Ingredient
Ingredient
Branding
Branding
Intel Inside
Intel Inside
–
–
A Case study
A Case study
Avik Kumar Si,B09014
Avik Kumar Si,B09014
G.Saradha, B09050
G.Saradha, B09050
Aprajita Gautam, B09071
Aprajita Gautam, B09071
Introduction
Introduction
Every second 15.4 billion transistors are being made in the world by various manufacturers across Every second 15.4 billion transistors are being made in the world by various manufacturers across the world. This translates to more than half a million for every human on the planet. Most computer the world. This translates to more than half a million for every human on the planet. Most computer chips each comprise more than 7 million transistors.
chips each comprise more than 7 million transistors.
A decade back, almost no one knew about what went inside making a computer, except the A decade back, almost no one knew about what went inside making a computer, except the technology geeks. Few mainstream consumers knew anything about the processor, even though it technology geeks. Few mainstream consumers knew anything about the processor, even though it was the "brain" that powered the computer. But
was the "brain" that powered the computer. But today many personal computer users can recite the today many personal computer users can recite the specification and speed of the processor; just like car specification and speed of the processor; just like car owners can tell you if they have a V4, V6 or V8 owners can tell you if they have a V4, V6 or V8 engine. The awareness of "Intel" has grown along engine. The awareness of "Intel" has grown along with the awareness of the chip, and today is with the awareness of the chip, and today is associated with "technology leadership," "quality" associated with "technology leadership," "quality" and "reliability." This a classic example of a and "reliability." This a classic example of a fabulous marketing strategy which catapulted its fabulous marketing strategy which catapulted its company to the top notch league of its industry. company to the top notch league of its industry. Chips are something most customers don't see, many Chips are something most customers don't see, many don't understand, and large numbers don't care about don't understand, and large numbers don't care about
then how did this company manage to educate its customers to look for its brand among the clutter of then how did this company manage to educate its customers to look for its brand among the clutter of the umpteenth semiconductor manufacturers?
the umpteenth semiconductor manufacturers?
A one word solution to this is “Ingredient Branding”. The company wisely converted its commodity A one word solution to this is “Ingredient Branding”. The company wisely converted its commodity like product and built a brand around it. In the world where most of the companies spend lakhs on like product and built a brand around it. In the world where most of the companies spend lakhs on product development and advertising in
product development and advertising in order to differentiate order to differentiate their product and gain their product and gain a strong hold ina strong hold in the market, Ingredient Branding came as a boon for the companies looking for quickly establishing the market, Ingredient Branding came as a boon for the companies looking for quickly establishing their brand among the host of others.
their brand among the host of others.
The strategy worked so well that today, in spite of the low differentiation between two The strategy worked so well that today, in spite of the low differentiation between two semiconductors in term of quality and technology, Intel controls around 80% of the world's market semiconductors in term of quality and technology, Intel controls around 80% of the world's market for personal PC microprocessors.
for personal PC microprocessors.
Pertaining to Intel, how did they come up with this idea? Was it a smooth ride for them after the Pertaining to Intel, how did they come up with this idea? Was it a smooth ride for them after the conception of the idea? Were there any repercussions of this strategy? Was there any opposition conception of the idea? Were there any repercussions of this strategy? Was there any opposition from the computer manufacturers to which they supplied? How much did the strategy actually help from the computer manufacturers to which they supplied? How much did the strategy actually help them? And moreover, is this sustainable given the huge expenses of marketing and advertising them? And moreover, is this sustainable given the huge expenses of marketing and advertising
Consumers typically can
Consumers typically can
buy 50 million transistors
buy 50 million transistors
for a dollar on some
for a dollar on some
memory chips. It really is a
memory chips. It really is a spectacular industry”.
spectacular industry”.
“The current number of
“The current number of
transistors the
transistors the
(semiconductor) industry
(semiconductor) industry
churns out each year is 10
churns out each year is 10
to the 18
to the 18thth power, orpower, or
1,000,000,000,000,000,00 1,000,000,000,000,000,00 0, a figure sometimes 0, a figure sometimes expressed as one expressed as one quintillion.” quintillion.”
involved? Also, is this strategy of Ingredient Branding sustainable in every kind of business where there is a need of differentiation among commodity like products? We will look at these aspects.
