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1 Emerald Article: Brand mergers: examining consumers' responses to name and logo design Joana César Machado, Leonor Vacas-de-Carvalho, Patrício Costa, Paulo Lencastre Article information: To cite this document: Joana César Machado, Leonor Vacas-de-Carvalho, Patrício Costa, Paulo Lencastre, (2012),"Brand mergers: examining consumers' responses to name and logo design",, Vol 21 Iss: 6 pp Permanent link to this document: Downloaded on: References: This document contains references to 63 other documents To copy this document: permissions@emeraldinsightcom Access to this document was granted through an Emerald subscription provided by UNIVERSIDADE CATOLICA PORTUGUESA For Authors: If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service Information about how to choose which publication to write for and submission guidelines are available for all Please visit wwwemeraldinsightcom/authors for more information About Emerald wwwemeraldinsightcom With over forty years' experience, Emerald Group Publishing is a leading independent publisher of global research with impact in business, society, public policy and education In total, Emerald publishes over 275 journals and more than 130 book series, as well as an extensive range of online products and services Emerald is both COUNTER 3 and TRANSFER compliant The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation *Related content and download information correct at time of download

2 Brand mergers: examining consumers responses to name and logo design Joana César Machado Catholic University of Portugal, Porto, Portugal Leonor Vacas-de-Carvalho Évora University, Évora, Portugal Patrício Costa School of Health Sciences, Minho University, Braga, Portugal, and Paulo Lencastre Catholic University of Portugal, Porto, Portugal Abstract Purpose In the context of a merger, the management of corporate identity in particular of corporate names and logos assumes a critical role This paper aims to explore how name and logo design characteristics, and specifically figurativeness, influence consumer preferences in the context of a brand merger, in the banking sector Design/methodology/approach This study develops a typology of the alternative corporate identity structures that may be assumed in the context of a brand merger by drawing on a literature review and secondary data, as well as an exploratory study analyzing consumers preferences regarding alternative branding strategies Findings The results suggest that there is a clear preference for figurative logos Furthermore, there is evidence that logos may be as important as the company name in a merger situation, in terms of assuring consumers that there remains a connection to the brand s past The data show that the logo chosen by consumers reflects their aesthetic responses, whereas the selected name reflects their evaluation of the brand s offers or its presence in the market Originality/value The paper uses an innovative research design which gives respondents freedom to choose their preferred solution; hence, the richness of the results is enhanced The results should guide managers in their evaluation and choices regarding post-merger branding strategies Keywords Brand, Brand identity signs, Brand logo, Mergers and acquisitions, Consumer preferences, Consumer behaviour, Corporate identity Paper type Research paper An executive summary for managers and executive readers can be found at the end of this article 1 Introduction Name and logo are key components of brand identity, since they are the most pervasive elements in corporate and brand communications, and provide instant recognition of the brand (Schechter, 1993; Henderson and Cote, 1998) The reasons why a corporate brand name or logo might change are numerous, but a merger between two or more companies is a major one (Muzellec and Lambkin, 2006; Stuart and Muzzelec, 2004) Moreover, the tendency for companies to merge has increased considerably over recent last years, across virtually all industries, and this trend is expected to continue rising (Ettenson and Knowles, 2006) The formulation of a post-merger branding strategy is one of the more important organisational and marketing tasks that The current issue and full text archive of this journal is available at wwwemeraldinsightcom/ htm 21/6 (2012) q Emerald Group Publishing Limited [ISSN ] [DOI / ] arises from mergers (Balmer and Dinnie, 1999; Brooks et al 2005; Melewar, 2001) Understandably, there has been increasing interest in the role of corporate brands and corporate communications in merger activities, both in the general business press and in academic fields (eg Bahadir et al, 2008; Balmer and Dinnie, 1999; Jaju et al, 2006; Melewar and Harold, 2000) Yet, relatively little academic attention has been paid to the different name and logo options available to a new corporate entity, and to the authors knowledge no empirical research has yet addressed branding strategies from the perspective of individual consumers This paper seeks to address this research gap, by exploring consumers brand identity preferences in the context of a merger Specifically, it considers the degree to which name and logo design characteristics influence consumer responses The paper is set out as follows: we begin by reviewing relevant brand identity and logo literature, and specifically discuss the impact of a merger on corporate name and logo From here, the study is described, the research results are presented and discussed, the limitations are noted and future research directions are outlined 2 Literature review 21 Brand and brand identity signs Branding is a central concept in marketing, and the particular importance of corporate branding has been highlighted by a 418

