Inside Intel Inside

Q1. What was the motivation behind Intel Inside Branding campaign?

Answer. The motivation behind Intel Inside campaign was the marketing experiment, RED X, which
Intel had to come up with to move its customers to the upgraded product version. In 1982, Intel
came up with a breakthrough microprocessor, 286, which ran at 6MHz to 12MHz. This allowed the
users to run multiple tasks at the same time. But Intel faced a major hurdle in 1988 when 386
processor, being a superior product than 286, was out in the industry for 3 years but still did not gain
good revenue out of it. The problem was that no one was buying it. Users were very satisfied with
286 processor. The slow adoption of 386 processor was a particular problem given that the company
was on the verge of launching its fourth generation microprocessor, 486 chip.

The major issue was that the end users were not aware of the product differences. Thus Intel had to
come up with RED X campaign where in they began by covering billboards in Denver with large 286
enclosed in a circle. Then they splashed a big, graffiti style red X over the number. After a few
weeks they added a large 386 enclosed in a circle alongside crossed-out 286, and promoted the fact
that 386 was now at the same price with many additional features.

RED X campaign was a success and the team quickly realised that the company could not afford to
brand each new generation of product that was realised. Thus the solution was to create an
umbrella brand that could span successive generations of products.

Q2. What factors have accounted for the success of the campaign?

Intel mainly focused on its core competencies and developed a marketing campaign that aligned
with their business strategy. Their strategy was Safety (reliability) and leading technology. Hence
with respect to these two elements the factors that accounted for the success of the Intel Inside
campaigns are as follows:

Product Technology The prime reason for the success of the campaign was that Intel had the
technology to back up their product claims. Their R&D as well as the technological backbone enabled
them to continuously develop better products and maintain quality simultaneously. Their
technological advancements made them the market leader in the microprocessor segment.
Whatever promises the marketing does, it s the engineering team which keeps the promise with
their product quality.

Customer centric advertisements They targeted the masses by developing customer centric
advertisements that depicted that the Intel chipsets could easily perform all the tasks that a user
needs in his day-to-day activities.

E.g. They emphasized their advertisements on the above mentioned attributes. Intel developed a
series of twelve 2 second Pentium ads that could be used singly or in combination. The ads showed
the many different kind of activities that one could do at the same time. Also Intel developed a 3
second animated jingle and five-tone melody played at the end of every radio and television co-op
advertisements.

These helped to gain the attention of the consumer as well build more trust over the brand.
Brand Image Intel had been in the market for a long time and it was ranked as number 41 on the
fortune 500 list. It was a market leader in its respected product categories. Hence this long and well
established brand name also contributed towards the success of the Intel Inside marketing
campaign.

Co-op advertising program - Co-op advertising program model was used aggressively by Intel in
which the OEMs would be able to accrue co-op advertising dollars on the basis of their purchase of
Intel chips. About 5% of the purchase price paid by OEM for Intel microprocessor went into market
development fund of Intel. These could be used to pay for upto half the cost of any advertisement
produced by the OEM as long as they put Intels logo in their ads and their computers. Thus through
this campaign Intel had targeted their OEMs to market and promote Intel with their own products.
With this campaign Intel had 300 OEMs on board.

Other Factors:

Distribution network
Competitive pricing strategy
Product strategy
Non-Stop product development doubling up strategy

Q3. What are the current problems Intel is facing in PC Market?

Competitive Landscape Intel had a technological lead but sustaining this technological lead was
not easy as throughout time there were a significant amount of threats from competitors such as
Apple, IBM, and Motorola(AIM alliance).These companies banded together to produce chipsets
based on RISC architecture. This alliance increased the competition on Intels engineers to create
faster processors. Thus Intel had to reduce the product lifecycle and innovate new products more
frequesntly.

In addition to these companies such as AMD, Texas Instruments, and Cyrix produced
microprocessors that were compatible with Microsofts operating system. These microprocessors
clones fostered the entry of low-cost PCs into the market. (Exhibit 6 for U.S. PC market share by
price, Exhibit,7 and 8 for additional market segment data)

Slow adoption of chipsets one of the major concerns for Intel was relatively smaller number of PC
makers which contributed to the slow adoption of new chipsets. This was simply because no PC
maker wanted to begin buying the new generation of microprocessors before related PC
components (e.g.- motherboard, chipsets etc.) were available in the market. As the cost of
microprocessor in the computer was relatively high PC makers expected the processor to be in
compactable with the chipsets of the computer.

