In Niō prefecture, where my campaign takes place, all ogres (oni) and demons (yōkai) have an associated color (by and large—there are exceptions). I've been naming monsters this way for ages. To me, "Yellow Bull Demon" or "White Ritual Demon" are evocative sequences of words in of themselves, and each immediately provokes a host of images when I hear it.
Color-coding demons and ogres also has mechanical implications for how they interact with dyed swords, as below:
- Ogres take half damage from regular weapons, full damage from silver weapons, and double damage from dyed swords that are the opposite color of the ogre
- Demons take no damage from regular weapons, half damage from silver weapons, and regular damage from dyed swords that are the opposite color of the demon
Besides giving the campaign a unique bit of flavor and another layer of mechanics, I like this rule because it allows me to offer a reward between mundane weapons and magic weapons. I don't like to distribute +1 swords too early in the campaign, so colored swords serve as a useful stand-in. Besides, players love to collect them. In the last campaign I ran with this mechanic, players devised whatever means they could to acquire dyed swords, knowing that they were often the only tool one could use to drive back malicious demons.
I never quite decided what should happen if a player struck a demon with a sword colored the same as it was. I'd be curious to hear suggestions.