3 Joana César Machado et al number of writers (Keller and Richey, 2006; Merrilees and Miller, 2008) Although there has been increasing interest in branding, it is reasonable to say that its incorporation into the conceptual structure of marketing has yet to be completely consolidated (Stern, 2006) In the search for an holistic conceptualisation, we assume a semiotics-based conceptual model for branding, according to which the brand is founded on three fundamental pillars: the identity pillar, which includes the sign or signs that identify the brand (name, logo, slogan, etc forming the identity mix) and the brands associated with it, thus building the corporate identity structure; the object pillar, which includes the different offers of the brand together with the organisation, and the marketing activities that support them; and the market pillar, which includes the brand s stakeholders and their different responses to the brand at cognitive, affective and behavioural levels (Mollerup, 1997; Lencastre and Côrte- Real, 2010) Name and logo are generally considered to be the main brand identity signs, since they are critical communication cues (Henderson et al, 2003; Pittard et al, 2007; van den Bosch and de Jong, 2005) Development of a strong logo is particularly relevant for service organisations, because of the intangible nature of their offerings (Berry, 2000; De Chernatony and Segal-Horn, 2003; Devlin and McKechnie, 2008) Several marketing scholars have underlined the need to link intangible service offers to tangible logos in order to convey appropriate meanings (Berry, 2000; De Chernatony and Segal-Horn, 2001; Miller et al, 2007) 22 Brand logo As a brand identity sign, a logo can refer to a variety of graphic or typeface elements, ranging from word-driven, ie including word marks or stylized letter marks, through to image-driven, ie including pictorial marks (Henderson and Cote, 1998; Wheeler, 2003) In this study, the word logo refers to the graphical element that a company uses to identify itself or its products Prior research recognises that logos play a critical role in brand building, because they act as the primary visual representation of the brand s meaning and offer summary information about the brand s marketing efforts (Henderson and Cote, 1998; MacInnis et al, 1999) Logos are the most salient visual elements in a wide range of direct and indirect communication tools, ranging from packaging, promotional materials and advertising to business cards and letterheads (Henderson and Cote, 1998; Walsh et al, 2010) Companies invest significant amounts of time and money promoting, updating and changing their logos (Colman et al, 1995; Henderson and Cote, 1998; Spaeth, 2002) Thus, marketing managers can benefit considerably from understanding the principles of designing, selecting and modifying logos Yet, there is little systematic research on the effect of logo design on brand evaluation and preference In one exception, 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, 2011) examined consumer responses to logo shape redesigns (from angular to more rounded shapes) These authors found that brand commitment negatively influences evaluation of logo redesign 23 Brand logo design and response towards the brand Theorists agree that well-designed logos should be recognizable, evoke positive affect and allow the transmission of a set of shared associations (Henderson and Cote, 1998; Henderson et al, 2003; Janiszewski and Meyvis, 2001; Klink, 2001, 2003; Kohli et al, 2002) Affective reactions to a logo are critical, because such reactions can transfer 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 a logo is one of the few cues that differentiates the offering therein (Hoyer and Leong, 1990; Leong, 1993) Prior research suggests that brands with a greater aesthetic appeal not only provide the pleasure of visual gratification, but are also more likely to facilitate the formation of emotional bonds between the company in question and its customers (Bloch, 1995; Goldman, 2005) As aesthetic appeal and design evolves to become an essential component of corporate marketing, it is important to determine the extent to which design elements such as figurativeness create a positive affect Previous research in logo strategy has underlined the advantages of using pictorial or natural (figurative) logos Schechter (1993) demonstrated that logos suggestive of a recognizable object can add the most value to the brands they represent Henderson and Cote (1998) also found that logos representative of objects that have familiar and widely recognised meanings are more effective in producing correct recognition and positive affects than more abstract logos Natural forms are defined by the degree to which the form depicts commonly experienced objects They are comprised of representative and organic characteristics (Henderson and Cote, 1998) Therefore, natural or figurative forms include inanimate objects (eg the Traveller s umbrella) and living organisms (eg Apple s apple) According to semiotics, figurativeness and its