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http://weareintel.wix.com/lookinside

The Company

Intel is an American multinational technology company headquartered in Santa Clara, California. The company is a world leader in semiconductor chip manufacture - Intel's technologies, products and initiatives have transformed and continue to advance how people around the world live, work and play in a digital age. The company's ubiquitous microprocessors first launched in 1971 have been at the forefront of this digital revolution some 40 years on. A smart evolution is underway and Intel technologies - in 2 in 1 devices and portable all-in one computers, massive data centers, phones, tablets and the tiniest sensors - are shaping an era where everything connects and computes, from vending machines and automobiles to automated factories and cities.

Research and development is also considered an important aspect in view of building long term brand equity. Intel believes in being reactive to changes in the marketplace as a key element for sustainability. Intel invests heavily in R&D to stay one step ahead in of the competition and as a result be able to enjoy a skimming pricing strategy. The company is known for its innovation and mostly for first to market with its products that are perceived as most advanced. As a result the company enjoys a flexibility in pricing because of its economies of scale.

Utilizing the medium of this online blog, we will take stock of the strategies, successes and struggles that have shaped the firm since its inception, and in the process offer some insight into what the future might hold for the company. Let us take a good look inside!

Evolution

A brief snapshot of the evolution processors:

Corporate Identity

Mission

"This decade we will create and extend computing technology to connect and enrich the lives of every person on earth."

Values

The company has 4 main core values. These are:

1. Customer orientation

2. Results orientation

3. Great place to work

4. Quality discipline

Objectives

The company espouses the following goals:
1. Grow PC and Datacenter business with new users and uses

2. Extend Intel Solutions to win in adjacent market segments

3. Create a continuum of secure, personal computing experiences

4. Care for our people, the planet, and inspire the next generation

Intel's New Tagline

In a recent New York Times advertising column, Stuart Elliot writes about Intel's decision to "Shift its Focus to the Present". A new tagline "Look Inside" will replace the current "Sponsors of Tomorrow" after the company determined that customers are more interested in the present than the future.

This change is also more in line with the "Intel Inside" campaign that the company has been running for more than 10 years.

Competitors

In PC/Laptop Space:

As a manufacturer of microprocessors, Intel’s fiercest competitor is AMD (American Micro Devices). In a way, Intel has been partly defined by this intense rivalry which has been a key driver for the technological advancements that it has made over the past decade - a period of immense growth in the general computing and semiconductor industry.

Both Intel and AMD were founded in the Silicon Valley, USA – Intel was started in 1968 and AMD was started a year later in 1969. They were competitors right from the start in the manufacturing of PC and server microprocessors (or Central Processing Unit) which quickly became like a commodity within a short period of time –just imagine the sheer number of electronic devices on the planet, each one of them requiring a CPU and you would quickly agree that a CPU has become sort of a commodity and a necessity.

The competition between Intel and AMD intensified especially during the 1990’s and early 2000’s as both companies competed on speed and also pricing. Some of you would remember the term “x86” which was technical jargon for a certain variant of CPU which Intel and AMD competed fiercely on, even resulting in several lawsuits between the two companies. However, Intel eventually got the upper hand over AMD by means of clever marketing with its “Intel Inside” campaign – an unprecedented marketing effort which cost Intel millions of dollars at that time. Intel concentrated on pushing its CPU’s to PC manufacturers and reimbursed them for featuring Intel CPU’s in the PC’s they made. This move was so successful that eventually consumers began to only trust PC’s which sported “Intel Inside” stickers. Today, Intel has become the default standard for any PC and laptop on the market so much so that consumers have taken for granted that Intel will be inside the gizmo they are purchasing.

Currently, Intel controls upwards of 65% of the total CPU market while AMD has about 22%. Intel has become a household brand for the mass consumer market as well as the default choice for data-center servers with its Xeon line of high powered and high durability CPU's. Just to give you an idea of how dominant Intel is in the server market - its server market share is upwards of 90% till today.

