Keywordsagency theory city brand logo marketing communication theory payoff
JEL Classification M31
Many organizations across the globe spend substantial sums of money designing, building and sustaining their product, service or place brand logos in a market that has become cluttered and crowded with competing brands. In 2014 the City of Cape Town (CCT) introduced a new logo and pay – off- line amid considerable controversy and resistance from the city’s residents and other stakeholders. The introduction of the new logo and pay –offline seems to have by-passed public participation in the process for a couple of reasons and this compounded the stakeholders’ suspicions about the whole process. This paper seeks to evaluate the residents’ perceptions regarding the introduction of the new logo and pay – off line of the CCT. The study also seeks to assess the City’s handling of the perceptions from the local stakeholders regarding the new logo and pay –off line. It seeks to ascertain the extent to which they was stakeholder participation in the whole rebranding exercise and whether their sidelining, if any, influenced perceptions of the new logo and pay-off line. Walsh, Winterich and Mittal (2010) elucidate that not all consumers view changes in brand elements such as logos similarly. The local stakeholders included businesses, organizations and residents of the CCT in South Africa. Interest in this empirical study emerged after the recent introduction of a new logo by the CCT. Hem and Iversen (2004) postulate that the main goal of a logo is to enhance awareness about a place and to build a beneficial place image. The process of developing a place logo should involve the owners of the logo, the logo developers and the logo stakeholders (ibid).
1.1. Purpose of the Study
The purpose of this study was therefore to assess local stakeholders’ response to a change in the logo of a CCT brand. A cursory glance at available literature indicates that the CCT unilaterally introduced the new logo and pay –off line without public participation. This partly motived this study, hence the desire to assess the stakeholders’ views regarding that change in the absence of their input. Several studies have been carried out on the impact of corporate and product/service brand logo re-designs on consumers’ attitudes and perceptions. However, very little, if any, literature is available on the impact of a change in a city brand logo on local stakeholders’ attitudes and perceptions of a city brand. The study also seeks to assess how lack of stakeholders’ participation may influence the stakeholders’ reception about the city brand’s communication.
In 2014, the CCT introduced a new logo to replace the old logo that was designed in 2003 (CCT, 2014). The CCT asserted that its previous corporate identity and pay-off-line were approximately ten years old and had thus has become outdated and misaligned with the current values, strategy and vision of the city (CCT, 2014). The previous pay –off line, ‘The City that Works for You’ implies redundancy on the part of the residents, hence the misalignment with the strategic direction that encapsulates inclusivity which the City now intended to take. The CCT authorities now wanted active involvement of the stakeholders in the affairs of the city. When the new logo was introduced, the City received several thousands of objections from residents who felt that there was nothing wrong with the old logo and therefore there was no need to change it. Most importantly, the residents argued that they had not been consulted by the City management during the process of developing the new brand logo. On the other hand, the city authorities argued that the decision to change the logo does not require public participation (Herman, 2015). Supporting this argument (Budlender, 2015) noted that "many other organs of state have adopted new logos without following a public participation process." The City therefore went ahead and rolled out the new logo.
The designing of the new logo cost the CCT R313 720 that was paid to an advertising agency called King James (CCT, 2014). While this cost was fairly alright, it is the rollout amount of R7 million that outraged residents who described the rebranded logo as looking like a gear cog, a Rotary logo or a police badge (von Ulmenstein 2014). Irregularity was alleged in the tender awarding process because the company that won the tender, King James, had previous links with Carol Avenant of the City’s Integrated Communications and Branding Department that spearheaded the rebranding process. This, according to the residents, raises some conflict of interest in the tender awarding process.
2. Literature Review
2.1. Theoretical Underpinning
The paper is underpinned by two theories namely a theory of participation in democratic governance as well as the marketing communication theory.