opposite endpoint, abstractness, reflect the degree to which a sign depicts objects from the natural and sensitive world: a sign is abstract when there are no links to the sensitive world; in the opposite situation we would say that a sign is figurative (Greimas and Courtés, 1993) Logos depicting characters, places, animals, fruits or any other objects from the sensitive world demand lower learning efforts and are more recognizable (Henderson and Cote, 1998; Lencastre, 1997) Recognition for abstract and meaningless logos may be poor, and abstract designs are more difficult to interpret (Koen, 1969; Nelson, 1971; Seifert, 1992) Empirical research further shows that figurative identity signs can enhance brand memorisation, contribute to the formation of brand associations and encourage affective reactions (Henderson and Cote, 1998; Hynes, 2009; van Riel and van den Ban, 2001) These findings are supported by the recognised aesthetic primacy of natural forms in logo design In fact, Veryzer s theory of aesthetic response suggests that individuals surrounded by a common, natural environment form similar non-conscious rule systems that inform their design preferences The responses that individuals produce towards design, experienced as affects, are the results of consistency or 419

4 Joana César Machado et al inconsistency with several rule systems that are internalized at the deepest level (Koffka, 1962; Veryzer, 1999) To the extent that one can count on a common physical environment, one can also count on a broad range of commonly acquired likings (Veryzer, 1999) Figurative logos depict natural phenomena, and therefore one should expect figurative logos to be most preferred Thus, from a design perspective, we decided to focus on this particular logo element figurativeness and to examine reactions to it in the specific context of a brand merger 3 Typology of post-merger corporate identity structures Based on the literature review (eg Aaker and Joachimsthaler, 2000; Ettenson and Knowles, 2006; Devlin, 2003; Devlin and McKechnie, 2008; Olins, 1990; Rosson and Brooks, 2004) and on a documental analysis of recent mergers, we present in this section a typology of the corporate identity structures that organisations may assume in the context of a merger Following a merger, organisations may choose a monolithic corporate identity structure (one single corporate brand), a differentiated corporate identity structure (two separate, distinct, stand-alone corporate brands), or a combined corporate identity structure (a redeployment alternative that combines elements of both corporate brands) The seven options identified are illustrated in Table I through real cases of brand mergers 4 Research method This research focused on the banking sector This seemed particularly appropriate, since a large number of mergers and acquisitions have recently taken place between banking brands Additionally, there is a growing body of literature relating to brand identity and services or banking brands (Devlin and McKechnie, 2008; De Chernatony and Segal- Horn, 2003; Berry, 2000) For the main study, four Portuguese banking brands (Caixa, Millennium, BES and BPI), and two international brands (Barclays from the UK and Banco Popular from Spain) were selected Since it was fundamental to give respondents the option to choose a new name and/or a new logo when choosing the preferred redeployment alternative, a pre-test was conducted to identify a suitable name and logo combination to use Therefore, we conducted an exploratory study using three names and three logos of European banks that did not have branches in Portugal and that had a low probability of being recognised, at the the time of the data collection (Erste Bank, HBOS and UniCredit), in order to identify the option that elicited the highest level of preference In this study we included figurative (eg UniCredit) and abstract names (eg HBOS), and also figurative (eg the boomerang of UniCredit) and abstract logos (eg the monogram of Erste Bank) We used a within-subjects design, and a convenience sample according to the snowball method This study was conducted using an online survey with a total of 207 participants The results showed that the name and logo of UniCredit Banca were preferred by the majority of the respondents (638 per cent), and thus this brand s identity signs were selected for use in the main study In the main study the authors administered a survey questionnaire among consumers to measure their preferences regarding different corporate identity redeployment alternatives This was done by creating fictional scenarios involving the six real brands The respondents (n ¼ 467) were postgraduate students (Master of Science, MBA, and postgraduate courses) from a major university (from the arts, law, management and economics and psychology schools)[1], and were assigned randomly to one of the 15 versions of the brand merger Each independent group of respondents (composed of at least 30 elements) evaluated one corporate brand pair First, the respondents answered introductory questions regarding their recall and recognition of banking brands and their identity signs (name and logo), along with stating which banks they use, and their main bank In the final part of the questionnaire, the respondents were presented with the target stimulus depicting the corporate brands merger scenario, and then answered questions concerning the corporate