Since the development of PCs in the late-1970s, the marketing of IT related software and hardware was mainly driven by computer vendors and software publishers. However, Intel relied completely on its computer-vendor customers otherwise known as Original Equipment Manufacturers (OEMs) to convey to end users the benefits of using an Intel processor. As a result consumers had very little awareness about Intel and its products. Most PC users were not aware of the availability of advanced processors and their cost saving performance. Intel realized that it needed to create more awareness about itself and its products among consumers. The first focused marketing initiative was developed by Intel in 1990 to market the 386SX microprocessor. A small group of marketing personnel interacted with IT managers who came to buy PCs for business purposes and briefed them about the features and advantages of the existing microprocessors as well as the new releases. As a result of the above, customer awareness about the 386SX processor increased and translated into increasing sales. Even as the company initiated marketing activities, it had to deal with certain legal problems. Arch-rival AMD, which had been given the license to manufacture chips by Intel began making use of the latter’s processor numbers to market its own products. By offering chips at comparatively cheaper prices, AMD captured 52% of the market by 1990. According to Intel sources, the company had ‘assumed’ that the 386 and 486 processors were protected trademarks and that no other company could make use of them. Intel then made attempts to protect the technology of the 386 and 486 processors. As a result AMD sued Intel for breach of contract. Intel lost the case and the courts stated that the processor numbers were not trademarks. This opened the doors for other companies to use them. Intel realized the need for a better marketing program that would protect its rights. Intel thus sought to create a strong brand to communicate better with consumers, justify the billions of dollars invested in product development, and highlight the superior performance and reliability of its products. The decision to go in for component branding was taken because of the company’s observation that although a microprocessor was a key component of the PC, it was largely seen as ‘just another component.’ The company developed a component branding strategy that aimed at gaining consumer confidence in Intel as a brand. It decided to run campaigns that would demonstrate the value and benefits of buying a processor from a leading company in the industry. The most innovative aspect of this strategy was the decision to communicate directly with end-users. This was a very novel idea for a ‘pure technology’ company. Intel, however, decided to go ahead with its plans, and with the help of an advertising agency, Dahlin Smith and White, designed a campaign for its products. The company adopted a new tagline - ‘Intel The computer inside’- in July 1991. Later, the company shortened the tagline to ‘Intel Inside.’ The tagline was accompanied by a new logo, in which the words ‘Intel Inside’ appeared inside a circle. This design suggested that the brand had an implicit seal of approval. The new marketing program consisted mainly of an incentive based cooperative advertising (coop) program. Intel created a cooperative fund wherein 5% of the purchase price of the microprocessors was kept aside for advertising funds and made available to all PC makers. Intel shared the advertising costs with the OEMs for print advertisements that included the Intel logo. This arrangement became very popularly and many OEMs joined the program. As a result of the arrangement OEMs could not only increase their ad spend, they could also be assured that their computers were powered by the latest microprocessor technology. By the end of 1991, around 300 PC OEMs had joined Intel in support of the Intel Inside coop program. After the success of this program, Intel started to advertise in the print media around the world to explain the Intel logo to global customers. Intel released its first TV advertisement in early 1992. This ad was made by Industrial Light Magic for the new Intel i486™ processor. It stressed on the power, speed and affordability of the chip. Intel had a series of high profile launches for its new chips over the next couple of years. Pentium® and Pentium® Pro were launched in 1993 and 1994 respectively. The company had now decided to use names instead numbers for its microprocessors (the word Pentium was derived from a Greek word meaning five). In the meantime Intel’s investment in marketing seemed to have paid off. A company research revealed that while only 24% of European PC buyers had been familiar with the Intel Inside logo in late-1991, the figure increased to nearly 80% in 1992 and 94% in 1995. Intel’s marketing efforts not only increased the demand for chips, they also increased the demand for PCs around the world. This was interesting considering that the demand for PCs was growing sharply in spite of increase in PC prices. The number of people who owned home-PCs was increasing even as the PC emerged as the most viable tool for business, education and entertainment. Intel was the catalyst in this PC revolution that swept the entire world. Intel’s advertisement campaigns and coop marketing strategy had become well known marketing success stories of the 1990s. Each new campaign in the print, electronic or outdoor media attracted significant attention. However, even those who had accepted Intel as an unconventional marketer were not prepared for the Stayin’ Alive campaign in 1997. Commenting on its success, Advertising Age said, “They became nothing less than the whimsical icons of a go-go PC industry.” In the same year, Intel started advertising on the Web and also encouraged PC makers to use this media. Intel also allowed them to use the company logo and messages in their advertisements. This helped the company convey to customers the important role its chips played in giving then a good Internet browsing experience. As the Internet gained in popularity during the late-1990s, consumers began turning to it for gaining information on products and purchasing products online. Consequently, Intel took steps to become a leader in the Internet economy. The company spruced up its Intel Inside Program to promote and support e-Commerce marketing activities undertaken by taken up by computer manufacturers. To leverage the popularity of the Intel logo, the company even started selling products like books (for engineers and IT professionals), caps, T-shirts, key chains, pens, coffee mugs and dolls. These products, made available through the company’s website, came with the Intel Inside logo printed or embroidered on them. The printed material on the merchandise generally featured the latest product(s) launched by the company. In 2001, in another innovative move, Intel set up the Intel Inside® Online Network. This was essentially a web-based tool that helped manage business transactions related to the company’s coop advertising program. The Intel Inside® Online Network, which was available 24 hours a day, provided services in languages other than English (Chinese and Japanese). Intel’s consistent efforts towards providing customer satisfaction through quality services and its innovative efforts at component branding fetched it commensurate results. The company’s net income of $ 7.31 billion in 1999 increased to $ 10.53 billion in 2000. Intel earned 35% of its total revenues from North America, 31% from the Asia Pacific region, 25% from Europe and 9% from Japan. Besides PC manufacturers, the company marketed its products to various other industries such as industrial equipment, military equipment and communications industries.

1. Examine the business environment in which Intel began selling its microprocessors in the early-1980s. Why did Intel decide to intensify its marketing activities in the 1990s? Discuss. 2. Examine Intel’s decision to target the PC end-users through its marketing campaigns. Also, comment on the cooperative marketing strategy and the execution of the Intel Inside campaign.