The logo that represents a company should differentiate it from the competition.
- How did the MasterCard logo recently change?
- Why did MasterCard recently change its logo?
- What does a successful logo accomplish?
- Referring to each of the following, state reasons that companies change logos:
- How much is each of the world’s Top Four most popular brands worth?
- How is a brand different from a logo?
The Economic Idea: Product Differentiation
A logo lets us identify a company. It helps the company differentiate the good or service it produces from everyone else. Firms use product differentiation in order to compete.
But its does depend on the firm.
Think of a potato. In the supermarket, when we do not know which farmer grew which potato, then we have no product differentiation. Similarly, when there is just one physician or one newspaper, product differentiation is impossible since there is no one else.
However, when selling an item that is resembles your competition, you do want to differentiate it. You want to show why and how it is better than what a competing firm sells.
Here is where a logo enters the picture. Reflecting your distinctive identity, a logo helps you compete. MasterCard had to change its logo when the image stopped conveying accurate product differentiation
Activity Goal: To consider the role of a logo.
Procedure: Discussion in pairs or small groups.
- Divide into pairs or small groups (each with 3-5 students).
- The Chinese tech behemoth Huawei wants to register its trademark with the European Union Intellectual Property Office. Saying the mark looks like its logo, the luxury fashion company Chanel objects.
Decide what each logo is supposed to say about the company and how each logo helps it compete.
- Then list at least three reasons that you support Chanel or Huawei.
- Write a letter to the Intellectual Property Office in which you express the reasons for supporting Huawei or Chanel.
- Re-gather as a class. Share your letters.