Intel Corporation
Intel Corporation was founded on July 18, 1968, asIntegratedElectronics Corporation (though a common misconception is that "Intel" is from the word intelligence). It is based in Santa Clara, California, USA and is presently the world's largest semiconductor chip maker, based on revenue. There has been a history of innovation in the company. It was the inventor of the x86 series of microprocessors, the processors which found in most personal computers Intel. It also makes motherboard chipsets, network interface controllers and integrated circuits, flash memory, graphic chips, embedded processors, and other devices related to communications and computing. Founded by semiconductor pioneers Robert Noyce and Gordon Moore, and widely associated with the executive leadership and vision of Andrew Grove, Intel combines advanced chip design capability with a leading-edge manufacturing capability. Originally known primarily to engineers and technologists, Intel's "Intel Inside" advertising campaign of the 1990s made it and its Pentium processor household names.
While Intel created the first commercial microprocessor chip in 1971, it was not until the success of the personal computer (PC) that this became their primary business. The 2010 rankings of the world's 100 most powerful brands published by Millward Brown Optimor showed the company's brand value at number 48.
Intel‟s major customers include:1
Original equipment manufacturers (OEMs) and
original design manufacturers (ODMs) who make computer systems, cellular handsets and handheld computing devices, and telecommunications and networking communications equipment;
PC and network communications products users (including individuals, large and small
businesses, and service providers) who buy PC components and board-level products, as well as our
1
http://www.intel.com/intel/company/corp1.htm#anchor4
Intel’s mission
Delight our customers,
employees, and shareholders by relentlessly delivering the platform and technology advancements that become essential to the way we work and live.
Intel’s values
Customer orientation Results orientation Risk taking
Great place to work Quality
Discipline
Intel’s objectives
Extend our silicon technology and manufacturing leadership Deliver unrivalled
microprocessors and platforms Grow profitability worldwide Excel in customer orientation
networking and communications products, through distributor, reseller, retail and OEM channels throughout the world; and
Other manufacturers, including makers of a wide range of industrial and communications
equipment.
The need for an Ingredient Brand
Short duration of the of the technology life cycle: The microprocessor market is as volatile as it is lucrative for those producers who succeed. Technology expands on an exponential growth curve2 with each new chip generation dwarfing the capabilities of its predecessors. For example, the 286 chip introduced in 1983 contains 130000 transistors and is capable of processing approx one million instructions per second (MIPS). The 486 chip which followed in 1990 is built around 1.2 million transistors and handles about 5 MIPS. And the list continues...See Exhibit no 1.
The impact of such a short span of the life cycle of any product is that there is a massive spending on Research and development and there is a very small time to influence the vendors to buy their products. Thus, at this time, a well established brand works in the advantage of the producer company as, based on the brand equity of the corporate, its new products are more likely to be accepted by the buyers.
Competition: Intel was always an innovative company which excelled at developing the chips which set the standard for personal computing during the 1980s, beginning with the 8086 chip and then developing a series of product improvements. But the trouble arose when competitors adopted the same naming convention, and Intel's product names - the 286, 386 and 486 could not be protected. Thus, Intel had to offer a unique value to its consumers so as to rise above the confusing, commodity marketplace.
In order to protect its trade mark, it launched litigation for it, but when it lost its battle for the "386" trade mark, it sought out the strategy of transition from a microprocessor producer to a branded products company. In 1991, the "Intel Inside" brand ingredient programme was launched with almost 200 OEM (Other Equipment Manufacturers) partners with the objective of creating a consumer brand to make sense of the rapidly changing product cycles.
2
Premium pricing: Intel already had an established reputation as a quality producer of microprocessors amongst the OEMs. What it wanted now, in order to gain a higher market share was to differentiate itself from its competitors. It also believed that owing to its higher quality, it could position its chips as a premium product, which it could in turn sell at a premium price to computer manufacturers. Thus, in order to justify the computer manufacturers and their retail customer‟s choice of selecting Intel‟s products over its competitors, Intel decided to give them another reason by marketing its product as a branded component.
Intel utilized the power of performance of processor chip design and manufacturing to tell the end customer that their offering is special compared to the offerings of the 25 competitors at that time. All it had to do was to convinced manufacturers that their computers would have higher perceived value if they featured Intel in their own marketing. That meant creating brand awareness for Intel chips in PCs amongst the manufacturers' direct customer (the dealer) and the end-user (consumers and business purchasers). In order to do this, the first step was to develop a whole new brand strategy for Intel. They chose to invest in "ingredient" branding - the creation of equity as an input brand.
