Inside "Intel Inside"

Summary:
HBS Inside Intel Inside case went into an in-depth view of Intels greatest marketing
strategy of the early 90s. At the time of this article, the Intel Inside campaign was more
than 10 years old and succeeded in creating one of the most valuable brands in the world.
Pamela Pollace, VP and director of Intel's marketing operations, is charged with the
responsibility to protect, sustain, and build that brand equity. This case study discusses what
seems like a simple question for the 15-year Intel veteran. Should the Intel Inside brand be
extended to other product categories?

Key Issues / Suggested Solutions

Intel was so closely identified with computers that it was unclear whether consumers would
psychologically accept an extension of the brand to other product categories.
o Extending the Intel Inside brand to other product categories may be troublesome if the other
products do not align with what is expected of Intel. Psychologically, consumers solely
regard Intel processors as high performing computing devices. In order to extend this brand
to new product categories, Pollace needs to speak to the technical teams at Intel to make sure
that these new products can be marketed as such.
Intel previously experimented with putting the Intel brand on other devices in the past, but it
had retreated from these efforts when it had became apparent that the company could not
make returns in these markets.
o Intel should not be too wary of this previous failure when making this decision. Back when
Intel experimented with the Intel Outside marketing scheme, the underlying technology
was not mature enough to provide the same promise of being a high performing computing
device. Currently, Intel has a product that fulfills this requirement and should capitalize on
the brand recognition as these other product categories start to mirror the computing
requirements of PCs. Again, Pollace needs to work closely with the technical teams to make
sure their upcoming products can actually deliver.
It is unknown whether consumers will care about the silicon in their cell phones. Marketing
may be ineffective unless Intel can show consumers exactly why their Silicon is better than
their competitors.
o As long as Intel has a competitive product that actually is better than the competition, the
Intel brand alone will make people want devices with Intel processors in them due to Intels
success in the PC market.

Friday, February 8, 2013

Inside Intel Inside

by: Youngme E. Moon and Christina L. Darwall

Extend to New Products?

Pamela Pollace, vice president and director of Intel's worldwide marketing operations, is
debating whether the company should extend its "Intel Inside" branding campaign to non-PC
product categories, such as cell phones and PDAs. The "Intel Inside" campaign has been
one of the most successful branding campaigns in history, but it is too old, and growth in the
PC market appears to be stagnating. However, she is concerned that since Intel does not
dominate these other markets like it does the PC market, it won't be successful.

Initially the motivation behind the branding of Intel Inside was to establish the company by
name and identify the high performance products that were used inside the computer with
the company. This was in an effort to create an image for a company and to establish its
brand presence to the general public. They already had a well established reputation of a
quality brand, but they wanted to raise awareness of their brand and create a positive
image.

Key Issues and Solutions

The major problem faced by Intel was the competition from other microprocessor
manufacturers, who were producing chips which took aim at a cheaper computer
market which Intel had not yet tapped into.

Intel was unable to differentiate its products from its competitors due to the number of
clone products in the market.

Consumers were left confused and often guessing as to what was the content and
performance of MP.

Consumers knew Intel's product because of the cloning but Intel wanted them to
recognize the product through the brand itself.

Solutions:

They established a co-op advertising program to start attracting original equipment

manufacturers and place their products in mass produced PCs.

Fight the competitors with technology, marketing, lawyers, and money power. All
focused towards the same goal.

Intel Consultant Point of View

It would be wise for Intel to extend their technology and services to other products. At this
time, the sales and production of computer were stagnating, as PDAs and cell phones were
on the rise. The figures in the future would reflect the same trend and it creates a great
opportunity for Intel to use their band equity from the computer market and translate that into
the cell phone and PDA. If Intel were to capitalize on this, they could maintain their presence
in the PC market, while extending their reach to alternate markets and improve their
company.

Inside Intel Inside: Expanding on a Branding Legacy

Inside Intel Inside: Expanding on a Branding Legacy

Creating what was one of the greatest branding projects in the era of technology, Intel's
decision to expand into the mobile industry set a new precedent for defining the limits of
branding campaigns.

The Intel Inside branding campaign made a brand inside a commodity a genius B2B
practice.
Summary of the Case:
Intel's decision to market its product as a branded component was genius - it was ground
breaking in its industry of microprocessors at the time, and was instrumental in creating
equity as an input brand.

'Intel Inside' became the first trademark in the electrical component industry. They
effectively taught consumers to understand computers as an assurance of quality through
their name. Intel's main success factors included an established reputation in the
technology field, a willingness to collaborate with partners, and an aggressive marketing
budget even despite economic turns.
What is now difficult for Intel to achieve in the mobile market, as opposed to their highly
profitable and reputable PC market, is the level of necessity in smartphones and tablets.
They don't require the computing power that Intel fosters, meaning either a less quality
computing product option and one that sucks less battery power from mobile devices, a
constant problem for smart devices. Intel has to kick up its efforts more than the 'Intel
Inside' campaign in the mobile market if they want to gain a foothold.

