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In logo design, there are five essential rules that serious graphic designers should follow. One common mistake is replacing a letter in the logo with a relevant symbol or graphic, which often leads to ineffective designs. To illustrate this point, the video references a British television show where contestants, vying to work for a successful tycoon, designed logos for a baby food company. One team's logo exemplified how poor branding decisions can fail to instill confidence in a product. This highlights the importance of adhering to established design principles to create impactful and professional logos.