At that time also, there were a few firms that were practising the same strategy. The most visible example of such branding at the time was NutraSweet, Monsanto's brand, an artificial sweetener used in 3,000 food and beverage brands.
In order to correctly communicate the benefits of new processors to PC buyers it became important that Intel transfer any brand equity from the ambiguous and unprotected processor numbers to the company itself, while raising awareness of its name. Intel invested billions of dollars in developing cutting edge technology and billions more in assuring performance and reliability. A stronger brand was needed to communicate this to consumers, separating Intel from the pack.
Before Intel Inside®
For 30 years after the launch of personal computers, the marketing was a forte of the computer vendors and software publishers. Even though, during that time the rapid technical advances of Intel processors had played a central role in transforming the PC from a basic production and business management tool in the 1980s into a rich new information, entertainment, education tool, along with being a business device, no end consumer was aware of the Intel. It was the Intel processor which was driving the rapid increase in the performance, which in turn helped systems run more smoothly, quickly and reliably. But Intel relied on its PC vendor customers to convey this message; these were OEMS, otherwise known as Original Equipment Manufacturers. Thus it had little brand identification among users, who knew no more about the processor than they did the company that built the engine in their cars.
"Intel Inside"- branding strategy by Intel
The Intel Inside® Program, which launched in 1991. The program represented the first time a PC component manufacturer successfully communicated directly to computer buyers. Today, the Intel Inside® Program is one of the world's largest co-operative marketing programs, supported by thousands of PC makers who are licensed to use the Intel Inside® logos. The Intel brand is one of the top ten known-brands in the world, in a class with Coke*, Disney* and McDonalds*, according to various rankings. In 1991, Intel launched the successful co-op program in which they convinced manufacturers to place the "Intel inside" logo unit in their advertising and other marketing material.
Key aspects of the program:
Early preparations
:
Dennis Carter, Intel‟s marketing manager and his team studied successful consumer marketing techniques and examined tactics used by well-known companies supplying a component or ingredient of a finished product, like NutraSweet™, Teflon™ and Dolby™. They also began a variety of marketing experiments and soon began envisioning how a branded ingredient program would play out in the computer industry.Coop Marketing program: In order that they wholly and effectively communicate the important role of the microprocessor the ingredient status of the microprocessor needed to be dealt with. In 1991 Carter launched the Intel Inside® coop marketing program. The program was an incentive-based cooperative advertising program which worked on a co-op fund. Intel would take a percentage of the purchase price of processors and put it in a pool for advertising funds. It benefitted the computer makers, as it offered to cooperatively share advertising costs for PC print ads that included
the Intel logo. Adding the Intel logo not only made the OEM's advertising much more efficient in terms of money spent, but it also showed that the OEM was using latest technology. As per the expectations by the end of that year, 300 PC OEMs
had signed on to support the program.
Mass Advertisements: Now after gathering the support of the OEMs, the next step was to advertise the brand “Intel” and build its brand equity in the minds of
the consumers who were the potential buyers of such systems. For this end, Intel started print advertising around the world to explain the logo to consumers. See Exhibit 2. A very effective part of their communication proved to be television which
communicated the Intel Inside® program messages to the consumer. Along with colourful TV advertisements, Intel added a distinctive and memorable three-second animated jingle (known as a signature ID audio visual logo), displaying the logo and playing a five-tone melody. Starting in 1995, the now-familiar five-tone helped cement a positive Intel image in the minds of millions of consumers. It has created a non paralleled cue in the minds of the consumer.
Trademark: The name "Intel Inside" went on to become the first trademark in the electrical component industry. This campaign focused the entire organization around the brand and created a highly effective advertising campaign. The main purpose was to reduce the uncertainties about the quality and reliability of Intel microprocessors. Intel focussed to increase the information in the minds of the consumer and gain their confidence. "Intel Inside" represented quality and reliability.
Intel Co-operative Marketing Strategy
For any Ingredient Branding campaign to succeed, the Host Brand and the Ingredient Brand must co-operate to be able to fully leverage the synergy.
