INSIDE INTEL INSIDE

By Pritam Priyadarshan Tamal Mallik

Background & History

Founded in 1968 by Robert Noyce and Gordon Moore Initial focus was on developing semiconductor memory for main frame computers and minicomputers. And later in 1970s Intel went into microprocessors. Since then it is evolving by continuous innovation in microprocessor sector and remained #1 position in market share.

Evolution of MARKETING
Before 1988 Intel was not bothering about its marketing as being the #1 and having a virtual monopoly. But after that Intel realized the upcoming huge competition decided to integrate marketing to its business. The first step that Intel took is well known as Red X campaign. This is the 1st step that Intel took to educate the end users about the inside core of a PC.

 Reasons against no adoption of 386 a) user belief : 286 was capable of doing everything b) software of 286 were not compatible with 386 Billboards having a red cross on 286 was put followed by another one showing 386. This campaign is carried out 10 other cities and was a success and create an excitement inside company as it is its 1st one.

The Intel Inside Campaign

Reasons a) Company couldnt afford to brand each generation of product. b) Judge recently ruled not to trademark just chip numbers like 286, 386. So Carter decided to create an umbrella brand Initial Tag line was Intel. The Computer Inside Question by Original Equipment Manufacturer(OEM) was, If Intel is the computer than what are we?

 Then Intel started the Co-op Advertising program. Part of the advertising expenses are shared of the OEMs if they bear Intels logo Carters Goal: a) to create more advertising b) get the logos on OEMs products c) consumers pay more attention to microprocessors. Program launched in 1991 having a success figure of 300 by the year end. IBMs ad of a horse running across the page Measles ad showing How to spot the very best computers 1992 it launched its 1st TVC of star wars.

Introduction of Pentium Processor

Carter want the users to associate two things with its brand a) safety (Reliability) b) Leading technology In 1994 high end processor Pentium is being introduced With TWELVE 20-seconds ads showing the different kind of activities that can be done with it. At the same time the 3 second famous five tone jingle of Intel flooded radios and TV co-op advertisement.

 With the introduction of Pentium processor Intel changed the perception of its end users and made them addicted to it. By the end of the decade Intel and its partners have invested $7 billion in advertising which carries Intel Inside logo. In 2001 alone 150 million Intel Inside stickers are being printed. That was the demand. At that time 6th most valued brand which is now 26th in rank. Another favorable condition for Intel was the growth of the pc magazines like PC WORLD which made the end users more tech-savvy.

Product Development in 1990

Through out 1990 significant competition In 1991 Apple, IBM and Motorola (The AIM Alliance) banded RISC chips which pressured Intel to create ever faster processor. Introduced Overlapping Development Cycle in 1990s Doubling up the RnD. The Chip-set makers couldnt cop up with Intels rapidly evolving technology so Intel put its step into manufacturing chip-sets and motherboards in 1991. This product offerings encourage more rapid adoption of Intel Chips. by 1995 Intel achieved a 28% of Chip-set market share. And 15% of motherboard market.

A Major PRODUCT RECALL

In 1994 due to a minor flaw in Pentium Intel faced its major product related crisis. Though the effect of the flaw is to a minor group of users but due to the over publicized matter it created a very negative impact. So Carter with Andy Grove recalled all the faulty chips at a cost of $475 million in order to maintain its brand equity. By 1997 low cost desktop claimed 20% of US market share with cloned microprocessors that Intel responded with its Celeron processor. Intel had 24% where as AMD was market leader in that segment with 60%.

 By 2002 Intel had a full line of computer related microprocessor. Competition remain stiff both in low end and high end of the product. In 2000 AMD threaten Intels Technological dominance by breaking 1GHz barrier. That Intel responded immediately and within a year it breached 2GHz barrier. Segmentation in computer buyers and domination of companies are different.

Role of Marketing IN
This is a sector where the marketing is more technically detail. So the aim of Intel was to bridge the gap between the technical details and emotional experience of using cutting edge technology. Marketing team works more closely with the technical team. Advertising become more bolder and creative over time. Featuring Blue Man Group

Pentium II: Homer Simpson

Pentium III: The Blue Man Group

Pentium 4: The Blue Man Group

 Intel is very innovative in developing new products, just need to be innovative in marketing and thats what Intel is doing. Introduction of Alien ad for Pentium 4 showing different features that it can do like digital photography, digital music. Budget for Pentium 4 advertising was $300 million Coke, Pepsi market based on feelings and experience but Intel trying to be breakthrough, relevant and innovative. Bridge the gap between cutting edge technology and emotional experience.

Pentium 4 Alien ad

SWOT Analysis
Strength a) Strong Technical backbone b) Pioneer in the field c) Integration of technical and marketing team d) Mountain sum Brand Equity e) Innovative marketing strategies Weaknesses a) Too much aggressive in technical innovation b) Less awareness about the inside of pc in the mind of the end users c) Adaptation of new technology by the end users is slow d) high RnD cost

 Opportunities a) vast market growth b) more users are becoming tech-savvy c) more devices are adding to the activity of Computing d) Huge Brand Equity in market e) Good relationships with OEMs f) Much scopes in diversification g) Flooding up of new entrants. Threats a) competition is becoming more stiffer b) cloning of the product is easy c) Attack of competitor in various segments d) consumers perception upon the brand extension e) OEMs decision of manufacturing product by their own.

Objective of the Case

After this main question came - pc market is getting stagnant - Diversification into non-pc market is suitable or not Which Pamela Pollace was going to address in the press conference.

In favour of Diversification
Intel is having only 1% of the mobile chip set. Aggressively Adopting new products in flash memory segment. Joint effort with Microsoft in mobile segment. Cost of high end mobiles is rising and reduced RnD cost due to joint effort. Brand Image can be leverage to create a strong presence in the market

 Psychologically maynt be accepted (previously tried in toys and mp3 player sector) People are becoming more tech-savvy so looking inside a mobile is not far away Consumer is changing so be tuned with them Bringing to life all the things that people can do with their Pentium computer.

Thank You