Inside Intel Inside: Case Analysis

Submitted by- Vatsal Goel (FT152079)

Motivation behind the original Intel Inside campaign:

The case with Intels microprocessors during the PC era was that the end customer was never aware of the
entire supply chain responsible for bringing to them a packaged PC that they referred to a computer. In
this particular value chain, it seems that the OEMs or the OEDs, or the most down-stream players would
have the most face time with customers. This situation is not favorable to Intel in the long-run because
despite all the innovation and efforts to stay current, their microprocessors would be, at the end of the
day, considered as commodities. Hence, razor thin margins and competition of price could be expected.
The Intel Inside campaign was an effort to combat this situation and bringing the fact to customers
attention that a microprocessor is the heart of a computer and it matters what microprocessor you have.
Without having to undermine the brand equity of the downstream players, Intel chose a simple message
that made customers aware that their computer has Intel Inside
Apart from the above the creators of the Intel Inside campaign had two other agenda on their minds. One,
to not offend the OEMs and thus create a co-op marketing strategy which would market Intel as the
superior ingredient which makes a great PC. Getting their logo in OEM ads as well as on their products
gave Intel such visibility that no other component manufacturer ever dreamed of. It not only established
Intel as the market leader in PC components, it also created a perceived image of high quality in
consumers minds. It is worth noting that Intel continued to deliver on these promises year after year with
its technologically advanced microprocessors. Second, was to generate more advertising in the industry in
general. The motive was to educate the end customer regarding what goes into the making of a PC, how
are different microprocessors built for fulfilling different needs and what is best suited for their PC usage.

The effect of Intel Inside campaign on consumer decisions:

The Intel Inside logo present on about 70% of PCs selling in the market place created a perception that
the CPU is the most important component of the computer. The point that there were significant
differences in performance across chips was brought up in advertising by print media. Consumers
perceived Intel as a strong brand and hence associated it with safety and reliability. The social scheme of
things was such that an Intel buyer was perceived by peers as modern, high tech and knowledgeable.
Hence, the end consumers were not only demanding to buy PCs which had Intel inside, but were also
willing to pay a premium for it. The users who were CIOs of big organizations responded to advertising by
upgrading to Intels latest chips as soon as they came out in market, which went down quite favorably for
Intel. The advertising results were stunning. For example, late in 1991, Intel research indicated that only

24 percent of European PC buyers were familiar with the Intel Inside logos. One year later that figure had
grown to nearly 80 percent, and by 1995 it had soared to 94 percent and continues at these high levels
today. Ten years into the campaign, products that don't boast the presence of Intel inside are bound to
arouse suspicion among consumers. "People will wonder, "Why don't they use Intel chips? Are they using
something cheaper, or not as good?"

From the point of view of the PC Maker, does the Intel Inside campaign
make sense?
In 1991, Intel launched the successful co-op program in which they convinced manufacturers to place the
"Intel inside" logo unit in their advertising and other marketing material. At first this met with skepticism,
outside the company and within it. But that didn't deter Intel. As well as advertising for itself, it had the
bright idea of contributing directly to PC makers' campaigns-as long as they promoted Intel at the same
time. Intel went to publishers and media organizations and negotiated volume discounts for everyone
who participated in the program. Publishers were excited because the program appeared to bring them
many new advertisers and helped prove the value of advertising. The computer manufacturers got better
rates through the program than they would have buying rate card price. Intel also substantially reduced
the total cost for its own advertising while maintaining high exposure for "Intel inside". Computer
manufacturers began co-branding their computers with Intel, the logo gained wider recognition, and
consumers perceived it as a benefit in performance.
From a PC makers point of view in 1991, the idea of ingredient branding was harmless as Intel was one of
many suppliers and did not have any real power in marketplace. However, as the Intel Inside campaign
gained popularity by the late 1990s Intel popularity rose to such an extent with the end consumers that
anything which did not use Intel chips was considered of sup-par quality. This increased the supplier
power of Intel by many folds and PC makers lined up to get licenses to use the Intel Inside logo on their
products and marketing materials. In the end, the PC makers market remained highly fragmented and
competitive, but since all of them were promoting Intel it became the standard for highest quality in CPU
industry. This allowed Intel to charge premium prices for its products and gain control of around 90% of
the world market. Today, the Intel inside Program is one of the world's largest co-operative marketing
programs, supported by some 1,000 PC makers who are licensed to use the Intel Inside logos. Since the
program's inception in 1991, well over US$3.4 billion has been invested by Intel and computer
manufacturers in advertising that carried the Intel Inside logo.
As a conclusion it can be said that entering into co-op marketing strategy may not have been best strategic
decision for PC maker as an industry, but there are instances such Intel's strategic alliance with IBM
continues to be a strong one which is mutually beneficial. Neither partner is heavily dependent on the
other, yet each benefited greatly from the relationship. No brand dilution has occurred on either side. In
fact the opposite has happened, each party has benefited dramatically from the partnership.