Marketing ManagementCase: Inside Intel Inside

Case Presentation: Inside Intel Inside

Marketing Management Team 4

Table of Contents

1. Intel?

2. Original Motivation Behind Intel Inside Branding Campaign

3. Current Problems Intel Is Facing in the PC Market

4. Extending ‘Intel Inside’ Campaign or Not?

5. Conclusion

Intel Corporation Largest Chip Maker in the World

Question 1. What was the original motivation behind Intel’s decision to launch the Intel Inside branding campaign?

Andy Grove (the chairman of Intel Corporation) &

Dennis Carter (an marketing manager of Intel Corporation)

will talk about the answer.

Problem

Consumers

are not buying

386 processor

Consumers believe 286 is capable of all

the functions that they need to do

CHANGE

of

PERCEPTION

need

How?Through

MARKETING!

Red X Marketing Experiment

Limited Success of Red X

1. Advertising new generation of

product separately each time

‣ Too expensive and

unaffordable

2. Legal problem

‣ Numbers cannot be userd

as product name and be

trademarked

‣ Solution

- Creation of Umbrella Brand

What factors have accounted for the success of the campaign?

1. Designed a Co-op Advertising Program to Enlist OEM’s Co-operations.

‣ Provide Subsidy (Co-op advertisement dollars)

- Pay for half of advertisement cost of OEM partners.

- If they put Intel’s long on their computers.

‣ To induce cooperation of original equipment manufacturer (OEM) partners.

‣ Reduce offensiveness of OEM partners toward Intel Inside advertisement.

Example 1. 3 seconds JingleExample 2. The promotions in retail stores, using end-aisle displays and hands-on demonstrationsExample 3. Intel’s Bunny people characters introduced in 1997 Super-ball game

2. The Ads Showed the Many Different Kinds of Activities.

3. Made Performance-based Products That Has Delivered on Their Message.

IntelReliabilityLeading

Technology

Intel’s brand promise (Core Value)

‣ Intel’s breaking through advertisement

‣ Manufacture’s direct appeal to PC consumer

‣ Change of paradigm in PC purchase resulted by Intel Inside

- Consumer buy computer because Intel is inside of it

‣ This could be successful because

- Intel is the Leading microprocessor company from the beginning

- Their advertisement was backed up by technology

3. Made Performance-based Products That Has Delivered on Their Message.

The Results

0%

7.5%

15%

22.5%

30%

1991 1992 1993 1994 1995 1996 19970MM

7,500MM

15,000MM

22,500MM

30,000MM

NI Margin (LHS) Revenue (RHS, $) Net Income (RHS, $)

Question 2. What are the current problems Intel is facing in the PC market?

Pamela Pollace, the vice president and director of worldwide marketing operations, gives us the answer.

Threat 1 - Reliability

1994:

Discovery of

minor flaw in

Pentium

processor

by end user

Highly

publicized

Direct attack

against

Intel’s

core value

of

Reliability

Result:

Fury

of

negative

publicity

Threat 1 - Reliability

Threat 2 - Market Share in Low End Market

60%24%

16%

Market Share in Low End Market

AMD Intel Others

1995 1996 1997

MarketShare

ofSub

$1,000PC

3% 5% 20%

Threat 3 - Leading Technology

0

250

500

750

1,000

1,250

19961997

19993/6/2000

3/8/2000Intel AMD

Intel lost its leading technology image of overwhelming performance advantage

0%

4.5%

9%

13.5%

18%

1995 1996 1997 1998 1999 2000 20010MM

10,000MM

20,000MM

30,000MM

40,000MM

R&D/Revenue (LHS) Revenue (RHS, $) R&D Cost (RHS, $)

Threat 3 - Leading Technology

Question 3. Should the company extend the ‘Intel Inside’ branding campaign to other non-PC categories such as cell phones and PDAs? Why or why not?

Now, it’s our turn.

First Thing to Ask:Should Intel Extend Brand in Non-PC Categories?

• While PC markets are in a slump, mobile markets are rapidly growing.

• This could be a profitable opportunity for Intel to maximize its profits.

Answer? Yes!Intel Should Extend Brand in Non-PC Categories.

0

100

200

300

400

19971998

19992000

2001Desktop PC Portable PC PDA Mobile Phone

Sales Revenue:From 1997 to 2001

Possible Choices

‣ Extend brand tomobile phonemarket

‣ Find market that isrelated to PCindustry, other thanmicroprocessor

✓ Categoryextension

For both option, Intel’s leverage and fit need to be studied.

Prototypicality & Brand Extension

Problem Intel Currently Faces

Wha

t is In

tel’s

levera

ge?

Concre

te Le

verag

eable

poin

t,

but,

limite

d ex

tendib

ility

Even t

hose

trad

itiona

l

levera

geab

le po

ints a

re sh

aky

Intel

= Micr

opro

cess

or

Lead

ing Te

chno

logy

in Micr

opro

cess

or

Poten

tial p

ossib

ility o

f dilu

tion

In 20

00, A

MD surp

asse

s Inte

l

Intel, what to do...

Timing of brand extension?‣ Strengthen superiority in microprocessor market first

Timing of brand extension?‣ Need to extend brand to different category

Pro:

strengthening

its original

brand identity

Con:

already saturated PC

market, increased

R&D cost without

result in 2001

→ risky

Possible Category Extension: Mobile Phone

1. Mobile phone market’scharacteristic

2. Design > Technology

3. To be successful,Intel need to break awayfrom the image‘Intel = Microprocessor’

4. How?

5. Short term:creation of sub-brand

6. Long term:concrete leverage point→ Abstract meaning transform

Short Term Marketing Strategy:Joint Venture

Example: Intel + Microsoft + Samsung (Chip) (Software) (Hardware)

Category Membership

Creation of Endorsed Brand;Utilize the well established brand image of MS, Samsung

At the same time, minimize brand relationship between Intel and the New Brand specifically created for mobile phone market

Result: minimizing the diluting effect of current brand image of Intel

Category Extension : Mobile Phone

• Mobile Phone market’s characteristic

• Design > technology

• Microprocessor 에 국한되어 있는 image 를 탈피 해야함

•

‣ Intel inside → direct reflection of microprocessor

‣ Change the Slogan

‣ Highlight superiority of Intel’s technology in various market not just PC

‣ Marketing strategy; in TV advertisement, do not use jingle, do not show image of microprocessor or silicon or any product that reminds of PC

Long Term Marketing Strategy:Abstract Marketing to Grow Intel’s ‘fit’

‣ After given the more ‘fit’, Intel should apply their leverage to non-PC categories that related with high technology in Intel. (Sub-brand type)

When abstract meaning established

TV

PMP

Network

Other Possible Extension

Highlight Intel’s brand image of Reliability

Example: Storage devices such as SSD

SSD put emphasis in reliability.Once data is lost cannot be retrieved.

In this area, ‘Intel Inside’ campaign still can be applied

Though they are category extension but show strong both fit and leverage

Brand New Intel Corporation The Ideal Technology

Thank You for Listening

Q & A

Thank You for Listening