A theory of participation in democratic governance emphasizes the need for participation of stakeholders in the governance of a public entity. In the context of public management transparency is vital and that speaks to the ability of the stakeholders to find out what is happening in government or local government (Krah and Mertens, 2020). Democratic governance which is the in- thing in the 21st century hinges on public participation in public governance. Transparency and participation are the cornerstones of democratically run public entities. The stakeholders have a right to know what is happening within a public sector organization, including accessing information as well as giving input in decision- making.
A specific public participation theory that is applied in this paper is the agency theory. According to this theory in an entity such as a local government like CCT municipality, the city fathers are the agents of the principals. The agency theory provides one of the theoretical lenses of this study because the residents are taken to be the principals and city/municipal management become the agents. The agents run the council on behalf of the residents (principals). However, the agent- principal relationship is riddled with problems called agency problems. Agency problems arise when the interests of the agents are tangential to the interests of the principals. A self- serving agent is likely to avoid full disclosure of information (especially financial disclosure) to avoid monitoring and evaluation by the principal (Miller, 2005). Agents may be motivated by the need to line their pockets, getting the most out of their management expertise and once this happens this could be at the expense of the interests of the principals (residents). Service delivery might be compromised in the process because the same money that the agents could be after is the one that should go towards service delivery. Checks and balances have to be put in place to reduce the agency problems that are inherent in a principal -agent relationship. The checks and balances can assume the form of a carrot and stick approach. Ensuring public participation in budgetary processes and general transparency are some of the ways of making sure management is forced to act in the best interests of the residents (principals). Management could also be taken to account by the various bodies that act on behalf of residents such as residents associations and other lobby groups in the city like different political parties with a representation in that city. Their performance or service delivery could be incentivized so as to get the most out of their management expertise. Use of censures and incentives gives rise to the carrot and stick approach which has been deployed to varying levels of effectiveness in different organisations.
The papers also makes use of the marketing communication theory. Buttle (1995) says there are five ancestral communication theorists namely Lasswell, Shannon & Weaver, Schramm, Berlo and Klapper. Marketing communication can be thought of in terms of communicative practices which are designed to produce cognitive, affective and behavioural outcomes in the target audiences that could be internal or external stakeholders of the organization (Buttle, 1995). Lasswell (1948) says a convenient way of describing an act of communication is to say: who (control analysis), says what (content analysis), in which channel (media analysis), to whom (audience analysis), with what effect? (effect analysis). This conception is quite applicable to the CCT’s introduction of the new logo and pay – off – line, hence its application in this study.
One of the major problems of marketing management is to determine, ahead of use, the most effective communication to be used and to measure the extent to which the persuasive communication would have succeeded (Baker, 1976, p.67). Persuasive communication is concerned with inducing the right kind of response from the audience targeted by the communication. Increased awareness and improved attitudes are some of the goals of persuasive communication. Success of persuasive communication depends on the characteristics of the audience (Baker, 1976). The audience is no longer a passive receiver of information but an active seeker of information. In other words, the audience is now an enlightened one, often seeking answers relating to accountability from the city authorities.
Promotional effectiveness is also reflected in increased awareness of that which is being promoted. This led to the ‘stimulus- response’ model as well as the ‘hierarchy of effects’ concept (Baker, 1976). Much of the work on early marketing derived from the ‘stimulus – response’ theory. Advertisements were perceived as stimulus which elicited some response from the audience. The stronger the stimulus – response connection the more positive the desired behavior or outcome from the target audience. However, it was later found out that even as the audience was “hit” by the stimuli some did not respond in the anticipated manner. This led to the development of a ‘hierarchy of effects’ model by Lavidge and Steiner (Baker, 1976), meaning that there could be several results from the same stimuli that are not necessarily the desired outcome. It would be a series of outcomes with some on a continuum or hierarchy. This pints to the existence of some ‘halfway house’ responses from the stimuli that are not necessarily the desired outcome.
