ADVERTISING AND PROMOTION (MKT 621)

Assignment No. 4
Marks: 10
Read the following case study and answer the questions given at the end.
Intel Inside: The Co-op Program That Changed the
Computer Industry
If you were to ask most owners of personal computers what is inside their Ps! chances
are they would respond "y saying! #an Intel.$ And there%s a good reason why. &'er the
past decade consumers ha'e "een e(posed to hundreds of millions of dollars% worth of ads
for personal computers each year that carry the #Intel Inside$ logo. )he logo has "ecome
u"i*uitous in P ads as a result of a landmark cooperati'e ad'ertising program that is
lauded as the most powerful e'er and the definiti'e model for successful #ingredient$
"randing.
In 1+,+ Intel was the first computer chip manufacturer to ad'ertise directly to consumers.
Its goal was to persuade P users to upgrade to Intel%s -.,/ 01% chip from the 2,/.
3nown as the #4ed 1$ campaign! the ads depicted the num"er 2,/ with a "old! spray5
painted ( o'er it. 6ennis arter! Intel%s 'ice president and director of strategic marketing
and the architect of the #Intel Inside$ campaign! was a marketing manager at the time and
was working with a tech ad shop on Intel%s print! outdoor! radio! and in5store ads. 7e
noticed that the ads were changing people%s "uying "eha'ior and that the company had a
model of something that was working as Intel could communicate technical information in
a "asic way.
In 1++0 Intel selected a new agency! 6ahlin 0mith 8hite! 0alt 9ake ity! which created
the now5famous tagline #Intel. )he omputer Inside.$ )he goal of the campaign was to
"uild awareness and position Intel as the real "rains of the computer. In early 1++1 Intel
"egan pitching the program to P makers! and I:M! creator of the first Intel5powered
personal computer "ecame the first computer maker to use the logo. Intel then "egan
talking to P makers a"out the creation of a co5op fund in which Intel would take ;
percent of the purchase price of processors and put it in a pool to create funds for
ad'ertising.
)he #Intel Inside$ co5op program was officially launched in <uly 1++1 and works as
follows:
In return for showing the logo in print ads and on the Ps! a computer maker can get "ack
; percent of what it pays Intel for chips! with the money to "e applied to ads paid for
=ointly "y the P 'endor and Intel.
More than 1;0 computer makers signed on to the program and "egan using the #Intel
Inside$ logo in their ads.
As the program "egan! Intel started playing up the logo in its own print ads as well. In
No'em"er 1++1 it mo'ed the campaign to tele'ision with the classic #Power 0ource$ spot!
which magically took 'iewers on a whirlwind tour of the inside of a computer to show
how the Intel chip streamlined upgrading of a P. In 1++. Intel introduced the Pentium
processor "rand with a national )> campaign. 7owe'er! the company was putting the
"ulk of its ad'ertising "udget into the #Intel Inside$ co5op program. In 1++; Intel
e(panded the co5op program to include )>! radio! and in5flight ads. )he mo'e led to a
"oom in P ads on tele'ision featuring the Intel auditory signature at the end of each
commercial. In 1++? Intel e(panded the co5op program to include Internet ads and
pro'ided incenti'es to P makers to place ads on media5rich we"sites Intel has also
e(tended the co5op program into retail promotions as well.
0ince the co5op program "egan! Intel has pumped into it an estimated @4 "illion! and this
has "een an awfully smart in'estment Intel%s share of the microprocessor market has
grown from ;/ percent in 1+,+ to nearly ,. percent in 1+++! and the company%s re'enue
has gone from @. "illion to nearly @.0 "illion. Nearly +0 percent of the more than 1?!000
P print ads run in the Anited 0tates for the first nine months of 1+++ carried the #Intel
Inside$ logo. )he program has influenced a generation of P users and propelled growth
of the entire computer industry.
According to positioning e(pert Al 4ies! #Intel Inside$ will go down in history as one of
the more magnificent campaigns of the century. 7e notes! #It%s "rilliant and! in a sense! it
pre5empted the "randing of personal computers.$ :randing guru <ack )rout notes! #)hey
took an old idea B ingredient "randing.B which 6u Pont pioneered! and took it into
technology.$ )rout was an early "elie'er in the programC he told -Advertising Age in a
1++1 inter'iew that conceptually it was a good idea! although Intel would need consistent
ad'ertising o'er time for the logo to ha'e much meaning.
In its early stages the program encountered criticism! as many ad'ertising and computer
marketing e(ecuti'es were skeptical a"out Intel%s a"ility to differentiate its chips. )he
head of one agency noted: #Most people who "uy computers don%t e'en know that chip is
there. )hey care a"out the performance of the computer. It really doesn%t matter what the
chip is.$ 8ell! they may not know e(actly what a microprocessor chip does! "ut
apparently it does matter if there is an #Intel Inside.$
Q 1. Why do you think the Intel Inside cooperative advertising program
has een so successful! "ive reasons.
Q #. Write down the e$ample of any other company that might e in a
situation to enefit from this type of cooperative advertising
program and %ustify your answer.