In early 1992, made by George Lucas' Industrial Light Magic, Intel debuted its first TV advertising stressing speed, power and affordability. It used state-of-the-art special effects to take viewers on a sweeping trip through the innards of the personal computer before hovering over the campaign's raison d'être - the then new Intel
i486™ processor.
The Intel Inside campaign aimed to "educate both the retail sales associates and the consumers about the value of Intel microprocessors, and to explain to them the differences between the microprocessors" - without the technical jargon.
Leveraging partnerships
While Intel isn‟t the only one in history to engage in Ingredient Branding, it is true that Intel‟s cooperative marketing strategy was exceptionally brilliant. Intel negotiated deals with all leading Original Equipment manufacturers (OEMs).
On 6th June 2005, Intel received another shot in the arm with the public declaration of Apple stating it would switch to Intel from IBM. By mid-2007, Intel was present in all Macs.
The program was launched in July 1991. By the end of the year, 300 PC OEMs had signed on to support the program.3 Tier 2 and 3 OEMs were made part of the program through profitable propositions and by explaining to them the short and long-term benefits of this alliance. The Intel Inside launch was supported with marketing backing both directly to consumer and indirectly in the form of advertising subsidies to its OEM partners.
Outsider to Saviour- a full circle
When Intel began its Ingredient Branding campaign, it had to fight with IBM, Hitachi, Motorola and Siemens. Assistance from OEMs helped it to become
known. The Intel Inside campaign helped them to achieve recognition. The Cooperative marketing approach was instrumental in helping them to gain this breakthrough. In the course of the next several years, acceptance of Intel resulted in the co-operation partners increase their conversion, thanks to use of Intel processors.
Marketing the ingredient brand
Advertising to the end-user
In the industry, advertising directly to the end-user was a new concept. The crux of this initiative was to instil confidence in the consumer about Intel as a brand, so that there would be a pull for PCs armed with Intel‟s processors. Intel was already a respected name amongst the OEMs as a microprocessor producer of repute. Now, it needed to go to the consumer market so that the end-users could differentiate it from the competition.
There were initial doubts as to whether a technology company could do its marketing as successfully as established marketers. There were doubts internally too in the company.
3
http://www.intel.com/pressroom/intel_inside.htm
APPLE’s Endorsement “A big shot”:On 6th June 2005, Intel received another shot in the arm with the public declaration of Apple stating it would switch to Intel from IBM. By mid-2007, Intel was present in all Macs. See Exhibit 6
After the OEM program started off, worldwide print advertising kicked off with the objective of explaining the logo to the consumers. The logo itself, of course, had great visual appeal, resembling like a quality check with Intel Inside inscribed within a circle.
Intel used sound as an advertising tool to great effect too. This marketing weapon, which Intel started yielding since 1995 is characterised by its three-second animated jingle, known as a signature ID audio visual logo, soon became familiar.
Soon, Intel became a brand with tremendous pull from just a component supplier. Advertising produced fast results.
Online Marketing
In addition to traditional channels, the use of online marketing is becoming increasingly important for Intel as a more powerful tool to influence consumer decisions. In the initial stages, mainly due to unavailability of online marketing4, partners were hesitant to shift advertising expenditures from traditional to newer media outlets. Intel‟s team-up with Google to create the Google AdWords campaigns using the AdWords Template Centre changed this scenario. “The Template Centre gives our partners guidance and enhances the control over the types of messaging they use to market their products. This is the one vehicle that ena bles smaller advertisers to be on par with bigger partners”, says David Haroldsen, global Intel Inside Program Track 2 manager. Haroldsen is optimistic about the results. “We‟ve seen impressive ramping up of our online co-op fund usage,” says Haroldsen. “The quarterly average online spend of all co-op funds across North America has increased by a factor of 2.5 times since the program launched one year ago”, he says.
Creating a quality standard for Intel
Intel have been able in successfully creating a brand awareness in a previously commodity market. It has raised awareness not just about its own processors but about processors in general. It has conveyed the message of quality signified by the “Intel inside” logo to customers so strongly that customers have began to associate a certain amount of quality-driven trust in the brand of Intel.
