to
create brand equity: without awareness it is impossible for a
business to succeed and gain profit.

58
 CHAPTER 5
LIMITATIONS OF THE STUDY

There are some limitations of the research that should be noted.

Firstly, we should mention the sample is a convenience sample,
with consequences at sizes and proportions level. Secondly, we
measured affect towards the logos through one dimension only
(like/do not like), and to measure a latent variable such as affect,
we need to consider at least two items. However, in this research,
we are measuring affect towards three different categories of logo
designs and towards unknown and known logos, thus we are
measuring affect towards a minimum of four different objects.
Further research should allow us to explore in detail the
main effects of gender, age and educational level, as well as the
possible interaction effects between these variables.
The findings regarding consumer logo preferences will be
analyzed more thoroughly in two replication studies that will
investigate reactions to the naturalness of logo design across
different cultures. Jun and Lee (2007) highlight the relevance
of visual elements to generate corporate identity but the
scarce cross-cultural marketing research in existence. Few
empirical studies address this issue. In this paper, we present
the results for Portugal, but we are currently replicating the
study in Spain and in the Netherlands. These countries show
heterogeneity for the Hofstede cultural dimensions (Hofstede,
1980). Extreme values were found in relation to Portugal and the
Netherlands, while the values for Spain usually lie between the
values of the two. For example, for the Uncertainty Avoidance
Index (UAI), the Netherlands has a value of 53, Spain of 86 and
Portugal of 104. Intermediate values may be relevant in order to
explore nonlinear patterns (i.e., Broekhuizen et al., 2011).
59
We hypothesize that cultures characterized by high levels of
UAI (Hofstede, 1980) display a preference for known/recognized
shapes (natural ones). As organic representations are the most
familiar ones, we expect to link this to cultures with higher levels
of UAI.
This experiment will also be complemented by two additional
experiments, which will allow us to further examine the
psychological, behavioral and neurological properties of logo
design.
In a second experiment, we will attempt to differentiate
consumer affective responses toward logo design. In this
experiment we will evaluate the influence of naturalness on
affective processing and on logo choice. In a third experiment, we
will complement the psychological and behavioral results from
our previous experiments, with an empirical analysis of
neurological response toward brand logo design. This should
provide confirmatory evidence of the psychological phenomena
identified in our previous experiments, and help to generate a
more fundamental conceptualization and understanding of the
underlying processes (Reinmann et al., 2010; Shiv et al., 2005).

The biggest limitation was the geographical location of the sample

group: it was rather difficult to reach the sample group efficiently
and be sure that all the respondents fulfill the intended
requirements. Since, the sample group was hard to reach the time
to collect primary data was comparably short. Due to this, the time
sequence left for analysis was also short which can have an effect
to the findings of the research. In addition, the lack of experience
and knowledge of the researchers concerning the composition of
an empirical study limits the depth of the insight of this study. One
major limitation concerns the scope of the sample group: we were

60
able to obtain 216 responses to the online questionnaire but just
126 respondents fulfilled the desired requirements. This decreases
the reliability of the study results. A factor that also limits the
results of the research is the incident with question number five in
the online questionnaire that resulted in a procedure of deleting this
question. Due to this procedure, the questionnaire consisted only of
nine questions and we lost one important question that would have
assumably provided significant information about brand
preference.

61
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