Saturday, February 19, 2011

Intel Case Study


1. What were the strengths and weaknesses of the Intel Inside campaign?

I think it was a brave and brilliant business move for Intel to distinguish itself from a ‘commodity’ like position and establish itself as the ‘brains’ of the computer industry. Intel decided not to keep a low profile and make itself known. CEOs tended to see sales of semiconductors and processors as engineer to engineer type sales believing that they were simply fact based: who has the best product after evaluation. They employed partnership marketing to build stronger customer relationships and increase profits. Intel chose to have its logo on its customer’s products raising the profile of lesser known computer manufacturers and at the same time levelling the field of computer manufacturers. The campaign delivered results for the partners in a big way. It was a gamble as the big three did not buy in initially. They worried that it diminished their standing. Intel allowed the companies to independently choose their ads and they would pay up to 50% of the cost to the point of 3% of sales. This was absolutely win/win for smaller manufacturers and engendered great loyalty. It also comforted the most timid and least financially able consumer and again engendered great loyalty. The campaign promised upgradability (a big problem at the time as people were continually forced to buy a whole new computer to keep up), power, affordability, compatibility and someone to stand behind the purchase. I think a major strength is that Intel understood the insecurities of its ultimate market and addressed them reducing anxiety. In the end it also forced the larger manufacturers to play Intel’s game. For consumers, in a fairly new and scary world, the branding represented safety and quality. This was sorely needed at the time when few consumers considered themselves qualified to choose a computer. A weakness is that the Intel numbering system was not patentable and thus made them vulnerable. I remember the controversy about the Pentium naming and I was a housewife at the time with small children (meaning I was not exactly in the know.) There was significant free advertising in this controversy alone. The logo itself had a weakness in translation to other cultures. I think a final weakness may be in giving up on the campaign too soon.

2. Evaluate Intel’s continued use of the Pentium family of processors. Did Intel make the right decision by extending the name through the Pentium 4 processor?

Absolutely, I think that they did the right thing. Pentium became the ‘name’ of the right amount of processing power at the time. It had cache like a designer label for computer industry signifying that you were up to date and knowledgeable. Its initial high price re-enforced its quality and exclusivity. Although sales were initially slow, they rose dramatically when the price dropped based on this mystique of exclusivity and the cache of being ‘the’ brand. Now, the former ‘commodity or ingredient’ was such a large brand that they could advertise during the Super Bowl! Again, they understood the ultimate purchaser so well. It was men that normally purchased and computers became the new phallic symbol for techie yuppies.

3. Suppose you were the chief Marketing Officer for AMD. How would you propose that AMD institute an Inside¬ like ad campaign?

This is a tough question. I guess that being number two is difficult and you could choose a Hertz type of ad “we try harder” but they should try harder to find staff with vision for advertising as a first step. I think that I would identify the ultimate buyer. I would realize the maleness of the customer, the testosterone driven competition for ‘more power” and yet the anxieties involved in fear of inadequate knowledge to run or fix the computer. From there I would embrace sporting, Nascar or where ever the male, knowledge/ competitive types were. Maybe I would do an ad with a famous Nascar and driver tearing up the track, rushing into the pit for a team of specialists to change the tires and was the windows in a quick stop and then have the car pull up on a suburban street driveway and the guy helps his young smiling family (with baby asleep) out of the same car. Tag line: Performance and Safety. Man, that’s AMD’s style. –As he settles down in his computer chair. My logo might be a race car with ‘AMD’ simulating a Nascar brand (or a Porsche).

4. Evaluate Intel’s segmentation strategy. Is having a good/better/best product line the best positioning for Intel. Should it discontinue a line(s) and focus on the other(s).