4
http://www.google.com/adwords/co-opmarketing/casestudy.html
GROWTH: Towards the end of
1991, only 24% of European PC buyers were familiar with Intel Inside logos. However, within a year, the figure rose to 80%. By 1995, 94% of buyers were
Dell rides on the Intel horse
The Intel logo in fact helped then lesser-known electronics manufacturer Dell to break into the market, as it reassured customers that the quality of processor in the computer they were buying was superior. Achievements like this are testimony to Intel‟s success. Customers got the “emotional security” that they had made a wise decision for what was a high-involvement purchase for them. Association with Intel helped OEMs gain equity with end-consumers.
Educating the consumer
Intel‟s primary task in this regard was to educate consumers about the value of Intel microprocessors and about the differentiation of Intel‟s offering. The task was made critical as microprocessors are essentially a technical component and the marketing campaign had to win customer confidence without the use of technical jargon that would have confused consumers and turned out self-defeating. To begin with, consumers were apprehensive about the quality and reliability of Intel microprocessors. Intel had to convince end consumers of its superior quality and reliability.
The Branding Campaign
Investments
Since 1991, the joint volume of investment by Intel and PC makers on advertising the Intel inside logo totalled to US$ 4 billion. Both Intel and its partner OEMs contributed to this spend.
The volume of investment in 1999 alone was $800 million.
In order to build relationship with the host brand, Intel provided advertising subsidy based on purchase. Intel offered a 3% advertising subsidy to PC manufacturers as a percentage of funds spent on Intel processors.
Historically, Intel has spent heavily on brand building. In early 1993, a sports line and a back-to-school clothing line were launched by Intel which featured geometric patterns resembling microprocessor chip layouts with the slogan “Intel Outside”. Reports suggest that Intel‟s spending on advertising for the Pentium microprocessor exceeded $15 million during the second quarter of 1994. The first three years of the “Intel Inside” campaign is estimated to have cost over $300 million. For Pentium, Intel went into overdrive, sanctioning three times the budget allocated to any previous product.
Between 1991, when the slogan‟s journey began, and 2002, Intel and other companies had invested over $4 billion on advertising.
As of 2008, Intel had plans to invest over $2.6 billion on advertising over the next three years.
The Gains
The pay-offs from this investment have been huge too. Around 70% of home PC buyers and 85% of business buyers have been shown by market research to show a preference for the brand of Intel. The security and peace-of-mind offered by Intel have been cited as reasons which enable Intel to demand a premium for the brand.
Within a year of launching the Ingredient Branding campaign, worldwide sales shot up by 63%. Intel entered the list of Top 10 most valuable brands by 2002. The Brand Value of Intel in 2002 was US$ 30,861 million and irrespective of dropping marginally, stands at US$ 30,636 million in 2009.
Ingredient branding results for Intel
A look at the Intel website would say it all – a proud reaction to its unique and path breaking campaign. Their website claims thus:
“The awareness of "Intel" has grown along with the awareness of the chip, and today is associated with "technology leadership," "quality" and "reliability. You can credit this to the Intel Inside® Program, which launched in 1991. The program represented the first time a PC component manufacturer successfully communicated directly to computer buyers. Today, the Intel Inside® Program is one of the world's largest co-operative marketing programs, supported by thousands of PC makers who are licensed to use the Intel Inside® logos. The Intel brand is one of the top ten
known-brands in the world, in a class with Coke, Disney and McDonalds, according to various rankings.”
A large downstream value was created for the laptop/PC manufacturers by the upstream value creation by Intel. The most enviable feature was that Intel conveyed that value to all their client‟s customers without an ounce of dilution. Thus, they achieved their target. Top of Mind recall was achieved for Intel when people thought about PCs. This leaves PC manufacturers with no choice but
Awareness of Intel logo prior to the Intel inside campaign was a mere 24% in the European PC market. But it soared to 94% within two years of its launch. World sales of Intel rose by 63% within a year of introduction of the Intel inside campaign. By 2002, Intel broke into the list of top 10 valuable brands of the world.(Exhibit 3)
to opt for Intel microprocessors. The result was that Intel gained huge bargaining power with its customers. This is pull marketing through surrogate means.
From the dawn of PCs in seventies, PC vendors & software publishers drove the marketing campaigns. Intel though had exemplary products; it relied on its vendors to convey the message. This job somewhere was left incomplete. The fact that companies with processors that were just extended abbreviations of Intel caught the same mind space as Intel proved this to Intel. So, it took the baton of conveying its merits itself and who can tell better about its products than the technologically superior manufacturer himself?