identity redeployment alternative that they preferred The participants were given three cards depicting the different alternatives in terms of the new brand s name Table I Typology of post-merger corporate identity structures Typology Brand 1 Brand 2 Merger Monolithic identity 1 One of the brands name and logo Vodafone Telecel Vodafone name and logo 2 One of the brands name and a new logo BP Amoco BP name and new logo 3 New name and logo Guinness Grand Metropolitan Diageo Combined identity 4 Combination of the two brands names and a new BNP Paribas BNP Paribas name and new logo logo 5 Combination of the two brands name and logo UBS Swiss Bank Corporation UBS name and Swiss Bank Corporation logo 6 One of the brands endorses the other with its name and logo Banco Fonsecas and Burnay BPI Banco Fonsecas and Burnay BPI Group Differentiated identities 7 Two idendependent brands P&G Gillette P&G Gillette 420

5 Joana César Machado et al name of Brand A, name of Brand B or a new name[2] and three cards depicting the different alternatives in terms of the new brand s logo logo of Brand A, logo of Brand B, or a new logo[3] and were asked to indicate their preferred corporate identity redeployment alternative on the booklet provided Finally, the respondents were asked to justify their choices The questionnaire ended with a set of socio-demographic questions which allowed us to characterise the sample in detail The results show that with regards to age, gender, educational background and occupation, none were significant influencers in the subsequent analysis Giving respondents the freedom to select their preferred solution allowed us to induce a high level of involvement and compromise within this answer, and contributed to creating much richer results (we obtained 118 response alternatives) 5 Results 51 Revision of the typology of identity options The analysis of consumers preferences led to a revision of the typology of corporate identity redeployment alternatives developed previously, since we identified new monolithic and combined redeployment alternatives With respect to the monolithic alternatives, we identified four different response typologies, instead of the three options initially typified (see Table II) The option to choose the logo of one of the two brands and a new name was not pre-empted in the literature, and is not usual in practice In this new monolithic option, the logo is the stability element, reassuring consumers that there will be a connection with the brand s past, while the name signals a fresh beginning With regards to the redeployment alternatives that combine elements of both brands identities, we found a wide array of response typologies instead of the three options previously typified (see Table III) The option to combine the two brands logos with a new name (eg choosing a logo that results from a combination of the logos of Barclays and BPI the blue eagle and the orange flower together with a new name) is a variation on the alternative of combining both brands names with a new logo (eg choosing the name BarclaysBPI and a new logo), and contributes again to underlining the importance of the logo as the stability element in a merger context The option to combine the names and logos of the two brands (eg choosing a name that results from the combination of the names of BPI and Barclays and a logo that results from a combination of the logos of BPI and Barclays) is a variant of the option to combine the identity signs of the two brands (eg choosing BPI s name and Barclays s logo) The same stands for the alternative of combining the names of the two brands The option of both brands logos associated with one brand s name can be considered as an example of an endorsement solution, and confers on the logo the endorsement role that is typically attributed to the name Our results indicate that almost half of the participants preferred monolithic redeployment strategies (475 per cent) However, the analysis of the different monolithic response typologies shows that the creation of a new brand outperforms the preservation of the brands involved in the merger Moreover, redeployment alternatives that combine elements of both brands identities are also very often chosen On the other hand, differentiated alternatives are very rarely selected The authors decided to call the respondents that preferred the creation of a monolithic structure dictators ; those that always chose a combination of both brands identities were termed ethicals ; and those that considered that, despite the merger, the two brands should remain completely independent were called reluctants 52 Relation between the typology of identity options and the main bank We used chi-squared tests to test the existence of a dependency relation between the respondents main bank and their choice regarding the different corporate identity structures (monolithic, differentiated or combined) There are no significant differences between the responses of clients and non-clients, and thus it is not possible to conclude that there is a dependency relation between being or not being a brand s client and the choice of the corporate identity structure [BP 2 x 2 (2,467) ¼ 0160; p ¼ 0923; BES 2 x 2 (2,467) ¼ 0921; p ¼ 0631; Banco Popular 2 x 2 (2,467) ¼ 1897; p ¼ 0387; Barclays 2 x 2 (2,467) ¼ 0847; p ¼ 0655; Caixa 2 x 2 (2,467) ¼ 1588; p ¼ 0452; Millennium 2 x 2 (2,467) ¼ 2155; p ¼ 0347] The analysis