All major corporations have specific features that distinguish them from other companies, such as a logo, copyrighted materials, or a trademark. The essay evaluates the different aspects of the Coca-Cola trademark. The Coca-Cola trademark has proved to be priceless to the corporation in retaining and attracting new customers. Apart from the historical overview, the approaches of the global corporation to using its trademark in the balance sheet is be highlighted. The paper concludes by outlining the reasons that make trademarks an asset and the need to protect it from exploitation by other organizations.
The History of Coca-Cola Trademark
Companies strive to create trademarks that have a significance impact on their products, services, and even their customers, to a great extent. The Coca-Cola Company along with trademark is probably the most popular in the world. The Coca-cola logo has a long history since it was first created in 1886 by Frank Robinson. When Robinson was creating the trademark,i.e. Coca-Cola®, the entrepreneur suggested that a name with two ‘Cs’ would be easier to advertise (The Coca-Cola Company, 2012). The ribbons on the letters Cs as well as the flowing handwriting further enhanced the uniqueness of the Coca-Cola trademark (The Coca-Cola Company, 2012).
Since its introduction, the logo has undergone various transformations, but the name has remained the same to the present. For instance, during the first seven years of the logo’s existence, the word trademark did not appear in the name. However, in 1893, after patenting the brand, the trademark became part of the logo (The Coca-Cola Company, 2012). Further, the trademark name was in the tail of the first C, but in 1941, it was changed based on the U.S authorization. This version was used for a few years before settling on a more simplified logo in 1962 (The Coca-Cola Company, 2012). Nevertheless, to recapture its market share from Pepsi, in 1985, the corporation introduced a fresh trademark called “Coke.” The company used the logo for two years only because the consumers were not impressed and refused to buy the products. Amidst all the transformations, the company settled on the present logo in 2009, which has the small R representing a trademark (Smith, 2013).
The Value of the Coca-Cola Trademark
As one of the most valuable trademarks in the world, the Coca-Cola trademark has various advantages to the corporation. The first and the most significant benefit is that the trademark restricts other corporations and individuals from creating similar products. Therefore, the company has succeeded in developing a monopoly in the market. If a competitor tries to produce drinks under the same name, the corporation can take a legal action for trademark infringement. Furthermore, the trademark is a single identity the consumers can use to recognize the analyzed brand. A majority of the customers buy the corporation’s drinks due to its name. If the company changes its trademark today but retains the drinks’ formula, most consumers would not buy the products. As a result, brand recognition is vital to the success of any company. For instance, the colors of the trademark, which are white and red, also attract consumers. The sophistication of the company is highlighted by the white color, while the red color mostly appeals to the youths (Smith, 2013).
In this respect, the Coca-Cola trademark is ranked as the third most influential global brand nowadays (Pham, 2014). In particular, the value of the trademark was estimated to be worth $81.6 billion in 2014 (Ryan, 2015). The trend signified an increase by 3% as compared with the previous year.
The trademark is also valuable since the Coca-Cola Company has used it to venture in other countries. According to Brookman (2014), such trademarks as Coca-Cola signify a high quality of the company’s products in consumers’ perception. Equally, the shareholders of the Coca-Cola Company have gained goodwill from the trademark over the years based on the company’s long-term quality reputation (Tankha & Bout, 2010).
Accounting Treatment of the Coca-Cola Trade mark and Related Costs in the Balance Sheet
Company trademarks are recognized as intangible assets as they greatly contribute to the overall profits of the business. Therefore, whenever a corporation is preparing its financial statements, it should put a trademark in the non-current assets section of the balance sheet (E. Stice & J. Stice, 2013). An example is an enterprise recording the value of its purchased trademark in the balance sheet. In such a case, the cost of the trademark must appear in the balance sheet as a long-term asset.
For instance, during the year, 2010, 2011, 2012, 2013, and 2014, the trademark was recorded under the category of ‘Net Intangible assets.’ This circumstance is a clear depiction that the Coca-Cola Company holds its trademark with high regards. The trademark is usually treated as an asset, even though it is not tangible, because of the significant impact it has for the company. As noted earlier, the corporation has embarked on joining forces with major influential global organization to induce more demand for its products, especially through using its trademark (Ryan, 2015). Therefore, Coca-Cola Company recognizes its trademark as a very important asset that helps it maintain its global competitiveness.
Companies should adopt effective ways of shielding its trademark from other businesses due to the potential value it embodies. The most efficient method of ensuring that corporations have exclusive rights to their trademarks is through registration. A majority of small companies ignores the above issue and operates without registering their trademarks. Such negligence may result in various losses due to counterfeits of the products as well as confusion of the customers. Miller (2014) notes that registering a trademark is a way of providing business organizations with legal rights. In this way, a company can recover damages from another enterprise using the trademark without permission and block the competitor from applying it further.
The founder of the Coca-Cola Company seemed to have realized this and ensured that the trademark was patented right from the onset. In fact, the move had made the company realize long-term benefits as it has created a surge in the demand of the Coca-Cola’s product. The trademark has become a global household name. The trend can be heavily associated with the company’s decision to list its trademark as a valuable asset. For instance, the recent move of merging with other companies, such as Google, meant that Coca-Cola had to allocate some funds for the activity (Staff, 2014). However, the results are paying as the move has helped the company experience a surge in the number of customers and top rating among other global brands. Therefore, there is much to learn from the Coca-Cola Company’s trademark.