Bringing
Lessons Learned:
1. Developing products in a B2B atmosphere means adapting to the needs and wants of
the customer base in each specific industry. Even if your customers comprise the same
foundation, in each respective industry (i.e., PCs vs. smartphones) they have varying
needs for each product or service you are offering, even in the B2B world.
2. Understand customer trust and innovative staff in the balance to move forward.
Intuition of a collaborative group of employees usually leads to smart decisions - don't let
previous dominance in a market or company policy withhold new idea generation!
3. Create feedback tools with existing and potential customers to generate important
data. It's the critical tool that, if the data is gathered honestly enough, can produce some
serious leads toward enhanced product design, especially in the case of Intel where risk
and uncertainty are prominent.
4. Don't fear the potential of new market entry: embrace it and accept the risk. Each
new industry have a wealth of opportunity and change - but, being in a position to
research and develop your business in these new fields is worth the risk, given the
potential payoff.
Buyer's Viewpoint:
As Jim Bob, the average middle-class user-friendly appreciative consumer, I'm thrilled to
see that Intel Inside is expanding into the mobile market. I understand that the company
is worried about their image and market share, but as someone who has used Intel in my
computers before at work and at home, I'm excited! I hope it doesn't drain my battery
though - having to recharge my iPhone two times a day is enough of a hassle. I also hope
that Intel keeps its quality in the mobile market, although I'm not so much worried about
that part as much as their integration to the product driving up the price per item and
monthly service bills.
Posted 11th February 2013 by Adam Moreschi
3

View comments

1.
Elizabeth RiendeauFebruary 11, 2013 at 7:44 AM

You took a much more optimistic view of this case that I appreciated. I was much
more intimidated by the breaking into the new market. I think that done tastefully, you
are correct, there can be great rewards in branching into the mobile device industry. I
also appreciate the siggested enthusiasm of the potential buyer, Jim Bob. Maybe if
Intel did some consumer outreach to gauge the feelings of their actual customers they
would have a boost of confidence to launch their mobile service campaign.
Reply

2.
Zorse ClothingFebruary 14, 2013 at 12:07 PM

The view of today's customer that you presented is very realistic but I do wonder what
buyers were thinking about in the early 2000s when purchasing PDAs and cell
phones. This was really the height of Intel's branding, and it would have probably
been a huge initial push for purchasers from retailers. While this wave of new
customers is great in the short term, they are ricking their long-term customers for all
products (including PCs) if they get a bad reputation from sub-par phones.
Reply

3.
SharileeFebruary 18, 2013 at 8:18 AM

Good summary, but what about the key challenges Intel faced? How do you brand in a
new market where you're not sure the technology is where you want it to be? Should
you bother or just ignore it for awhile? Does that open up big opportunities for
competitors like AMD to make a mark? What other ways can Intel grow besides
branding?

Brand Valuation News

Ingredient branding case study: Intel

Stuart Whitwell, joint managing director of Intangible Business analyses Intel's successful
ingredient branding campaign.
1. Introduction to ingredient branding
2. The need for an ingredient brand
3. Developing the ingredient brand strategy
4. Intel co-operative marketing strategy
5. Creating a quality standard
6. Intel campaign investment
7. Ingredient branding results
8. Ingredient branding success factors

1. Introduction to ingredient branding

Every month more than 4 million billion (4 x 1015) transistors are produced; more than half a
million for every human on the planet. Most computer chips each comprise more than 7
million transistors.
Twelve years ago computer chips, in the eyes of consumers, were a generally unknown
component of PCs - a commodity product. From a competitive standpoint, a computer chip is
a typical commodity. Take one out, put another in, no performance difference. Chips are
something most customers don't see, many don't understand, and large numbers don't care
about.
But Intel has built a brand around a commodity. The company was founded in 1968 and went
public in 1971. By 1997, it controlled 90% of the world's market for personal PC
microprocessors. Although the market is more competitive today, Intel is still the largest chip
manufacturer in the world.
2. The need for an ingredient brand
Intel developed 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.
Competitors rapidly adopted the same naming convention, and Intel's product names - the
286, 386 and 486 could not be protected. Intel had to find a way to become distinctive in
what seemed to consumers to be a confusing, commodity marketplace.
When Intel lost its battle for the "386" trade mark, they began the 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.

