Intel The Component Branding Saga

Introduction
Intel was founded in mountain view, california in 1968 by Gorden E. Moore, Robert Noyce and Aurther Rock Total initial investment in intel was $ 2.5million and $ 10,000 was from rock Integrated electric corporation Largest semiconductor chip producer in the world

 Manufactures the processors that are used in the majority of laptop computer and makes many devices that relate to the computing and communication

Biggest customer are hawlett-packerd and dell

According the report in Q1 of 2010, Intel achieved a net income of $2.4 billion on revenue of 10.3 billion

 Intel Corporation is an American multinational semiconductor chip maker corporation headquartered in Santa Clara, California, United States. In 2010 Intels brand value is at number 48among 100 top companies of the world.

Year 1971 1972 1974 7978 1982 1995 1989 1993 1995

Product category 4004 microprocessor 8008 microprocessor 8080 microprocessor 8086-8088 286 microprocessor Intel 1386 Intel 486 DXCPU Pentium processor Pentium pro processor

description First microprocessor Twice power full than 4004 Became brains and worlds first pc Used by IBM, it was brain for IBM pc First processer compatible with all s/w Consisted 275000 transistor 100 times more than 4004. It was designed for 4th generation computers. Designed for real world such as speech, sound Designed for 32- bit server & work station app.

1997
1998 1999

Pentium 2 processor
Pentium 2 xeon 1) Celeron processor 2) Pentium 3 processor 3) Pentium 3 xeon pro

Specially designed for video, audio and graphic

It features technical innovations . 1)Designed for pc marked segment . 2)It featured 70 new instructions 9.5 transistor, 3g, streaming audio video . 3) This is extended offerings of Pentium processor

Year 2000 2001

Product category Pentium 4 processor 1) Intel xeon processor 2) Itanium processor

description This incorporated 4 million transistor with 0.18 micron. 1)This targeted high performance & mid range dual pro. 2)It was designed for high end enterprise class servers .s

Market of Microprocessors
90 80 70 60 50 40 30 20 10 0 Intel AMD Others

1998 49.3 32.1 18.6

1999 46.7 38.8 14.5

2000 82.2 16.7 1.1

2001 78.7 20.2 1.1

Need For a Component Branding

PC users were not aware of the availability of advanced processors and their cost saving performance. They realized the need to create more awareness about itself and its products among consumers. A small marketing group used to interact with the IT Engineers who used to come to purchase PCs and briefed them about advancement in the processors.

 Lost court case against AMD. The decision to go for component branding.

Marketing Of Microprocessors
The most innovative strategy was to communicate directly to end users. Company came up with a new logo INTEL INSIDE inside a circle and a tag line was accompanied which was very catchy. 5 % of the purchase price of the micro processors was kept aside for advertising funds. Intel released its first TV advertisement In early 1992, stressed on power speed and affordability of the chip.

 After the advertisements Intel became very familiar with European PC buyers. Intels marketing efforts not only increased the demands for chips but demand for PCs also around the world. In 1997 Intel started advertising on the web and also encouraged PC makers to use this media.

Need For a Component Branding

Intel entered into tie ups with many companies from experience vendors in the US to countries like Japan and Poland for innovative web based marketing and sales deals. Started selling IT books, caps. T-shirts, key chains, pens, coffee mugs etc. Provided services in (Chinese and Japanese) other than English language. Besides PC manufacturer the company marketed to industrial equipment company, military equipment and communications industries.

Examine the business environment in which Intel began selling its microprocessors in early 1980s. Why did Intel decide to intensify its marketing activities in 1990s.Examine Intels decision to target the PC end users through its marketing campaign? Discuss.

Scenario of 1980s
8086 8088 chip
Released in 1978 Chip had a huge success It gave major boost to Intel and increased its overall sale Intel emerged out as widely accepted supplier of microprocessors

 80286 chip
Released in 1982 Also known as 286 It was a huge success as well In 6 years after its invent it reached 15 million PCs all over the world

386 chip

486 chip

Released in 1985 Released in 1989

 During this period Intel produced new and more advanced processors Features of processors
Improved PC performance Higher processor speed Reliability Transformation to a device which offered
Information Entertainment Education

Marketing activities in 1990s

Need to increase marketing efforts
Before 1990, chips were used by OEMs in device and customer hardly new about the chips of Intel So there was no awareness of Intel chips in mind of customer

Marketing Activities

First marketing initiative in 1990 to market 386SX chips Customers were briefed about advantages of chips Increase in sale of 386SX chips

 Legal Problems
Intel allowed competitors like AMD to manufacture chips by giving them license AMD sold at cheaper rates and increased market share by 52% Intel assumed 386 & 486 were protected trademarks and no one can use them AMD sued Intel for breach of contract Court stated that processor numbers were not trademarks

Comment on the coop marketing strategy and the execution of the Intel Inside Campaign.

 COOP Marketing Strategy

Cooperative advertising program

5% of purchase price was kept for advertising funds

This fund was given to OEMs for print advertisements of Intel Logo
Very popular gaining campaign

Many OEMs joined program

By end of 1991, around 300 PC OEMs joined

 Intel Inside Campaign

It was a part of component branding strategy Aimed at gaining customer confidence in Intel as a brand Dahlin Smith and White designed campaign in 1991 for Intel products

Used tagline Intel The Computer Inside

 Aimed at
Importance of microprocessor in PC Reliability Safety Technologically advanced

Changed to Intel Inside

 Logo Design

Necessary component Verified and approved quality Brand has implicit seal of approval

 Intel has been taking customers for a ride by over-pricing its chips and offering less efficient processor than its competitors. Critically comment on this statement in light of the fact that Intels performance had declined drastically in the early 21st century. What kind of marketing strategies should Intel adopt now to increase its profit margins?

 Intel introduced P4 in 2000 Its performance was less powerful then its earlier version P3 and AMDs Athlon chips Thus P4 was over priced and was inefficient

 Thus in 2002 it faced nationwide action suit against P4 for its performance At the same time AMD increased its marketing for products to increase its market share

Marketing Strategies
Introduction of new P4 version Should have better performance and speed Should understand pricing of product according to market prices It should bring print media campaign which focuses core aspects of newer version

Current Scenario
IHS analysts have revealed that Intel has increased its share of the global microprocessor market in the third quarter to 83.7 percent. Intels market share jumped by 1.2 percentage points compared to the second quarter, with strong sales of notebooks and the popularity of the tablet market helping to increase its lead over rival AMD, who has suffered a share drop of 0.3 percentage points, to 10.2 percent.