Marketing Management Case: 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 Intels 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 believeof is capable of all Through 286 How? are not buying the functions that they need to do PERCEPTION MARKETING!

Consumers

CHANGE

386 processor
need

Red X Marketing Experiment

Limited Success of Red X

1. Advertising new generation of

Solution product separately each time

Too expensive and

2. Legal problem
Numbers cannot be userd

- Creation of Umbrella Brand

unaffordable

as product name and be trademarked

What factors have accounted for the success of the campaign?

1. Designed a Co-op Advertising Program to Enlist OEMs Co-operations.

Provide Subsidy (Co-op advertisement dollars) - Pay for half of advertisement cost of OEM partners. - If they put Intels long on their computers. To induce cooperation of original equipment manufacturer (OEM) partners. Reduce offensiveness of OEM partners toward Intel Inside advertisement.

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

Example 1. 3 seconds Jingle Example 2. The promotions in retail stores, using end-aisle displays and hands-on demonstrations Example 3. Intels Bunny people characters introduced in 1997 Super-ball game

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

Reliability

Intel

Leading Technology

Intels brand promise (Core Value)

3. Made Performance-based Products That Has Delivered on Their Message. Intels breaking through advertisement Manufactures 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

The Results
30% 30,000MM

22.5%

22,500MM

15%

15,000MM

7.5%

7,500MM

0%

1991

1992

1993

1994

1995

1996

1997

0MM

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 aw in Pentium processor by end user Highly publicized Direct attack against Intels core value of Reliability

Result: Fury of negative publicity

Threat 1 - Reliability

Threat 2 - Market Share in Low End Market

Market Share in Low End Market 1995 1996 1997 16%

Market Share of Sub $1,000 PC

24% 3% 5% 20%

60%

AMD

Intel

Others

Threat 3 - Leading Technology

Intel lost its leading technology image of overwhelming performance advantage 1,250 1,000 750 500 250 1996 1997 0 3/6/2000 AMD 3/8/2000

1999 Intel

Threat 3 - Leading Technology

18% 40,000MM

13.5%

30,000MM

9%

20,000MM

4.5%

10,000MM

0%

1995

1996

1997

1998

1999

2000

2001

0MM

R&D/Revenue (LHS)

Revenue (RHS, $)

R&D Cost (RHS, $)

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, its our turn.

Answer? Yes! Ask: First Thing to Intel Should Extend Brand in Non-PC Categories. Should Intel Categories?
While PC markets are in a slump, mobile markets are rapidly growing. This could be a protable opportunity for Intel to maximize its prots.
400

Sales Revenue: From 1997 to 2001

300

200 100 1997 1998 1999 Portable PC 0 2001 Mobile Phone

2000 PDA

Desktop PC

Possible Choices

Extend brand to mobile phone market

Find market that is related to PC industry, other than microprocessor

Category

extension

For both option, Intels leverage and t need to be studied.

Prototypicality & Brand Extension

In te l= M icr op

W ha t is In te ls lev

Po t en tia lp os s ib ilit y of di lu tio n

Le ro ad ce in in ss M gT or icr e op ch ro no ce log ss y or

er ag e?
Co

Problem Intel Currently Faces

In 20 0 0, A M D su rp

as

se s

bu nc t, re lim te ite Le d ve ex ra te ge nd ab ib le ilit p y In te l Ev

oi n lev en er th ag os ea e bl tra e di po tio in na ts l ar e sh ak y

t,

Intel, what to do...

Timing of brand extension? Strengthen superiority in microprocessor market rst

Pro: strengthening its original brand identity

Con: already saturated PC market, increased R&D cost without result in 2001 risky

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

Possible Category Extension: Mobile Phone

1. Mobile phone markets characteristic

3. To be successful, Intel need to break away from the image Intel = Microprocessor

5. Short term: creation of sub-brand

2. Design > Technology

4. How?

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 specically created for mobile phone market Result: minimizing the diluting effect of current brand image of Intel

Category Extension : Mobile Phone

Mobile Phone markets characteristic Design > technology Microprocessor image

Long Term Marketing Strategy: Abstract Marketing to Grow Intels t

Intel inside direct reection of microprocessor Change the Slogan

Highlight superiority of Intels 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

When abstract meaning established

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

PMP
Network

TV

Other Possible Extension

Highlight Intels 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 t and leverage

Brand New Intel Corporation

The Ideal Technology

Thank You for Listening

Thank You for Listening Q&A