demonstrates that the three categories of consumers identified (dictators, ethicals and reluctants) are relatively universal with regards to the criteria, which banks do you use? and what is your main bank? In fact, the Table II Monolithic redeployment options Options presented in the literature review and documental analysis Variants resulting from the experimental study 1 One of the brands name and logo 507% 21 One of the brands name and a new logo 95% 22 One of the brands logo and a new name 87% 3 New name and logo 311% Table III Redeployment options that combine elements of both brands identities Options presented in the literature review and documental analysis Variants resulting from the experimental study 41 Combination of the two brands names and a new logo 173% 42 Combination of the two brands logos and a new name 30% 51 Combination of two brands name and logo 355% 52 Combination of the two brands names and logos 48% 53 Combination of the two brands names 48% 61 One of the brands endorses the other with its name 317% 62 One of the brands endorses the other with its logo 29% 421

6 Joana César Machado et al dictators, the ethicals and the reluctants are uniformly distributed among the clients of the different brands studied This universality also occurs with regards to gender [x 2 ð2;467þ ¼ 3:292; p ¼ 0:193], age [x2 ð4;467þ ¼ 8:355; p ¼ 0:079] and educational field [x 2 ð6;467þ ¼ 6:194; p ¼ 0:402] These results allow us to conclude that the response typologies are universal, and contribute to their legitimation Regarding this aspect, we should underline that the relation between age and the corporate identity structure is almost significant, and that there is a greater tendency than expected for older respondents, and a lower tendency than expected for younger respondents, to fall into the dictator category 53 Relation between the typology of identity options and the brand pillars We analysed respondents justifications for their preferred redeployment alternatives using a content analysis The analysis allowed us to conclude that respondents justify the corporate identity alternative chosen based on their evaluation of the brands identity signs, the brands object or the brands image Whenever the respondents justifications underlined the characteristics or the qualities of the brands identity signs, we included them in the category response to brand identity (eg I chose the most attractive logo ; this is the name I liked most ; I liked the colours and the geometrical shape of the logo ) The respondents frequently justified their choices with reference to the image that the brands have in the market (eg [I selected this option] because this brand has much higher levels of international awareness ; due to the bad reputation that brand A has ), or the image that the redeployment alternative should transmit to the market (eg [I selected this option] because this solution communicates the merger better ; so that the origin of the merger is clearly expressed to the market ) We classified these justifications as responses to the market When respondents justified their choices with reference to their personal evaluation of the brand s offerings, and the core benefits underlying these offerings, or of the supporting marketing activities, the responses were included in the category response to the brand s object (eg I choose brand A because this bank offers the best services ; I would maintain the two brands, because their offerings are complementary ) Following this, we cross-referenced the different response typologies (dictators, ethicals and reluctants) with the responses to the three brand pillars (identity, object and market), as suggested by the analysis of the respondents justifications for their choices The dictators and the ethicals tended to justify the corporate identity alternative chosen with reference to the image of the two brands involved in the merger, or to the influence that this redeployment alternative might have on the image of the newly formed entity (response to the market) The quality of the brand identity signs (response to the identity) was also an important driver of the dictators and the ethicals redeployment options On the other hand, the reluctants tended to explain their resistance to the merger with reference to the personal meaning they assign to the brand s offerings (response to the object) (see Table IV) 54 Relation between being a brand client and the preference for the brand logo We used chi-squared tests to examine the existence of a dependency relation between being a brand s client and the preference for this brand s identity signs, in the context of a merger The analysis of the results suggests that for the majority of the brands there is no relation between these two variables In fact, with the exception of BES and Caixa, there was no observable tendency for the brand s clients to choose the brand s name or logo more often than non-clients (see Table V) We conducted a similar analysis to confirm whether there is a dependency relation between having the brand as the main bank, and choosing the brand s name or logo However, we concluded that there is no significant relation between these two variables 55 Relation between logo design and the identity options The two figurative logos, BPI s orange flower and Barclays s eagle, were the ones most often chosen, although they do not belong to leading banks On the