Intel Branding Strategy Case

The University of IOWA Tipple School of Management IMBA Program – Intake 6 Prepared By Group 2: Kimmy Wong Diana Hung Mike Yeh Ken Wan Date: 18/07/2009 1. Was the Intel Inside campaign worth it ? What were its strengths and weaknesses? The unfavorable judgment against Intel â€Å"386† trademark in 1991 indicated that any competitor could market its product using the same marks, numerical sequencing, used by Intel. To differentiate from competitors and solve the problem of market confusion among the product offerings, Intel developed an alternative branding strategy by focusing on building the company’s brand image instead of product-based brand strategy. Under the new branding strategy, Intel was established as a brand, a reliable and premium brand, ably transferring the equity of â€Å"386† and â€Å"486† microprocessor to Intel, the company and to distinguish Intel products and to communicate the depth of Intel as a corporation with respect to its competitors as well. To boost the awareness of Intel’s brand name and strong differentiation, the company employed a series promotion campaigns to reinforce the main message of â€Å"Intel Side† aggressively after loss of trademark. Detail of their promotion campaigns are as under: [pic] Intel campaign has successfully introduced the microprocessor to the market and consumers can identify its microprocessor technology. Its success laid the groundwork for moving into next generation. Through repeat impressed promotional message be certain that consumer have Intel technology on the inside. As Intel is the leader and the best microprocessor supplier. In Intel Inside campaign, the company applied â€Å"push† strategy to seek support of the OEMs by encouraging them using Intel microprocessor in manufacturing their product and including the Intel Inside logo in their print ads. Under this strategy, Intel found much infusive reaction from OEMs, created a great awareness of â€Å"Intel Inside† logo and driven positive perception and favorable association towards Intel brand simultaneously. With the help of the program, Intel cut the utter confusion clones bring to the marketplace. In turn, strong brand image and premium status has been built successfully. Moreover, the campaign powerfully in reinforcing on two key associations: â€Å"safety† and â€Å"technology†- whenever and wherever consumers saw the Intel logo and also created a brand image for products that fall under the Intel Side umbrella. At the same time, a â€Å"pull† effect was generated on the consumer and presented a very persuasive argument for OEM to use its product. In turn, it built a remarkable brand value to Intel, the company and its stakeholders as well. This campaign had demolished the negative perception of Intel and well-reposition Intel as a premium brand with promising of â€Å"Safety† and â€Å"Technology†. The new established brand successfully differentiate its product from competitors and help Intel move the market forward into new generations of microprocessor and to leverage its advantage and equity to its new generation of technologies. Frankly, the campaign is worth it since Intel got more than 700 OEMs to signed for the program and induce the first and second tier big OEMs to join co-operation program as well via the â€Å"pull† effect successfully. Consumer research indicated that most viewers of the TV ad remembered the Intel name instead of the product. The Intel, on the other hand, proved much more successful in educating the consumer on the specific product attributes associated with the Intel processor and created a favorable association and positive perception for consumers that they look for Intel inside their PC when making selection. In turn, a synergy effect has been well created for its brand Intel, the company and their customers till today. With the help of the program, Intel’s brand image is indeed associated with power, reliable, affordability, compatibility, technology and experience globally till today. Again, it is an effective campaign which generated lot of awareness for Intel and made the company and its chip program newsworthy in the eyes of the general and business press, and it helps build some creditability and enhancement to the OEMs’ message in the ad as well. Intel is being recognized as the technology leader which has the strongest image on quality, compatibility attributes and became more familiar, popular and delivered a quality message in the world. OEMs benefited from the campaign that their products become a quality product because of Intel chip inside. The Intel brand is one of the top ten known-brands in the world. You can credit these to the Intel Inside program. However, not all the OEMs, especially the first and second tier, were agreed and appreciated with such cooperation program would be greatly affect the penetration of Intel in the market and affect their market share. Moreover, rebate program which offered 30% -50% of rebate to the OEMs customer, incurred heavy cost to execute, caused huge marketing expenses and lower the profit in turn if program fail. Since brand equity can be eroded over time but can be enhanced by marketing actions. We concern huge of expenses has to be spent in marketing on continuous and regular basis for reinforcement of the brand and repeat reminding the customers of the brand. If success, it will create synergies in the brand and return to the company. If fail, on the other hand, it will create a burden to the company. 2. Evaluate the Pentium family of processors. Did Intel make the right decision by extending the name through the Pentium 4 processor? Should the company consider changing the name of the next processor in the Pentium line? Intel planned to introduce the next generation processor, code name â€Å"P5† sometime after the fall of 1992. Given the success of the Intel Inside campaign, it signals any branding strategy developed for the next generation, e. g. P5, would link with the Intel Inside program. In the meanwhile, Intel had leant an experience from Cyrix’s case in March 1992 which had caused a negative influence on its branding strategy. This painful lesson significantly influence Intel management concern the name strategy and as a force driven to review the possibility of altering the chip’s name instead of using 586. Recognized naming process as a major strategic move, Carter took great care by appointed Karen to manage it prudently. Intel conducted extensive search and employee contest for having the right name which is trademarkable and linguistically correct for its 5th generation of microprocessor. Intel developed a