Increasing costs The cost to develop a new microprocessor had risen to around $500 million, while
the cost to build a new water fabrication facility had risen from $2 billion to $2.5 billion.

Increasing Segmentation The customer base started to be divided into different segments and it
was evident that different competitors focused on various niche segments. Exhibit 11 for market
shares in PC-related market.
Other factors

Changing market trends

Recession

Q4. How has the Intels advertising focus changed?

Answer. Intels marketing campaign has always been unique as they had to promote their high tech
products on a regular basis. There has been a changed in focus throughout the marketing campaign
of Intel:

RED X: $5 Million budget was spend by the Intel marketing team (internal) to shift the end
users from 286 processor to 386 processor. The end users were initially reluctant to
upgrade their processor from 286 to 386 which had better features. This was mainly due to
the fact that users felt all their tasks were done efficiently by 286 processor and they find no
problem using it. Also they were concerned about their software being compactible with
386. Thus with the help of RED X they promoted the processor 386 to be of the same price
as that of 286 with additional features which was directly targeted to the end users of Intel.
The Intel Inside Campaign: This campaign had initially offended by some of Intels OEM
partners as the taglig used was Intel, The computer Inside. Thus carter ended up designing
a co-op advertising program model in which the OEMs would be able to accrue co-op
advertising dollars on the basis of their purchase of Intel chips. About 5% of the purchase
price paid by OEM for Intel microprocessor went into market development fund of Intel.
These could be used to pay for upto half the cost of any advertisement produced by the
OEM as long as they put Intels logo in their ads and their computers. Thus through this
campaign Intel had targeted their OEMs to market and promote Intel with their own
products. With this campaign Intel had 300 OEMs on board. Intel also targeted the end user
directly through some innovative advertisements with the use to visual graphics.
The Pentium Processor: Intel focused on promoting the two attributes which were critical
business strategy: Safety (reliability) and leading technology. They emphasized their
advertisements on the above mentioned attributes. Intel developed a series of twelve 2
second Pentium ads that could be used singly or in combination. The ads showed the many
different kind of activities that one could do at the same time. Also Intel developed a 3
second animated jingle and five-tone melody played at the end of every radio and
television co-op advertisements. The main credit for all these campaigns goes to the
engineering team itself because the product was very good at delivering all the promised
made by the marketing team. Pentium 4 has been the best product Intel has manufactured
and made sure that the advertisement was equally good. As PCs had become an integral
part of people Intel wanted to bridge the gap between the technical details and the
emotional experience of using cutting edge technology. They wanted to promote to the
customer and tell them what is meaningful to them.

Q5. Should the company extend the Intel Inside branding campaign to other non-PC categories
such as cell phones and PDAs?

Intel has a very good brand image and it should expand it to other non PC categories because:
 Despite the massive growth the core value of the company remained unchanged. Intel
represents technology, innovation, creativity and design. Extending this brand image to
other products and creating a different umbrella brand specifically for non PCs would benefit
the company as long as it manages to transfer its brand DNA to other non PC categories.
Intel, even though being a B2B organization, had created marketing miracle by targeting end
users and collaborating with PC manufacturers. As the PC market saturates as long as Intels
marketing division produces a similar marketing campaign it will be able to convince the end
user that whats inside the cell phone and PDA also do matter helping its brand image.
According to exhibit 13 & 14, the projected worldwide usage of microprocessor in desktop
computers is decreasing by 17% whereas, consumers and electronic goods are increasing by
40%, thus there is huge potential to grow in these categories and also if Intel only caters to
one segment and if the market becomes stagnant then the growth will be limited and they
cannot generate much revenue
AMD took the first mover advantage in 1Ghz processor and this left Intel lagging for the first
time. Subsequently Intel had to come up with their 1 GHz processor and 2GHz processor to
bring back status quo. Hence, in mobile phone branding they would want to take the first
mover advantage so that they can acquire maximum market share.