Intel already had an established reputation as a quality producer of microprocessors amongst

the OEMs. However, Intel needed to differentiate itself from its competitors and build a
consumer brand. Intel believed it could position its chips as a premium product, which it
could in turn sell at a premium price to computer manufacturers. To give computer
manufacturers and their retail customers more reason to identify Intel in their marketing, Intel
chose to market its product as a branded component.
Intel 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). The first step was to commit Intel to a fully integrated brand strategy.
They chose to invest in "ingredient" branding - the creation of equity as an input brand.
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. After only six years after its
introduction consumer preference for NutraSweet had produced annual revenues of nearly
US$850 million and net income of over US$180 million.
3. Developing the "Intel Inside" ingredient branding strategy
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.
The name "Intel Inside" became 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 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.
Many consumers were uncertain about the quality and reliability of microprocessors, and
Intel found a way of taking away the mystery of the product, gaining the confidence of the
end consumer that "Intel Inside" represented quality and reliability. At first this met with
skepticism, outside the company and within it. But that didn't deter Intel. As well as
advertising for itself, it had the bright idea of contributing directly to PC makers' campaignsas long as they promoted Intel at the same time.
The advertising results were stunning. For example, late in 1991, Intel research indicated that
only 24 percent of European PC buyers were familiar with the Intel Inside logos. One year
later that figure had grown to nearly 80 percent, and by 1995 it had soared to 94 percent and
continues at these high levels today.
Ten years into the campaign, products that don't boast the presence of Intel inside are bound
to arouse suspicion among consumers. "People will wonder, "Why don't they use Intel chips?
Are they using something cheaper, or not as good?"

4. Intel co-operative marketing strategy

Intel went to publishers and media organisations and negotiated volume discounts for
everyone who participated in the program. Publishers were excited because the program
appeared to bring them many new advertisers and helped prove the value of advertising. The
computer manufacturers got better rates through the program than they would have buying
rate card price. Intel also substantially reduced the total cost for its own advertising while
maintaining high exposure for "Intel inside".
Computer manufacturers began co-branding their computers with Intel, the logo gained wider
recognition, and consumers perceived it as a benefit in performance.
5. Creating a quality standard
With its ingredient branding program, Intel raised awareness for both processors in general
and for its own processor brand. Suddenly, consumers and business decision makers alike
considered what was on the inside of the computer before making a purchase and Intel
provided the only relevant solution.
More importantly, they taught to consumers to "look for the Intel Inside logo" as an assurance
of quality. Intel has been linked to premium brands like IBM and Compaq -they have created
the lasting impression that Intel makes something worth paying more for.
6. Intel campaign investment
In 1997, Jami Dover, Intel director of co-op marketing programmes said that since 1991, Intel
and PC makers together had spent US$3.4 billion on advertising that included the Intel Inside
logo. More than US$2 billion of that figure came directly from Intel with the remainder from
their partner OEMs.
Today, the Intel Inside Program is one of the world's largest co-operative marketing
programs, supported by some 1,000 PC makers who are licensed to use the Intel Inside
logos. Since the program's inception in 1991, well over US$7 billion has been invested by
Intel and computer manufacturers in advertising that carried the Intel Inside logo.
This leapfrog strategy of marketing to end-user has since worked so well that PC buyers now
ask for Intel. Market research has indicated that end-users show a strong preference for
computer systems containing Intel microprocessors. Around 70% of home PC buyers and
85% of business buyers state a preference for Intel, saying they will pay a premium for the
security and peace-of-mind offered by the brand.
7. Intel Inside - key results of ingredient branding
To illustrate the value of this campaign in increasing shareholder value, look at the growth in
Intel's market capitalisation. In 1991, before the start of the "Intel inside" branding program,
Intel's market capitalization was about US$10 billion. In 2003, it is about US$155 billion.
This growth of shareholder value indicates the value of Intel's ingredient branding strategy.
Some other key statistics demonstrating its value include:

In 1992, the first year of "Intel Inside" campaign, worldwide sales rose
63%.

Awareness of the Intel logo amongst European PC purchasers grew from

24% at the start of "Intel Inside" campaign in 1991, to 94% by 1995.

In 2001, Intel was listed as the sixth most valuable brand in the world,
with a published brand value estimated of US$35 billion.

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.
8. Ingredient branding success factors
The success of the Intel Inside campaign can be attributed to a number of factors including:

an established reputation for producing leading edge technology, in

particular microprocessors;

a willingness to pro-actively collaborate with channel partners;

the adoption of industry leading marketing strategies, such as the use of

plain English packaging and component instructions; and

an aggressive marketing budget, which maintained substantial campaign

spend even during the US economic recession in 1991. As of 1999, Intel's
was investing around US$250 million a year in the Intel Inside campaign,
representing 8% of total sales.

What the analysis shows, and what is instructive to any supplier in an industrial or
commercial market, is 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, and 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.
This case study demonstrates how a successful, ingredient brand campaign can transform a
commodity product into a valuable consumer brand with a brand value quantified at US$35
billion.
November 2005 Marketing
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