series of presentations to keep customers informed of the naming process and product introduction as way of asking for help and understanding before launching but without disclosing the actual name. Intel announced, in October 1992, its fifth generation microprocessor was named â€Å"Pentium† and would begin shipping production version in early 1993. Intel did great job in the naming strategy since â€Å"the name suggest an ingredient and the â€Å"Pent† of Pentium from Greek meaning five, imply the new chip is fifth generation of the family. The â€Å"ium† was added to make the chip sound like a fundamental element. † Absolutely, the name closely linked to Intel in which completely new with some generational concept has been rooted and have a positive association can be worked on global basis. It fully supports Intel’s brand equity till today as well. In addition, Intel conducted a profitable investment in advertising by spending a huge promotion campaign to achieve name recognition as well as acquire high level of awareness and favorable association for the Pentium processor. Intel had rewarded from what it did. In the meantime, the marketing launched a full scale effort to ensure the Pentium name quickly adopted into everyday industry vernacular. Intel’s PR department also phoned all the leading individuals who wrote about the industry to let them know the new name. They sent the author letter correcting the error if they found anyone using â€Å"586† or â€Å"P5†. In return, it was over 90% of press mentions used Pentium instead of â€Å"586†. Moreover, the Pentium processor had been recognized by PC users as a valuable ingredient since then. Intel management understood â€Å"solid position cannot be built on empty promise†. Thus, the company delivery its promise through its strongest product attributes, as under, which highly appeal to the targeted customers and the public as well: i) More than twice as fast as the Intel486 processor; i) With over three million transitors and high MHz offer high speed; iii) Support graphical user interface; iv) Support PC, workstation manufacturers to server and workstation lines; v) Offer power and technology to allow PC manufacturer to head-on address the traditional mini and mainframe market; vi) Made it easier to build the Pentium processor into multi-processor machines vii) The chip would the key to multi-platform, client-server architecture In support of the â€Å"Pentium†, Intel skillfully introduced aggressive â€Å"Technology briefing† campaign to build its brand equity and reinforce its technology leader position, a consumer-styling advertising before available for sale, in the print ad with 4 pages to educate and create demand as well as position the Pentium at the elitist of the market and further reinforce the brand awareness and its powerful features associated with the brand as well. In fact, Intel had made the right decision by extending the name through the Pentium processor. Through this extending, Intel can leverage and transfer its advantages in the valuable brand, in terms of positive perception, favorable association and strong brand equity, to this generation of â€Å"Pentium†. Clearly, it is a main ladder laid for the success of the Pentium. By the way, it created an excellent opportunity for the company moving the Pentium to achieve another climax in the new age. With the experience of i386, Intel also concern the name â€Å"Pentium† and made it protectable legally and by a set of internal and external guidelines from Intel on usage of the name as well. Through skillful extending together with the support of extensive well planned promotion efforts, cautious branding strategy and the huge advertising investment, the premium brand image and position of Intel Pentium has been successfully created and conveyed the positive attributes and preference as well as the favorable association with quality, state-of-art technology, software compatibility and performance which is the OEMs customers wanted to be associated with as well. Obviously, consumer looked for the Intel symbol in making their personal computer selection as a pull effect that adds both intangible (brand equity) and tangible (sales) value to Intel. Furthermore, following the announcement of the Pentium, Intel stopped all the speculation that had surrounded the name since trademark ruling in 1991. Regardless of the numerous debates over Intel’s branding strategy, Intel really did a great job by extending the name and applying the â€Å"branding ingredient† strategy to its new generation of technology. In 1993, Intel had been rated as the third most valuable brand, behind Marlboro and Coco-Cola, with an estimated worth of $17. 8 billion. It signals Intel is being recognized as an undisputed technology leader in which the brand had strongest image on quality and compatibility attributes. Moreover, what they had paid on the promotion now yielding the return through its huge sales of the Pentium chip, which was rising to 640,000 in 1994 from 80,000 in 1993 and further more to 2 million in 1995 and had continuously increased in 1996. It brings a sound return to the company and its stakeholders as well. Given the efforts in building and gaining the brand equity for Pentium, we don’t think it is the right time for Intel to change the name of the next processor in the Pentium line again. Since the customers had just familiar with the name and a favorable perception and association have been well connected the Pentium. Further change will cause confusion to the public within a short period of time. On the other hand, the company might use the number following the name Pentium. For example, Intel may use Pentium I, Pentium II, Pentium III†¦ as a clear indication for the new generation of technology instead of change the name frequently. Beside, staying in Pentium may also take this excellent opportunity to make use of its brand awareness, favorable association and valued brand equity inherent in the name â€Å"Pentium† leverage and transfer to its next generation as well. However, we understand that the innovation and change are necessary and crucial especially in this fast changing high technology and highly competitive world. We have reserved the right to leave the room for that change may happen sometime after few generations so as to better cope with actual changing market arena since there is still room for continue to improve on its branding strategy given surviving in such ever changing world.. 