Intel: Building Blocks Inside Out
The Intel Corporation (www.intel.com) was founded in 1968 to build semiconductor memory products. It introduced the world’s first microprocessor in 1971. Microprocessors, also referred to as central processing units (CPUs), are often described as the “brain” of a computer. Today, Intel supplies the building blocks for the computing and communications industries worldwide. These building blocks include chips, boards, systems, and software,
and they are used in computers, servers, and networking/communications products.
Most of Intel’s customers fall into two separate groups: the original equipment manufacturers (OEMs) and the PC and network communications products users. The OEMs manufacture computer systems, cellular handsets and handheld computing devices, telecommunications and networking communications equipment, and peripherals.
The PC and network communications products users include individuals, large and small businesses, and service providers, who buy Intel’s PC enhancements, networking products, and business communications products through reseller, retail, e-business, and OEM channels. Intel is an increasingly global company. Only 35 percent of its revenues are from North America, whereas Asia and Europe comprise 31 per cent and 25 per cent, respectively. Revenues for 2015 amounted to $55.4 billion (intel.com).
Intel has shown phenomenal growth as a company. Much of Intel’s success can be attributed to innovation within its marketing department. This innovation was required to overcome several obstacles. The main challenge Intel faced was trying to sell an ingredient brand, which is a component of a larger product. Thus, there is difficulty in reaching consumers who will never see your product and might not even know what it does or why it is there.
Intel began marketing research in the 1980s because it was having difficulty with its customers not upgrading from the 286 to 386 microprocessor. Marketing research showed that this was due to a lack of customer awareness, and Intel set out to change that. It conducted a small but effective advertising campaign. In fact, it realized that it had
inadvertently created a brand of Intel in the process. Because of the success of this small campaign, Intel began to realize the importance of marketing and marketing research and started to direct more effort and money on these areas.
Marketing research revealed that in order to be effective in its overall marketing campaign, Intel would have to reach the consumers and convince them that what was inside the computer was as important as what was on the outside. This became the key element of the “Intel Inside” campaign conducted during the early 1990s. This slogan helped Intel put a name with its products, and it helped it encompass several of its products under one title.
Furthermore, marketing research showed that it would be most effective for Intel to crossmarket with its technology partners. This would help consumers understand the products that Intel helped develop. The company did this by including the “Intel Inside” logo in its partners’ ads. It also helped fund these advertisements. A problem with including its slogan in others’ ads is that Intel did not want to intrude on the commercials. Intel decided
to help make the small logo sink in by accompanying it with a jingle every time it was displayed. This jingle has become extremely recognizable and synonymous with Intel’s slogan. All of this helped Intel realizes its goal of increasing consumer awareness. Longitudinal measurement of advertising effectiveness via marketing research revealed that the “Intel Inside” campaign was very effective.
Intel’s next idea was to create a name for its microprocessor. This would help the company to avoid using the numbering scheme, which was not patentable, and to find a name that consumers could identify their processors with. After extensive marketing research, Intel chose the name “Pentium,” which was found to generate positive reactions with its consumers. Between 1990 and 1993, Intel invested $500 million in advertising to build its brand equity. By 1993, 80 percent of people in the United States recognized Intel and 75 percent had positive feelings about the brand. Most important, 50 percent of consumers looked for the brand when they were shopping. By 1994, Intel had captured 95 percent of the microprocessor market, due in large part to its marketing efforts.
Intel’s market share for microprocessors slipped to about 80 percent in 2005 as a result of increased competition from its main competitor AMD. On December 30, 2005, Intel announced a major overhaul of its corporate and product branding, a move designed to symbolize the chipmaker’s transformation into a supplier for products beyond personal computers. The changes included a new version of the company’s blue logo—without the lowered “e” that had long been a part of Intel’s branding—along with a new tagline, “Leap ahead.” In 2009 to better align major product groups around the core competencies of Intel architecture and manufacturing operations, Intel reorganized itself into nine operating segments. The history of innovation has continued. In 2012, Intel introduced the IntelR Xeon Phi™ Coprocessor, marking a new era in high-performance computing. The increased competition causes Intel’s marketing research efforts to become more important than ever as it attempts to preserve its dominant place in the market. Intel has been very successful because of its focus on technology, marketing, and marketing research. Intel still faces future challenges, including increased competition, the opening of new markets, and the development of new products. Intel will continue to rely on marketing research to meet these challenges.
Marketing research has played a critical role in Intel’s phenomenal growth. Marketing research was instrumental in developing the Intel brand, designing the “Intel Inside” campaign, and crafting the new logo with the “Leap ahead” tag line. Continued reliance on marketing research will enable Intel to enhance its image as a preeminent building block supplier inside out.
1. Discuss the role of marketing research in helping Intel devise the “Intel Inside” and “Leap ahead” campaigns. Relate this to the marketing research process.
2. Intel would like to increase the preference for Intel chips among PC users in the individual user as well as business user segments. Define the management decision problem.
3. Briefly explain the relationship between management decision problem and marketing research problem. Define an appropriate marketing research problem corresponding to the management decision problem you identified in question 2. Also identify 4 relevant research objectives.
4. What is “secondary data”? Discuss the role of the Internet in obtaining secondary data. Give 2 URL’s for useful information sites and explain in 2 sentences how each site could help Intel.
5. Define the target market in operational terms – 3 target markets for the qualitative research and two for the quantitative research.
6. Discuss the role of qualitative research in understanding how businesses select PC and network communications products. Which qualitative research techniques could be used and why?
7. Explain the meaning of a “survey”. If a survey is to be conducted to determine businesses’ selection criteria for choosing PC and network communications products, which one survey method would you recommend and why? Describe 2 ethical issues that Intel would need to address when conducting the survey.
- Demonstrate knowledge and understanding of the market research theory: the marketing research process, research design, secondary data
- Ability to apply the MR theory in translating a management problem into a marketing research problem
- Demonstrate understanding of the use of qualitative and quantitative (survey) designs
- Demonstrate understanding of the ethical issues involved in undertaking marketing research