I think that I would be tempted to spin off the lowest end chips now. They are established and they could bring in an important market on their own but they dilute the quality message that I think will be crucial to Intel going forward into consumer products. Many pharmaceutical companies do this when their products are approaching the end of their patents. They continue to get revenue but they reduce the price to a generic level and often just spin the product off to concentrate on big money makers. Intel has been the everything to everybody company until now. At one time Toyota built bicycles too but they moved on. Celeron should be spun off to compete with and draw AMDs attention. I think that they should maintain the better and best lines to accentuate the message of high quality for their other products especially for B2B and for consumer products. They also need to focus on QUALITY production. The Itanium fiasco cost them too much in terms of reputation for quality.

5. In light of Intel’s move to a digital home, did the company’s executives make the right decision in launching an entirely new brand identity? Did it make the right decision in changing a 37 year old Intel logo and dropping the Intel inside campaign for Leap Ahead? What other marketing strategies might the company employ?

Yes, a company like Intel must progress and develop new applications for its products. I would have been reluctant to waste the 37 year impression that I had made on the consumer’s consciousness especially when I was also shifting gears and when the reputation was for quality but they did keep the essential logo and the Intel name. However, given the demographic segment that will primarily be buying these products there is some justification. The ‘millennials’ who are approaching the size of the Boomers in numbers are the ones who are absolutely comfortable with technology and who will have the buying power. The Boomers may keep up with technology but they are aging and not adept so Intel must make it very friendly for them. The important point here is that Boomers may not be the primary market and that the Millenials do not want to buy what their parents and grandparents bought. Even the new Rock Star ad pokes fun at the Boomer sense of Rock Star adulation. (Witness the number of Boomers flocking to Rolling Stones concerts. We would have laughed old men like that off the stage in our own youth but this generation appears more accepting.) They have maintained Intel but the logo has been tweaked and I think that is appropriate. Even Campbell’s soup updates its label from time to time. As they will be marketing to the MTV generation and to Boomers who stay flexible, they need to be careful not to alienate them. An excellent website that provides information and service is a must. Clear communication without equivocation is also required. This generation will not take much propaganda. A perfect, easy to use product that enhances life and the liveability of a home is the best way to go. Leap ahead reminds me of a toy that this generation grew up with- Leap frog. It was a learning toy- not a bad fit.

6. Intel moved into consumer electronics products, such as digital cameras in 2000, only to withdraw after receiving complaints from OEMs such as Dell. Does Intel face a similar issue with its move into the “digital home”? Does this move too far outside Intel’s core competency of producing microprocessors?


“Consumers are acquiring huge amounts and varieties of digital media on mobile and consumer electronic devices as well as on PCs — movies, games, photos, email, music and more. They want to be able to access and enjoy that data easily and conveniently, using any number of devices. To do that requires a home network that allows disparate devices to interoperate seamlessly. Up until now, this consumer desire has remained largely unfulfilled. The DLNA presents a great opportunity to bring together key players in the PC, CE, and mobile industries, to address which standards and specifications are needed to enable the digital home. Without cross-industry standards and specifications, the growth of the digital home market would be very limited.”

Taken from Intel and the digital home.

The mistakes of the past and the lessons gleaned from them have been plugged into this decision. I think that this does represent Intel’s core competencies- innovation, collaboration and marketing. The DLNA Board of Directors is run by representatives from the following companies: Sony Electronics, Philips, Hewlett-Packard, Matsushita Electrical Industrial, Microsoft Corporation, Nokia, and Samsung as well as Intel. All of the companies are potential buyers of Intel’s future products. The process of home digitization is in its infancy and is clearly the way of the future with only 2% of homes in North America using home digital applications. Computers are always lead by the Star Trek vision of the future with easy integrated computer technology that seamlessly interacts with human beings. Intel is bringing that future to us.


References:

http://blogs.intel.com/technology/2009/06/over_the_last_year_or.php

Calder, B, (2009)Intel's New Brand Structure Explained June 17, Downloaded Novemeber 14, 2009

http://www.intel.com/standards/case/case_dh.htm

Keller, K. L., (2008) Lessons from the World’s Strongest Brands, Upper Saddle River, New Jersey.

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