contrary, Caixa s abstract logo and Millennium s and BES s abstract monograms were chosen considerably less, even though they are the identity signs of the three biggest banks and those with the highest levels of brand recall (see Table VI) With regards to the choice of logo, the results suggest that the distinction between abstract and figurative logos has a significant influence on consumer preferences in a merger situation, and can be even more important than the brand s antiquity or position in the market Thus, the choice of logo tends to reflect consumers evaluations of its aesthetic qualities, and to confirm previous findings in the logo strategy literature (Henderson and Cote, 1998; Hynes, 2009; Pittard et al, 2007; Schechter, 1993) With respect to the choice of brand name, the preference ranking clearly reflects the market share and the brand recall ranking Indeed, the four biggest brands studied obtained the best results Hence, the choice of name tends to reflect consumers evaluations of the brand s strength or its presence in the market Therefore, it may be concluded that the qualities of the different names do not have a determinant influence on consumers preferences in a merger situation 6 Discussion This study contributes to the literature by increasing our understanding of the alternative redeployment strategies that may be assumed subsequent to a brand merger This study makes additional contributions by clarifying the influence of name and logo characteristics on consumer preferences in a merger situation Methodologically, it uses an innovative research design which gives respondents the freedom to choose their preferred solution The results of this study suggest that: within monolithic redeployment alternatives, consumers prefer the creation of an entirely new identity; the brand logo is often chosen as the stability element in a merger context; and the logo preferences reflect consumer evaluations of its aesthetic qualities Thus, the findings expand on the conclusions of previous studies in the literature 422

7 Joana César Machado et al Table IV The dictators, the ethicals and the reluctants, and their responses to the brand s pillars Responses to the brand s pillars Response to the merger Response to the identity (%) Response to the object (%) Response to the market (%) Other (%) Total (%) Dictators Ethicals Reluctants Total Table V Results of the chi-squared test between being a brand s client and preference for the brand s signs Brand Logo Name Banco Popular x 2 ð1;467þ ¼ 1:139; p ¼ 0:286 x2 ð1;467þ ¼ 0:337; p ¼ 0:562 Barclays x 2 ð1;467þ ¼ 0:069; p ¼ 0:793 x2 ð1;467þ ¼ 0:033; p ¼ 0:856 BES x 2 ð1;467þ ¼ 2:927; p ¼ 0:087 x2 ð1;467þ ¼ 5:935; p ¼ 0:015 BPI x 2 ð1;467þ ¼ 0:034; p ¼ 0:854 x2 ð1;467þ ¼ 0:844; p ¼ 0:358 Caixa x 2 ð1;467þ ¼ 0:302; p ¼ 0:583 x2 ð1;467þ ¼ 5:271; p ¼ 0:022 Millennium x 2 ð1;467þ ¼ 0:518; p ¼ 0:472 x2 ð1;467þ ¼ 2:447; p ¼ 0:118 Table VI The choice of identity signs Market share Brand recall (%) (%) Name rankings (%) Logo rankings (%) Millennium 229 BPI s logo Caixa 208 Barclays logo Bes 208 Caixa s logo BPI 201 Bes logo Barclays 188 Millennium s logo Banco Popular 105 Banco Popular s logo 49 First, it emerged from the results that within the monolithic response typologies, the solution most often chosen is the creation of a new name and a new logo This solution can send a very strong message to the market, signalling that the merger is an important corporate transformation entailing a new vision and direction (Ettenson and Knowles, 2006) However, these findings should be analysed with some caution Overall, the results confirm that monolithic redeployment strategies are favoured by consumers subsequent to a brand merger, but there is no significant discrepancy between the monolithic redeployment alternatives and those that combine elements of both brands identities On the other hand, the preliminary findings indicate that the preference for a monolithic redeployment strategy, as suggested in the study developed by Jaju et al (2006), is only clearly supported when one of the partners in the merger is weak Whenever the corporate brands involved in a merger are two highly familiar brands, there is a tendency among respondents to assume an ethical behaviour and preserve elements of both brands identities Our next finding relates to the fundamental role that the logo plays in a merger context Contrary to previous studies and to what is usual in practice, we find evidence that the brand logo may play as important (or even more important) a role as that of the company name in a merger, in terms of assuring consumers that there will be a connection with the brand s past, and respecting the brand s heritage (Ettenson and Knowles, 2006; Spaeth, 1999) Another important finding concerns the relation between logo design and identity options We found that the choice of logo reflects consumers evaluations of this brand identity sign and in particular, figurativeness On the contrary, the choice of name reflects consumers evaluations of the brand s presence in the market Thus, the results suggest that when consumers do not want to assume a dictatorial behaviour, they will tend to choose a figurative logo and the name(s) of the brand(s) that is more highly valued by themselves or by the market Thus, the results underscore the advantages associated with a figurative brand logo 7 Limitations and directions for further research The