The results were phenomenal. Microprocessors sales went up. Every PC manufacturer wanted to enter into a pact with Intel. Brand recall for Intel shot up. After studying the ingredient branding
campaigns of Nutrasweet, Dolby and Teflon – they knew the pros & cons of this methodology. They also found ways not to approach the end customers. They had found a way to transfer the entire brand equity to Intel itself which was the brain of the PC.
By the end of 1991, 300 PC OEMs had signed on to support the marketing coop program of Intel inside. This is sheer proof of the impact of the INTEL INSIDE CAMPAIGN. If it could rope in 300 OEMs in a matter of less than 6-7 months it just goes onto show how relevant and well liked the campaign was. This is a solid standing for the consumer recall commanded by Intel.
Insiders from Intel strongly believed that the rise in computer sales in that era could be attributed to Intel program. They had left the consumers educated on the usage and relevance of the computer. The marketing investments were beginning to pay-off in terms of consumer mind-share, aided by the high-profile launches of the Pentium® (1993) and Pentium® Pro (1994) microprocessors.
“After six years, and almost two decades in the PC business, Intel had arrived in the public consciousness as a world-class player. Its brand was known worldwide, its name synonymous with the computer industry.”
In 1991, before the start of the "Intel inside" branding program, Intel's market capitalization was about US 1 billion. In 2003, it is about US5 billion. This growth of shareholder value indicates the value of Intel's ingredient branding strategy.
Though AMD and other manufacturers could, and did, produce comparable and even superior processor chips, that fact is lost on buyers mesmerized by Intel who controlled 90% of world's share of PC microprocessors by 1998.
Ingredient branding success factors for Intel
Intel had an established reputation for producing leading edge technology, in particular microprocessors. That‟s the main reason that customers and vendors trusted its campaign. The same would not have been true for a shoe or a pesticide manufacturer. Microprocessor is high technological and high complexity product – it cannot be manufactured without any prior experience. Presence from 1970, quality products into the computing world since 1980s was enough proof for Intel‟s competence.
Microprocessor though a powerful and key component of a PC still remains a component. It is a chip buried inside a computer which has to coordinate with the system architecture. So, the marketing initiatives also look into the manufacturer‟s perspective. One of the main reasons for the success of the Intel inside campaign was that it was routed through the manufacturers. In this case, the loyalty to the PC manufacturer also accrues to the processor. The satisfaction and loyalty of the customer base induces trials and hence is an acquisition route as well.
In 1991 Carter launched the Intel Inside® coop marketing program. The heart of the program was an incentive-based cooperative advertising program. Intel would create a co-op fund where it would take a percentage of the purchase price of processors and put it in a pool for advertising funds. Available to all computer makers, it offered to cooperatively share advertising costs for PC print ads that included the Intel logo. The benefits were clear. Adding the Intel logo not only made the OEM's advertising dollar stretch farther, but it also conveyed an assurance that their systems were powered by the latest technology. Thus, the manufacturers were trusted lieutenants who led the war for Intel. If Intel had performed independently then the success might not have accrued.
Intel is an example for the fact that ingredient branding can work well. For example, Intel's strategic alliance with IBM continues to be a strong one which is mutually beneficial. Neither partner is heavily dependent on the other yet each benefits greatly from the relationship. No brand dilution has occurred on either side. In fact the opposite has happened, each party has benefited dramatically from the partnership.
Intel always followed a competitive pricing strategy. It never exploited its customer recall to extract unnecessary premiums. In fact it had learned this lesson from Nutrasweet- this high pricing strategy will make one unprofitable in the long run.(Exhibit 4)
Intel undertook a campaign that was all encompassing – similar to a 360 degree campaign of today. It looked into its vendors and advertised to them. It also came up with print ads explaining the logo on the PCs to the customers. It made sure that no space was left uncovered- tried to capture customer attention through every mode.
All communications, advertisements and marketing campaigns were state of art – eyeballs were captured through every means – innovation, creativity, likeability and above all trust.
An aggressive marketing budget, which maintained substantial campaign spends even during the US economic recession in 1991 was one of the other reasons for the success. As of 1999, Intel's was investing around 8% of total sales a year in the Intel Inside campaign. One of the smart moves taken by all industry leaders during crisis is to hike the ad spends – this creates a barrier and throttles the existence of the small players who have already been hit by the credit crunch. Intel yet again proved its mettle.