Increasing dissatisfaction with the early ‘stimulus – response’ model of communication led researchers such as Schramm (1965), Bauer (1964) and Klapper (1960) to propose that communication should be understood as a transaction. The audience is active rather than passive. With this perspective, communication can be successful or otherwise due to a number of factors such as the perceived credibility of the source of information, the message, the channels of communication and the receiver or audience (Baker 1976: 74). So media is only one of the several factors acting on the receiver of information to influence the success (or failure) of communication.
If the audience thinks that the source of the information is credible that information is more likely to be well received than where there are doubts about the credibility of the source. Communication or the message itself could also influence the reception of persuasive communication. Similarly, Klapper (1960) found the media to have considerable influence on how persuasive communication can be received.
Schramm (1961) says that when we communicate we are trying to establish a ‘commonness’ with someone. He says all communication involves three elements: source, message and receiver. The source encodes the message, transmits it and the receiver decodes the message. If encoding and decoding go well communication goes on smoothly but some distortion could occur along the way leading to disruption in communication. Schramm also says that it is misleading to think of the communication process as starting and ending somewhere because there is constant receiving of codes from the environment and continuous decoding. Feedback tells us how our messages are being interpreted. In a way, the communication process should be seen as two separate acts, one performed by the sender and the other by the receiver. According to Schramm (1961) the study of communication is essentially the study of people in relationship. When the relationship is bad, that negatively affects the communication. In this case, CCT’s side-stepping of the residents in the rebranding exercise contributed to breakdown in relationship, hence the negative feedback from the residents on the city rebrand.
2.2. The Research Objectives
This study sought to provide answers to three key objectives. The first objective of the study was to evaluate stakeholders’ perceptions of the new logo. The second objective was to determine whether stakeholders’ perceptions of the new logo affect their overall evaluation of the city brand. Finally, the study also sought to assess the level of stakeholders’ involvement in the logo re-design process and therefore establish whether their level of involvement in the process has a bearing on their evaluation of the logo and ultimately the city brand.
2.3. Conceptual Framework
A logo can be defined as the graphic and typeface element or the visual representation that an organization uses to identify itself (Bennet, 1995). The logo may have the name of the organization attached to it or may stand independently without the name of the organization. According to Biricik (2006, p.35), branding is extremely important in today’s marketplace and one effective way of creating, maintaining, and leveraging a brand is through the effective design and use of a brand logo. Reinforcing the importance of logos in branding, Peters (1999) asserts that “…humans think visually, a picture is really worth a million words and great brands have readily identifiable icons, just ask Nike or Apple or Shell; strong simple images that connect with customers”. Henderson et al. (2003) elucidate that names and logo are generally considered to be the main brand identity signs, since they are critical communication cues. Pay-off line are the words or phrase that accompany the logy.
2.4. Reasons for Changing a Brand Logo
Muzellec and Lambkin (2006) assert that there are several reasons why an organization may change its logo. Logos play different roles in brand management. Pfizer whose logo has been changed as illustrated below is one company that engaged in a logo brand change to increase its visibility.
They act as facilitators to speed up recognition of a company or brand (Peter, 1989). Companies invest significant amounts of time and money promoting, updating and changing their logos (Colman et al. (1995). A brand's logo has typically served as a means for resolving the problem of indistinguishability (Park et. al. 2012). According to Schuhbauer (1996) symbols act as support for a feeling of place identity. The place logo can be understood as the graphical counterpart of the place name. Similar to the place name, the logo signifies a location and thereby enables the location to be communicated and distinguished from other locations (Mueller and Schade, 2012).
3. Research Methodology/Approach
The study was done qualitatively. This methodology was chosen so as to gather deep insights from the respondents about the phenomenon under investigation. Primary data was integrated with secondary data as well as reports from CCT. In terms of timeline this was a cross-sectional study that sought to capture the views of the residents of the CCT about the City’s logo and pay- off- line. A cross-sectional study is a snap shot project that investigates a phenomenon at a particular point in time. Cooper and Schindler (2014:128) point out that cross-sectional studies are executed out once and highlight the situation at a specific point in time. A combination of in-depth interviews with purposively sample residents and expert interviews were done. Respondents were selected in town on the basis of preliminary questions like whether they were Cape Town residents and how long they had stayed in the City. These types of interviews were chosen so as to gather as much detail as possible from the respondents with interrupting them while responding. The challenge with such open – ended interviews relate to analysis. In this case, the thematic approach to data analysis was adopted where themes emerging from the data were grouped together. During the primary data collection, ethics such as informed consent, anonymity and voluntary withdrawal were upheld.