findings regarding consumer logo preferences will be analysed more thoroughly in a confirmatory study that specifically addresses the influence of the figurativeness of logo design First, this study used real brand logos which were familiar to our subjects In future research, we will use logos which are unknown to the respondents, so that it is possible to assess the effects of initial design on responses, and eliminate the effect of brand awareness and brand attitude on consumer responses to logo design (Henderson and Cote, 1998) The logos will be presented in their original colours, because colour is one of the major aspects of a logo s characteristics besides design (Hynes, 2009), and thus design and colour should not be separated Previous research has demonstrated the universal preference for divine proportion[3] in figurative logo designs Preference for more abstract logos, however, tends to favour the 1:1 ratio (Pittard et al, 2007) Based on these results, it is recommended that the confirmatory study includes abstract and figurative logos which conform to the preferred ratios The confirmatory study will attempt to differentiate abstract from figurative logos, and also to measure consumer affective responses towards abstract and figurative logo designs In this study, we will evaluate logo choice and affective processing through reaction time (Reinmann et al, 2010) Additionally, we will measure affect using a sevenpoint semantic differential scale, which will allow us to identify the feelings that the logo inspires (unpleasant/ pleasant; uninteresting/interesting; unfavourable/favourable; dislike/like; bad/good; negative/positive) (Grossman and Till, 1998; Henderson and Cote, 1998; Kim et al, 1998; Milberg et al, 1997; Park et al, 1996; Rodrigue and Biswas, 2004; Simonin and Ruth, 1998) This research focused on a very specific product category, namely banking services, and thus the generalizability of the findings may be questionable However, it should be noted 423

8 Joana César Machado et al that the financial service context has been used with success in the past to investigate branding issues Nevertheless, future research should explore similar matters in other product markets, to prove that the findings of this study are pertinent to a broad range of contexts The fact that this study used a student sample may also limit the degree of generalizability of the results However, since this is an exploratory study, we wanted to select a consumer group which would be easy to contact and engage Using a student sample may also provide some degree of homogeneity and allow for testing of the intended effects Furthermore, the majority of the research on brand identity signs, brand aesthetics, brand alliances or brand extensions used student respondents (eg Aaker and Keller, 1990; Bhat and Reddy, 2001; Henderson and Cote, 1998; Henderson et al, 2003; Kim et al, 1996; Park et al, 1996; Pittard et al, 2007; Simonin and Ruth, 1998; Walsh et al, 2010) Additional studies on consumer brand identity preferences will be designed to address this limitation 8 Managerial implications Our findings have particular managerial implications for firms planning mergers or acquisitions Executives who are preparing their firms for a potential merger process need to be cognizant that consumers consider a wide array of corporate identity redeployment alternatives within the three basic corporate identity structures The most appropriate post-merger branding structure depends not only on the strength of the two brands involved in the merger, but also on the aesthetic quality of their identity signs Managers need to recognise the influence that the aesthetic qualities of the corporate brand identity signs, and in particular the corporate logo, have on consumers redeployment preferences Indeed, the findings of this research suggest that logo design characteristics significantly influence consumer post-merger branding preferences For maximum positive affect and increased brand strength, it is suggested that figurative logos be chosen over more abstract designs Moreover, brand managers should be aware that the brand logo may play as important a role as the company name in a merger, in terms of assuring consumers that there will be a connection with the brand s past, and respecting the brand s heritage Notes 1 We used quota sampling within each educational field, and calculated the weight of each college/school in the sample according to the weight that its students have in the context of postgraduate students in the Catholic University of Portugal, in Porto 2 The names were written in the original lettering to reinforce the maintenance option (or the change option in the case of the new name), when the name was chosen 3 The logos were shown in their original colours 4 The divine proportion hypothesis states that a visual form is most aesthetically pleasing when the ratio of its larger to smaller dimensions is 1:618 References Aaker, 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10 Joana César Machado et al Veryzer, RW (1999), A nonconscious processing explanation of consumer response to product design, Journal of Psychology & Marketing, Vol 6 No 6, pp Walsh, MF, Winterich, KP and Mittal, V (2010), Do logo redesigns help or hurt your brand? The role of brand commitment,, Vol 19 No 2, pp Walsh, MF, Winterich, KP and Mittal, V (2011), How redesign angular logos to be more rounded