Inside Intel Inside

Deree Consultants Group:

Chantzou Christina
Karagianni Chryssa
Mountzouridi Maria
Simatos Lefteris

What problems does Intel phase today

that it did not face 10 years ago?
1990 1991 1992
1st time
competition on
the horizon

Many Intel
microprocessor
clones
appeared

Basic PC design
was not advancing
and Apple, IBM and
Motorola (AIM)
joined their forces
1st time
competition on
the horizon

1994

1997 1998

1st
product
related
crisis

Cheap PCs
grabbed a
large
market share

AMD threatened
Intels dominance
Increasing segmentation
among computer buyers

Federal Trade Commission

sued Intel for allegedly
using coercive tactics to
control intellectual property
Intel lost ground in
the value PC segment

Today (2002):

2000

Recession of the microprocessor and computer industries

Rising costs for producing new microprocessors around $500 million &
$2 - $2.5 billion for a new wafer fabrication facility
Need to move even faster down the technology curve
Stiff competition in both the low-end and high-end markets
Struggle to remain committed to its position as industry leader and the
technology lead

2002

What has changed?

Intels strategy of producing
ever-more-powerful
processors and obsoleting
their predecessors stumbled
leaving:
An opportunity for rapid gains to
competitors (AMD gaining the lost
market share)
Lower profitability of the
processor line
Ended an era of dominance in the
PC hardware by Intel (almost a
monopoly market)

Sales of PCs is stagnating

(mature market) vs. sales of
portable digital devices
(PDAs and cell phones) are
growing (new trend). In 4
years (1997-2000):
Cell-phone sales rose 382.41%
Desktop sales rose 156.42%
Laptops sales rose 183.80%
PDAs sales rose 583.33%

Technology and the use of

microprocessors is changing
rapidly

In 2001 already facing (in

comparison to 2000 figures):
$7.2 billion decrease in revenue
$837 million increase in cost of
sales
$8.14billion decrease in operating
income
$10.53billion decrease in net
income
$635million increase in property,
plant and equipment
2,700 employees being fired

Need for a change was more

obvious than ever before

How relevant is the brand promise?

Intels Brand
Promise : safety

(reliability) and
leading technology
Intels strong brand
equity indicates that
its brand promise
was communicated
effectively to the
customers

The end product of

Intels brand promise
is its leadership
position due to
prolonged customer
loyalty
Brand promise:
what customers
should expect
from
a company in
exchange of their
time and money

How can Intel continue getting

customers to upgrade?
Develop safe,
innovative,
customized,
cutting-edge and
tangible
solutions

Enhance
information flows
and improve best
practices

Better collaboration
between different
Departments (R&D,
Sales, IT)

Carry out
extensive
Market Analysis

Ensure cost
effectiveness

Segmentation of
the market to
pinpoint specific
target groups (i.e.
computers &
mobile phones)
Understanding
customers, acquire
insights into the desired
lifestyles, and create
products that are better
tailored to their
individual needs
Take into account
competitors
strategies (e.g.
AMD) and continue
to differentiate
itself from those of
competitors

Boost loyalty
program and
maintain a
genuine and
solid relationship

Set a good
example of ecofriendly business
practices to
boost global
image

Introduce special
offers to meet
specific
requirements

Constant product
development to
minimize
manufacturing
expenses.

Establish
agreement with
key players to
strengthen Intels
brand name and
overall position in
the market place
by licensing them
to use the Intel
Inside logos
Set up and provide
world-class, global
customer support
system

Apply energy
efficient
programming
performance to
reduce the
companys carbon
footprints

Can you think of companies in other categories that

face the same problem as Intel? How do they cope?
Intel
itself had tried to go into a totally distinct
product category about 20 years ago Intel
watches that failed and fortunately did not affect
peoples feelings about microprocessors
The new brand was in a distinct category far
enough away from the parent brand so its failure
did not affect how people felt about its
microprocessors.
Levis
marketed a three-piece suit under the Levis
brand but was rejected by consumers.
They launched their next major clothing line
under a different brand Dockers which
became a consumer favorite.
Coca-Cola
In 1995 launched New Coke , customers
rejected the brand and some of them turned to
Pepsi
discontinued the brand and had to do
considerable efforts to regain the customers that
had turned to Pepsi!

Nike
extended its brand from sneakers to
clothing and athletic equipment

Mitsubishi
extended its brand from cars to electrics
like air-conditions, TVs, etc.

Kodak
due to marketing and technological
forces went into the digital imaging
market

BIC
started from pens and extended to
lighters, shavers etc.

What should Intel do?

Dilemma : Brand promotion/extension

Capitalize on brand equity by expanding in other product

categories

Continue with ingredient branding

stagnating sales from the PC market/need for substitutes

increasing market opportunities in other product categories - PDAs & cell phones

rational move to expand to these product categories considering Intel's

competency/reputation in the microprocessor industry

make customers care again for whats inside their products

technical performance is a key factor for the majority of users of technology products

Craft and launch a new brand campaign

Intel Inside campaign is well connected with the PC era

a new campaign is needed to promote the different products falling under the same
brand

The Deree Consultants Group

Thank you!!!