Usage of brand elements efficiently also contributed to its success. The three second animated jingle left ears craving for more. The logo was familiarised through print campaigns and increased recognition without aids. All communications and packaging details were in plain English. Everything about Intel was user friendly and understandable. Even a layman knew what a microprocessor did and where it was situated. The layman could appreciate the virtual tour into the CPU as a doctorate student could. This conveyed the efficacy of the communication strategy adopted by Intel.
“After the OEM program was
underway, Intel started print advertising around the world to explain the logo to consumers. In early 1992, made by George Lucas' Industrial Light Magic, Intel debuted its first TV advertising stressing speed,
Way ahead for Intel
1. Intel inside, what is outside?
Intel forayed into consumer electronics with declining sales of microprocessors. But due to several factors which didn‟t work in its favour it had to retreat in 2001. But why did they enter into consumer electronics in the beginning?
Answers the Intel Corporation President and CEO Craig Barrett – “Convince consumers that mainstream digital gadgets will deliver their full value when linked to a powerful PC – surely one powered by a Pentium 4 processor. He was pitching an “Extended PC Era” strewn with personal audio players, digital cameras, and PC-enhanced toys such as microscopes and video games”
As strong as the reason seems, Intel could not stay put in this space. Insiders felt that they would not be long term growth potential in this arena. Consumer electronics was a different ball game-a low mgame-argin business with world clgame-ass plgame-ayers like Sony, Pgame-angame-asonic with their roots deep inside. The business was with the aim of boosting PC sales but did this help Intel in its core business remains unanswered because of its premature pull out. This was a classic example of a giant establishing foot into unrelated category and then pulling out.
The core brand‟s perceived quality obviously helps the brand extension. Due to the strength of the brand, the consumer already knows something about the new product: the quality, personality, character, and performance. When introducing a new product, that‟s obviously a
huge advantage. But a successful brand extension can sometimes dilute the reputation of the core brand.
Should Intel look at re-entering consumer electronics? Is it well equipped now? Can a microprocessor player bring new digital offerings in consumer electronics industry today?
2. Brand Built?
Bill Calder is a corporate communications manager with a long history developing PR and communications strategies around various Intel technologies and initiatives. According to him “Over the last year or so, Intel has been quietly working behind the scenes taking a hard look at our brand structure and exploring ways to make it more rational and easier to understand. The fact of the matter is, we have a complex structure with too many platform brands, product names, and product brands, and we've made things confusing for consumers and IT buyers in the process.”
What should be their brand architecture be? Which strategy should they adopt keeping in mind their current offerings and business model?
3. Name Game?
All their brand names were getting totally undecipherable. A recent post on their blog by a customer says it all
-“ All that these „brands‟, „modifiers‟ and „feature sets‟ do is confuse and distance customers from Intel‟s products. You‟d really be better off using your codenames. At least customers would have some idea of what they are getting. A Lynnfield processor is a Lynnfield processor. Who knows what on earth a Intel(R) Core(TM) i7(TM) vPro(TM)-950 processor really is. Every time I see one of these stupid marketing names, I have to go wade through Wikipedia or Intel‟s site to figure out what on earth I‟m getting”
Intel vice president and director Corporate Marketing Deborah Conrad replied to this post on Intel‟s blog –
“First, We are not going to have a line up of names for each derivative, for example a Core i(n) for every flavour of processor. Instead, there will be just three - Core i3, Core i5 and Core i7. And in each, there will be a few versions, but a consumer won‟t need to see that level of detail (unless they elect to, of course).
The fact is that the new approach is about putting it all back on “Core” as the processor family name, just as suggested. That‟s really the most important part of this effort. Right now
we have so many variants, with names that are confusing (Duo, Quad, etc), that moving to a simple “good, better, best” approach makes the most sense.
There is no “easy” way out. We have a lot of products in the market today, with a whole new line up coming out. We can‟t change the names of products that are out there, but we can change the pattern of naming moving forward, and make it intuitive, which is what we did ”
Is the naming strategy adopted in lines with the Intel inside campaign? Does the reply of the director marketing reflect the attitude of Intel carried over years of enlightening and educating the customer and making his life less complex when it comes to decision making?