shapes brand attitude: consumer brand commitment and self-construal,, Vol 28 No 6, pp Wheeler, A (2003), Designing Brand Identity: A Complete Guide to Creating, Building and Maintaining Strong Brands, Wiley, Hoboken, NJ Further reading Rao, AR and Ruekert, RW (1994), Brand alliances as signals of product quality, Sloan Management Review, Vol 36 No 1, pp About the authors Joana César Machado is Assistant Professor in the Marketing Department at the Catholic University of Portugal in Porto, Portugal She teaches in the areas of brand management, marketing communications and consumer behaviour Her research interests include branding, consumer behaviour and consumer neuroscience Her doctoral research at ISCTE Business School was dedicated to the analysis of consumer brand identity preferences, in the particular context of a merger She is co-author of the book O Livro da Marca (The Brand Book), which is a book of reference on branding in Portugal Joana César Machado is the corresponding author and can be contacted at: jcmachado@portoucppt Leonor Vacas-de-Carvalho is Assistant Professor in the Marketing Department at Évora University, Portugal, where she teaches marketing management, brand management and marketing communications She is a researcher at ISCTE Business School, Portugal Her doctoral research at ISCTE Business School was dedicated to the brand image of Portuguese universities This is an area in which she has completed extensive research, frequently presenting papers on the subject at international conferences Patrício Costa is Assistant Professor of Biostatistics at the School of Health Sciences of Minho University and of Statistics Applied to Psychology at the Faculty of Psychology and Education Sciences of Porto University His doctoral research in contemporary political processes at the Faculty of Political and Social Sciences of Santiago de Compostela University (Spain) was dedicated to electoral behaviour and political marketing He is also responsible for the Statistics Department at DOMP, an opinion and market research company Paulo Lencastre is Professor of Marketing at the Catholic University of Portugal He is also Visiting Professor at the ISCTE Business School in Lisbon (Portugal), São Paulo University and the Catholic University of São Paulo (Brazil) His doctoral research at the Catholic University in Leuven (Belgium) was dedicated to the perception of brand identity signs Together with a group of Portuguese and Brazilian authors, he co-wrote O Livro da Marca (The Brand Book) Executive summary and implications for managers and executives This summary has been provided to allow managers and executives a rapid appreciation of the content of this article Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benefits of the material present Recent years have seen a substantial rise in the number of brand mergers This pattern has occurred within most industries and a continuation of the trend is thought likely Companies involved therefore face the challenge of developing an effective branding strategy to ensure the merger is successful The identity of a brand post-merger is of paramount importance Different scholars purport the view that successful communication of identity is a key aspect of corporate branding In general, it is assumed that identity is conveyed mainly through the name and logo of a brand Due to the intangibility of their provision, service firms place additional emphasis on these identity dimensions In the quest to convey intended meanings, a tangible logo has a prominent role to play Merger is just one of several occasions when a revamped name and/or logo might arise The role played by logos in brand building is widely acknowledged within the research community They are considered the primary visual representation of what the brand signifies Consisting of images, words or a combination of both, logos feature prominently in direct and indirect communication through such as packaging, stationery and advertising and other promotional activities Logo change invariably involves substantial investment in both time and money Given this demand on resources, organisations must acquire greater knowledge of which design characteristics exert the greatest influence on how consumers react to a brand s logo Response is both cognitive and emotional, with the latter being seen as especially critical Academics point out the ready manner in which affective reactions to a logo can subsequently extend to the product or organisation too Such attachment can also help differentiate what the company offers In addition to generating positive affect, logos must be distinctive and able to emit a set of shared associations Designers should aim for enhanced aesthetic appeal to create both visual satisfaction and emotional attachment between customers and the firm involved Certain design characteristics have been identified as important in achieving the desired outcome For instance, the use of figurative and abstract logo types has been addressed in different studies The general conclusion is that designs which are representative of animate or inanimate objects or living organisms better aid brand recognition and positive affect Such logos are easier to process than their abstract counterparts, for which recall is considerably poorer It is assumed that figurative logos are preferred because they depict the natural environment that the consumer inhabits 426