4. Findings and Discussion
The study sought to find out the impact of city brand logo re-design on local stakeholders’ attitudes and perceptions towards the city brand. It also sought to find out the extent of participation of the residents and other stakeholders in the rebranding exercise and whether that participation or lack of it coloured their perceptions regarding the new logo and pay – off line.
4.1. Level of Involvement in the Logo Re-Design Process
The majority of the residents that were included in the sample for the purposive interviews stated that they were involved in the logo re-design process. This finding indicates that the majority of the respondents were not involved in the logo redesign process yet in the spirit of transparency and inclusivity they were supposed to have been consulted. In fact their lack of participation gets corroborated by council communication that states that management was under no legal obligation to consult with them. Good governance of public entities such as a city municipality should entail public participation, transparency and accountability in order to avoid agency problems. These values are also vial for shared management and better service delivery.
4.2. Level of Awareness of the New Logo
The gathered data clearly shows that most of the stakeholders were aware of the new logo even though the majority of them were not involved in the logo re-design process as indicated elsewhere. However, this does not mean that they agreed with the move to rebrand and the final design that CCT came up with. Awareness with the new logo is one thing and approval of it a completely different matter.
4.3. A Comparison of the New Logos
When the two logos were juxtaposed, most of the respondents were able to distinguish the new logo from the old logo and this clearly demonstrates a high level of brand recognition. Of the purposively selected sample, 50% of the respondents strongly disagreed and disagreed with the assertion that the new logo is better than the old one whilst only 22% were in favour of the new logo. 45% of the respondents felt that the City should have kept the old logo. The rest were neutral. This data clearly shows that the majority of the respondents preferred the old logo to the new one.
4.4. Overall Assessment of the Logo
When asked about their overall assessment of the new logo, most of the respondents indicated that the new logo is bad. Asked whether their perceptions about the new logo were influenced bout their lack of participation a considerable number of residents stated that they would have suggested better designs. This, to a considerable extent, vindicates the view that residents’ perceptions about the new logo and pay –off line were to a large extent a function of their lack of participation in the whole process. In other words, negative perceptions were fortified the moment they realized Council had done its own things behind their back. This was especially so because they felt that they should have been consulted since management should act in their best interests. They said as much as possible they should be given a chance to voice their own concerns rather than for council to decide for them. Some even argued that the same way they are consulted in budget processes or reviews is the same way they should have been involved in the rebranding exercise.
When asked what the new pay – off line, “Making Progress Possible. Together” meant, many of the residents professed ignorance. The CCT management explained that unlike the previous ‘The City that Works for You’ which implied redundancy on the part of residents, the new pay- off line highlighted the new strategic intent of the City. It represents a shift from passivity in service delivery to shared responsibility for mutual success (CCT 2014). The new line implies empowering citizens in their diversity to make the most out of the opportunities that City has to offer. Persuasive as this explanation might be, it can be argued that the CCT management was being contradictory. They were signally right while turning left. If they really meant shared responsibility in the letter and spirit of the word, they should have ensured residents’ participation in the whole rebranding process.
The above results clearly indicate that most of the respondents were aware of the new city brand logo but were not in support of the logo. This overall perception was largely driven by the fact that the majority of the stakeholders were not involved in the process of developing the new log and hence they have a negative perception of the logo with some stakeholders actually indicating that the City should revert to the old logo. The study also found out that many stakeholders do not really consider the logo as very important in their day to day decision- making and they remain committed to the overall city as a brand.
