A few years ago, Microprocessor chips, as it was not seen outside the product, were an unknown component of PC for the end consumers. It was a commodity product. Intel was a dominant microprocessor brand in the 1980s with the launch of microprocessor 286, 386 and 486. Soon competitors were catching up with Intel. In 1991, Intel lost its trademark violation case against AMD who had similarly named clone chip AMD 386. Intel realized that to remain as a leader in business for a longer duration, it needs to enter the mind of Consumer and that could be done only through branding. It was a challenge as the product was a component. How has Intel built a brand around a commodity?

UNDERSTANDING THE USERS

Except for programmers, gamers and scientists, the computer was a mystery for many target segments. Many were uncertain about the quality and reliability of the product and they were not aware that microprocessor chip was a critical component. Intel that microprocessor being a critical component of PC sensed an opportunity to enter consumer’s mind.

There was an “Achievers segment” – made up of knowledge workers – who spent the majority of time in gaining knowledge, reviewing information and they were major decision makers in companies and they were not programmers. PC manufacturers like Apple were designing products that were easy and intuitive to use to target this segment.

Intel had to focus their communication, branding strategies to target this “Achievers” segment.

POSITIONING and DIFFERENTIATION

INTEL had already established it as a quality product manufacturer and an innovator among OEM companies – Operational excellence in creating complex new products with speed and good infrastructure. Intel believed that it could position its chips as a premium product.(Matches identity requirements of “Achievers” segment).

VALUE THAT RESONATES

TRUST – Intel needed to communicate that the reliability, quality, speed, consistent performance of PC, is controlled by Intel’s chip.

INTEGRATION – It had to convey that chip was compatible with the Softwares used by target segment and play a major role in smooth functioning of those Softwares.

QUALITY SERVICE – Intel had strong service support center for OEMs which in turn assured end-users of quicker solutions to the hardware problems related to chips.

INNOVATIVE – Stronger infrastructure, Continuos solutions to increase a customer’s experience.

COMMITMENT – The “Achievers” category are like “Early Majority” segment and they would prefer a vendor who were assured to be around for a longer period – They need long term association and commitment from vendors(basically for service support)

Intel instead of verbally communicating the values, made customers to experience the values.

TILT THE ODDS

Intel chose a premium segment where competitive forces were weak. They avoided middle-level pricing as it is a market is for nobody.

As they were dominant for some time, they had funds to spend on advertisements, which competitors lacked(Intel sensed this as a competitor’s weakness). Intel needed to advertise to create brand awareness. But they funds were not huge to spend lavishly – They needed to create a meaningful brand.

Innovations – With the help of huge R&D setup, Intel could launch new products faster than the competitor and create a demand, rather than market dictating. Intel invested aggressively in R&D, which could not be matched by competitors or new entrants.

Standardization – To neutralize the OEM’s power, Intel standardized many of its components so that the component can fit more than one OEM vendor. This mutually benefitted OEMs and Intel for some time due to lowered costs and acted as a competitive strategy for Intel.

Intel developed a low-cost product – Intel Celeron to fight low-cost wars with competitors. Due to the diverse portfolio, Intel could maintain a large market share.

INGREDIENT BRANDING

Ingredient Branding – Promotion of a brand within a brand to end user – Simon, H., and Sebastian, K.

In 1991, Intel began Ingredient Branding program (Intel Inside). The program asked Intel’s partners to present “Intel Inside” logo on the product and in their product advertisements. Each partner received a 6% rebate on its purchases of intel microprocessors, which was transferred into OEM partner’s advertising budget. Advertising for computers exploded due to this program.

Intel convinced OEM partners to create a sub-brand for products having competitor microprocessors. In this scenario – customers realized that they were buying a computer without “Intel Inside”.

OEM partners were happy as they got 10% premium for “Intel Inside” products from end-consumers plus advertising support from Intel.

CLARITY – Can anybody write a better statement than “Intel Inside” – It was written in the language of consumers – Findable, memorable, desirable. The sentence was easier to talk about, easier to remember for the consumers. No buzzwords, fluff. Simple positioning statement. In a cluttered world, a customer wants to get to the facts and buy from a company that makes their lives a little bit easier.

PEAK-END RULE – The peak–end rule is a psychological heuristic in which people judge an experience largely based on how they felt at its peak (i.e., its most intense point) and at its end. Intel team was a brilliant one to utilize this psychological principle. Have you seen PC manufacturer ads? Most of the ads end with Intel Logo appearing at the end and with a nice audio representing Intel. That sound has become synonymous with Intel. Did you think why they chose the end instead of showing the ad throughout or at the beginning? The first thing everyone would remember is the “Ending” part. If you end well on a high note – you create a positive impression, a special place in mind. The sound provides that pleasant sensation. Everyone could remember the Intel Logo and the sound. The logo doesn’t just appear – It gradually grows on the screen. Many of ingredient brands have missed tactics like this in their co-brand advertisements. Placement of your logo in ad – visual and audio play a major role – Psychology helps.

BRAND PORTFOLIO STRATEGY

Intel’s brand portfolio strategy too played a crucial role in “Intel Inside” program’s success. In 1992, Intel wanted to launch a successor to 486 chip, but the competitors would soon come with a similar name. Thinking from a consumer’s perspective – It would be tough for consumers to remember numerals as many other products were following the same path. A text would be easy for customers remember. Instead of calling Intel 586 – the chip was named “Pentium”. Can the competitors call their chip as “Pentium”? Was it easier for customers to spell, communicate and remember?

“Intel Inside” became an endorser brand for the “Pentium” instead of sub-brand so that over a period of time, it could be an individual brand. This strategy avoided confusion among users and helped Intel to launch multiple products like Pentium 2, Pentium Pro, Pentium 3, Pentium MMX and Pentium 4, as Pentium brand has grown among the minds of consumers and people considered them as Intel’s product without Intel’s logo.

In 1998, Intel sensed a demand for mid-range high-end servers and workstations. As Pentium brand was associated with lower-end personal computers for homes, it may not be suitable for business servers and workstations. Intel launched Xeon Brand.

In 1999, as PC market crossed “Early majority” segment and entered “Late Majority”, Value segment emerged and demand for low-cost PCs was on rising. Intel observed that using Pentium brand would have been extremely risky. They launched “Celeron” low-cost brand with Intel as endorsement brand.

In 2001, a new processor has been built from the ground up – entirely new architecture – 64-bit(instead of 32-bit) – capable of delivering a very high performance. Intel needed to communicate that this new chip was qualitatively different from the existing processors. They called “The Itanium” processor instead of “Pentium 5”.

CONCLUSION

Intel Programme raised awareness for both processors and PC in general. Consumers and business decision makers(Achievers) alike started observing what was on the inside of the computer before making a purchase. Intel created an impression that it makes something that worth paying more for. Intel reached market supremacy, created brand equity comparable to the level of consumer goods and still continue to be a leader. Intel showed that In-branding could be possible if it covers other elements too.

References – Making the invisible visible – Philip Kotler, Sticky branding -Jeremy Miller, Illuminate – Nancy Duarte, Competitive Strategy – Michael Porter, Brand Portfolio Strategy – David A Aaker, Ingredient Branding case study article – Stuart Whitwell.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s