4. Too much Ingredient Branding?
Talk of Intel and everyone associates it to the microprocessor company. Did you know Intel 20 years ago introduced a brand of watches? It has always defined itself as an innovator in the advanced technology market. It specialised in the computing arena. As we saw Intel Inside campaign has been imprinted into the minds of consumers so strongly that it has not been able to get out of the cliché. It is probably not acceptable to customers that Intel could manufacture something other than microprocessors.
To break out of this, Intel has come up with a very large 360 degree marketing campaign called SPONSORS OF TOMORROW. Tim Bailey, marketing director, Intel Asia Pacific says “We‟re hoping to convey that we‟re not just a microprocessor company, but a move -society-forward-by-quantum-leaps company. What Intel develops today leads the path towards a better tomorrow.”
Should Intel go in for such a huge marketing spend? Will it help the brand to break out of its niche? Or should it just cuddle into its comfort zone?
APPENDIX
Exhibit 1. Technology Life Cycle
Exhibit 3.
Exhibit 5: INTEL i486
“ Want to run your software fast? Then look for the Intel inside symbol on your next computer. it says you got a
real power source on the inside like the upgradeable Intel 486 microprocessor - power it up and run your software at light speed. Intel - the computer inside ”
Exhibit 6: Apple Intel MAC commercial
“ The Intel chip. For years it's been trapped inside PCs. Inside dull little boxes. Dutifully performing dull little
tasks when it could have been doing so much more. Starting today, the Intel chip will be set free and get to live life inside a Mac. Imagine the possibilities.”
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Chandler,ISBM Report 8-2009 Tom Blackett and Bob Boad, Co-Branding: The Science of Alliance 7. Wei-Lun Chang, “Roadmap of Co-branding Positions and Strategies,” Journal of American Academy
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22. Intel's missing ingredient -- excitement. Marketing Week, May 24, 20 07, P10
23. ALTERNATIVE INGREDIENT BRAND STRATEGIES’, published on March 11, 2010 – MARKETING WEEK 24. Ingredient Branding: Time To Check That Recipe Again. By: Tradii, Joe, Brandweek, 10644318,
3/29/2010, Vol. 51, Issue 13
http://www.intangiblebusiness.com/Brand-Services/Marketing-services/News/Ingredient-branding-case-study-Intel~466.html
SOLUTION
„Sponsors of Tomorrow‟ is a campaign launched in 2009 – to overcome the confined circle customers perceived them to be operating in. In fact so strong was the customer perception that there was lack of employee direction. The reason being all communication from the top management indicated to the employees that they were an ‘innovation company in the high technology space’
but to all other parties they were manufacturers of Pentium and Core.
Internal marketing was the need of the hour and they employed this opportunity to convey to the outer world as well. They employed their employees as their spokespersons and showed the world that they were leading the world into a technology/digital age.
This campaign is essential – in fact the company should invest more. The campaign has shown results with customers positively identifying with Intel campaign. So, also employee satisfaction has been rising over the past one year. These kinds of campaigns will create a neutral image and help them diversify. In that case they can evaluate the option of entering software/hardware/consumer electronics spectre. That will give them the edge of a trusted player who has been an innovator in almost all spaces. In fact their innovations should be highlighted – the Moore‟s law, the IC circuit, the USB. The way forward is “RELATED DIVERSIFICATION” after customer acceptance. Intel‟s Brand Architecture is one of confusion today. The way ahead would however be a branded house. The parent brand is the driver and by no means plays a muted role. There have been enough damages just using 386 and 486 as product names. Intel has loads of brand equity that could accrue to any product just through label slapping. This capability should not be wasted. Anything out of the stable would be prefixed with the name Intel.
However, with several core i(n) where n=3,5,7 and then versions using +,- just confuses the customer. It leads to dissatisfaction in customers. This might cause switching as well. One lesson that all tech-wiz companies need to learn is make the product user-friendly. Don‟t give names that resemble algorithm. Pentium 4 over Pentium 3 was understandable and easy to relate to. Follow a hierarchical naming if necessary to relate to improved versions. Reduce complexity in names. Intel should not forget that it was its easy naming; simple instructions in English on packaging that helped its INTEL INSIDE campaign succeed amongst masses.