5.1. Theoretical Implications
The study was underpinned by two theories, viz the agency theory and the marketing communication theory. Both theories proved quite applicable to this study. The moment CCT management made decisions that involved spending as much as R7 million in the rollout programme of the new logo with residents’ involvement that produces agency problems. Under that murkiness suspicions of financial impropriety by city management get traction. The findings clearly show that the non-involvement of stakeholders in the logo re-design process affects stakeholders’ perceptions of a city brand logo. Stakeholders’ participation in the whole rebranding chain was supposed to enhance transparency and accountability and therefore reduce agency problems.
Another theoretical implication that derives from the marketing communication theory is that for better effective mass communication, the credibility of the communicator needs to be accepted by the residents so that they positively receive the message. The appropriate media also has to be chosen so that communication becomes effective. In this case, despite the fact that the new pay –off line is better than the old one from a neutral point of view, residents did not receive it well because they doubted the credibility of the source of the communication.
5.2. Practical Implications
As a practical implication, municipal activities that bear on service delivery need stakeholder participation because it is meant to benefit the residents. In the letter and spirit of democratic governance, transparency is a virtue that transcends legalistic considerations about ‘going it alone’ on the part of municipal managers. CCT management argued that the municipal act does not mandate them to involve residents in the rebranding exercise. However, it was prudent to involve them since the rebranding was actually intended to benefit the residents.
It is imperative for a city brand to develop a long-term and mutually beneficial relationship with its stakeholders. It is therefore vital for city branding practitioners to appreciate the fact that the brand logo is a critical element of the brand. It is more than apparent that any exertion to alter one or more brand elements may generate negative perceptions from stakeholders’ leading to an erosion of brand equity. Mutual relationship removes suspicions. However, this is largely dependent on the level of commitment or attachment stakeholders’ have to the brand. It is therefore important for stakeholders to be involved in the development of a city’s brand and its component features such as the logo and the slogan.
There is very little research, if any at the moment, on the impact of the introduction of a new city brand logo on local stakeholders’ attitudes and perceptions of the brand. The originality of this study can be thus regarded as high because it is the first study that demonstrates how the introduction of a new city brand logo has impacted on local stakeholders’ attitudes and perceptions towards that brand. As such, this study should therefore be regarded as a novel approach to establish a theoretical understanding and framework of how local stakeholders assess a new city brand logo. Lack of stakeholders’ involvement may impact on their attitudes and perceptions of the city brand towards negativity.
6. Conclusions and Recommendations
The study assesses stakeholders’ perceptions of the city’s rebranding exercise which entailed finding a consultant to redesign the City’s logo and pay-off line. The study found out that the City authorities by and large by-passed stakeholders’ participation in the process and this creates challenges for participative governance. That the City management acted unilaterally under legalistic justifications stimulates stakeholders’ negative perceptions about the whole exercise. This raises suspicions of financial imprudence if not outright lack of financial transparency and that raises agency problems. Residents and other interest groups think that they were sidelined in the rebranding exercise because CCT management wanted to favour certain individuals or companies in appointments to carry out the work. Some have even argued that the whole exercise was a waste of money since the old logo and pay -off line were still serving the city well.
When the audience has doubts about the credibility of the source of information that affects the chances of positive reception of the message as articulated by the marketing communication theory. Operationalization of public participation is vital so that the receivers of the communication do not receive the message negatively. Information sharing especially in processes leading up to major policy changes is the cornerstone of success.
The process to alter the elements of a place brand needs to involve all the brand’s stakeholders. From this study’s finding alluded to above, it is evident that the level of involvement of these stakeholders in the process of re-designing and implementing will influence their assessment and overall perception of the new logo and the brand that emerges out of that process. City authorities and brand developers are therefore encouraged to ensure effective stakeholder participation in the logo re-design and brand building process in order to increase the level of brand awareness, brand recognition, brand commitment and create a positive perception of the brand by its stakeholders. Without an alignment in the interests and perceptions of the residents and city management there are bound to be some agency problems and so to ensure congruency in these variables the agency theory is useful.
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