3. Should Intel adopt its Intel Inside campaign for use with its non-PC processor products? What other marketing strategies might the company employ? The Intel Inside program was widely regarded as a success and Intel became a lightning rod for this electronics revolution and paving the way for the computer to become more commonplace in the home and in business. While the Intel Inside Program continues to evolve, it will remain true to its heritage of promoting: â€Å"technology leadership,† â€Å"quality† and â€Å"reliability. † These features will be as important to online users and high-end server buyers today. The brand with an estimated worth of $17. 8 billion and expect to increase in the years to come. Intel recognized that they are in the ever changing global environment and planned to broaden its focus on other non-PC processor products, e. g. fax modems, LAN administration software etc. This is Intel to broaden its product profolio into different categories from its traditional processors and it is a new challenge for the company as well. In fact, the â€Å"Intel Inside† campaign focused solely on the company's microprocessors, such as its popular Pentium line of chips. When Intel broadens its focus to other platforms–not just the microprocessor, the new campaign and new logo is need for better reflecting this change. This will help aligning the brand strategy with its platform strategy. As they evolve as a company, it makes sense to evolve the brand supporting with the new compaign. Thus, retiring the â€Å"Intel Inside† campaign by redesigning a unique marketing program to launch its extension, which may better reflecting its product attributes, might be a wise decision and a drive for the company to leap forward into a new technological age. In the meanwhile, the company can take the leverage advantages heritage from the success of the previous program transferring to these non-pc processor products through the branding extension. Since successful brand extension occurs when the parent brand is seen as having favorable association and there is the perception of fit between parent brand and extension product. Given the favorable, positive and unique associations of the Intel brand to the mind of consumers, we believe the Intel brand name may offer many potential benefits in this extension and it would continue to receive its success as previous as well. This is also an excellent opportunity for the company to identify new and completed different way to use the brand at full potential. However, the success of the new program is highly depending on the marketing efforts, a unique and innovative marketing program as well as with huge investment projected in long term view in the new campaign in order to differentiate from its competitor. Instead of only focusing in microprocessor computer industry, we highly recommend the company should broaden its product range into other potential industry, such as, communication, household appliance industry and entertainment communication etc. and to widen its products in the existing profolio for capturing the potential heritage in the brand for consumer’s choice. Given its leading position in the world, we believe Intel can negotiate with big communication corporations, household appliance companies like Samsung, Sharp, Philips, Panasonic for different profitable co-operation or membership programs. It will be interesting to see if Intel’s strength in the traditional chip sector can translate to the increasing imp ortant mobile field. Intel may partner with first tier of the communication companies, this collaboration could lead to more innovation from the two companies and building products that the two companies can get out ahead of the competition on the emerging segment of mobile and entertainment devices or others etc. The growing importance of the Internet and webpage, E co-operation strategy with the main search engines can be considered to promote its product and its new technology as support to its new campaign to raise its awareness of the new product line. 4. What do you think of Intel’s aggressive expansion away from its core microprocessor business? What recommendations would you make for the future? It is a global trend which creates a pull and push effect for Intel to broaden its focus to entire platforms not just the microprocessor in such highly competitive arena. To continue build up its brand equity, maintaining its leading position and fully utilization of its technological potential and advantages, it is a must for Intel to act in this way respond quickly and deliver a product portfolio that meets the needs of the changing market. It is a long term planning for bring Intel move to other potential business and in more globalize way and stabilize its leader position in this diversification path. In fact, instead of only focusing in microprocessor computer industry, the company now broadens its product range into other industry, such as, communication, household appliance industry and entertainment communication etc. Given its leading position in the world, we believe Intel can negotiate with big communication corporations, household appliance companies like Samsung, Sharp, Philips, Panasonic for different profitable co-operation or membership programs. It will be interesting to see if Intel’s strength in the traditional chip sector can translate to the increasing important broaden field. Intel should boarder its brand name and create sub-brand to allow widen product category development. It should emphasize information about the extension rather than reminder about the Intel Inside brand. To be a house of brand, collecting different high technology product brand name, even if one of the product was not doing well, this would not affect their successful brand image. Most of the improvements come from Asia, such as the increasing present of technology from China corporate present threat to Intel’s global business in certain extent. However, the company reducing its threat and increasing its opportunity by vertical or horizontal integration or acquisition of its competitors or channel members etc. For decades, Intel has developed products, technologies and initiatives for the advancement and betterment of its customers. It has invented groundbreaking creations that truly define the word ‘technology’, and the proof is the Intel logo. Intel’s broadening strategy is also an indication of the company’s mission to ‘drive the next leap ahead – in technology, education, social responsibility, manufacturing and more – to continuously challenge the status quo’. ———————– CONFIDENTIAL . . . . . .. . . . †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. Intel ® Corporation Brand Management . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . .