Ingredient

Branding
Intel Inside –
A Case study

Avik Kumar Si,B09014

G.Saradha, B09050
Aprajita Gautam, B09071
Introduction
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
chips each comprise more than 7 million transistors.

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
was the "brain" that powered the computer. But
today many personal computer users can recite the
Consumers typically can
specification and speed of the processor; just like car buy 50 million transistors
for a dollar on some
owners can tell you if they have a V4, V6 or V8 memory chips. It really is a
spectacular industry”.
engine. The awareness of "Intel" has grown along
with the awareness of the chip, and today is “The current number of
transistors the
associated with "technology leadership," "quality" (semiconductor) industry
churns out each year is 10
and "reliability." This a classic example of a to the 18th power, or
1,000,000,000,000,000,00
fabulous marketing strategy which catapulted its 0, a figure sometimes
expressed as one
company to the top notch league of its industry. quintillion.”
Chips are something most customers don't see, many
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
the umpteenth semiconductor manufacturers?

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
product development and advertising in order to differentiate their product and gain a strong hold in
the market, Ingredient Branding came as a boon for the companies looking for quickly establishing
their brand among the host of others.

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
for personal PC microprocessors.

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
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
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, as Integrated Electronics 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
Intel’s mission executive leadership and vision of Andrew Grove, Intel
Delight our customers,
employees, and shareholders combines advanced chip design capability with a leading-edge
by relentlessly delivering the
manufacturing capability. Originally known primarily to
platform and technology
advancements that become engineers and technologists, Intel's "Intel Inside" advertising
essential to the way we work
and live. campaign of the 1990s made it and its Pentium processor

Intel’s values household names.

Customer orientation
Results orientation While Intel created the first commercial microprocessor chip
Risk taking
Great place to work in 1971, it was not until the success of the personal
Quality
computer (PC) that this became their primary business. The
Discipline
2010 rankings of the world's 100 most powerful brands
Intel’s objectives
Extend our silicon technology published by Millward Brown Optimor showed the company's
and manufacturing leadership
Deliver unrivalled brand value at number 48.
microprocessors and platforms
Grow profitability worldwide
Excel in customer orientation
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
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 curve 2
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
Donald A. Norman, The life cycle of a technology: Why it is so difficult for large companies to innovate
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 The Intel Inside campaign aimed
to "educate both the retail sales
support of the OEMs, the next step was to advertise the
associates and the consumers
brand “Intel” and build its brand equity in the minds of about the value of Intel

the consumers who were the potential buyers of such microprocessors, and to explain
to them the differences between
systems. For this end, Intel started print advertising the microprocessors" - without
around the world to explain the logo to consumers. See the technical jargon.

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
In early 1992, made by George audio visual logo), displaying the logo and playing a five-
Lucas' Industrial Light Magic, tone melody. Starting in 1995, the now-familiar tone
Intel debuted its first TV
advertising stressing speed,
helped cement a positive Intel image in the minds of
power and affordability. It used millions of consumers. It has created a non paralleled cue
state-of-the-art special effects to
in the minds of the consumer.
take viewers on a sweeping trip
through the innards of the Trademark: The name "Intel Inside" went on to become
personal computer before
the first trademark in the electrical component industry.
hovering over the campaign's
raison d'être - the then new Intel This campaign focused the entire organization around the
i486™ processor. 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.
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
APPLE’s Endorsement “A big
achieve recognition. The Cooperative marketing shot”: On 6th June 2005, Intel
received another shot in the arm
approach was instrumental in helping them to gain with the public declaration of
Apple stating it would switch to
this breakthrough. In the course of the next several
Intel from IBM. By mid-2007,
years, acceptance of Intel resulted in the co-operation Intel was present in all Macs.
See Exhibit 6
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
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
GROWTH: Towards the end of unavailability of online marketing 4, partners were hesitant
1991, only 24% of European PC
to shift advertising expenditures from traditional to newer
buyers were familiar with Intel
Inside logos. However, within a
media outlets. Intel‟s team-up with Google to create the
year, the figure rose to 80%. By Google AdWords campaigns using the AdWords
1995, 94% of buyers were
Template Centre changed this scenario. “The Template
aware.
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
enables 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
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 Awareness of Intel logo prior to
the Intel inside campaign was a
"technology leadership," "quality" and "reliability. You
mere 24% in the European PC
can credit this to the Intel Inside® Program, which market. But it soared to 94%

launched in 1991. The program represented the first within two years of its launch.
World sales of Intel rose by 63%
time a PC component manufacturer successfully within a year of introduction of
communicated directly to computer buyers. Today, the the Intel inside campaign. By
2002, Intel broke into the list of
Intel Inside® Program is one of the world's largest co-
top 10 valuable brands of the
operative marketing programs, supported by thousands world.(Exhibit 3)

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
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
In 1991, before the start of the
"Intel inside" branding program,
ways not to approach the end customers. They had found
Intel's market capitalization was a way to transfer the entire brand equity to Intel itself
about US 1 billion. In 2003, it is
which was the brain of the PC.
about US5 billion. This growth of
shareholder value indicates the
value of Intel's ingredient
By the end of 1991, 300 PC OEMs had signed on to
branding strategy.
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.”
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
“After the OEM program was through every means – innovation, creativity, likeability
underway, Intel started print
advertising around the world to
and above all trust.
explain the logo to consumers.
In early 1992, made by George
An aggressive marketing budget, which maintained
Lucas' Industrial Light Magic,
Intel debuted its first TV substantial campaign spends even during the US
advertising stressing speed,
economic recession in 1991 was one of the other reasons
power and affordability.”
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.
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 margin business with world class players like Sony, Panasonic 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 2.
Exhibit 3.

Exhibit 4.
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”

SCREENSHOTS:
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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http://www.intel.com/pressroom/intel_inside.htm

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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.