AMD, however has moved into a more specialized CPU market segment – PC gaming. As its general CPU market share plummeted against Intel, AMD shifted its focus onto gaming PC manufacturers like Alienware in order to stay in the game. AMD subsequently optimized their CPU’s to run single-threaded applications (typically video games) better than Intel’s CPU’s which were more optimized for everyday multi-tasking operations e.g. having 5 Internet browsers, 1 PowerPoint and 2 Excels at the same time. In 2006, AMD acquired advanced graphics processing unit (GPU) manufacturer giant ATI. This move further strengthened AMD’s position in the PC gaming and advanced 3D graphics segment. Finally in 2013, with the emergence of console gaming as a high growth market, AMD announced a unified gaming strategy to drive the gaming market across all computing platforms. By the end of 2013, AMD registered 165% annual growth, mainly driven by the PS4 and Xbox One gaming consoles – both consoles utilize AMD CPU’s – and the advanced computer graphics segment.

However, as PC revenues decline year on year as the world moves into mobile computing applications like tablets and smartphones, Intel is beginning to set its eyes on high growth markets such as mobile and gaming – both PC and console. For instance, Intel has stepped up its efforts in recent years to debunk the notion that AMD CPU’s are better for gaming. Neutral PC enthusiasts and critics have begun to endorse certain models of Intel CPU’s as more powerful (and more expensive) alternatives of AMD CPU’s, effectively placing Intel in the “high performance, high price” sub-segment of the PC gaming market where there was no competition for AMD before. We expect that the future will hold more than a few such "one-ups" between the two giants and that their rivalry is far from over.

In Hand Phone/Tablet Space:

In recent years, Qualcomm has evolved as "THE" manufacturer of processors for smartphones/tablets and Intel has become the Lord of notebook and desktop processors with its Powerful Ivy Bridge and cheaper Intel Atom processors.

Intel plans to attack the Android market and thus the strongest competitors Qualcomm. Previously, Intel had big problem to develop processors that are on the energy consumption level of Qualcomm processors. Intel seems to have overcome these problems, as the new Samsung Galaxy Tab 3 has an Intel dual-core processor inside. Furthermore, Intel's vision to re-create the meaning of technology is in line with the launch of its 'Make it Wearable' contest to bring the most attractive ideas to the table and eventually execute them.

Customer-Based Brand Equity

Building a strong brand has been shown to provide numerous financial rewards to firms, and has become a top priority for many companies. The Customer-Based Brand Equity (CBBE) model is a good framework that assists Intel management in their brand-building efforts.

According to the model, building a strong brand involves four steps: (1) establishing the proper brand identity which is establishing breadth and depth of brand awareness, (2) creating the appropriate brand meaning through strong, favorable, and unique brand associations, (3) eliciting positive, accessible brand responses, and (4) forging brand relationships with customers that are characterized by intense, active loyalty. Achieving these four steps, in turn, involves establishing six brand-building blocks – salience, performance, imagery, judgments, feelings and resonance. The most valuable brand-building block, resonance, occurs when all the other brand-building blocks are established.

Brand Salience

The first level, brand salience is an important first step in building Intel’s brand equity, but is usually not sufficient in and of itself. For customers of Intel, whether it is the casual or office users, artists and gamers, considerations such as the meaning or image of the brand, also come into play. Creating brand meaning involves establishing a brand image – what the brand is characterized by and should stand for in the minds of customers. Although a myriad of different types of brand associations are possible, brand meaning can broadly be distinguished in terms of functional, performance-related considerations versus abstract, imagery-related considerations. Thus, brand meaning is made up of two major categories of brand associations that exist in customer’s minds – related to performance and imagery – with a set of specific subcategories within each.

We next describe the two main types of brand meaning and the subcategories within each (second level).

Brand Performance

Intel’s product itself is at the heart of brand equity, as it is the primary influence of what consumers experience with a brand, what they hear about a brand from others, and what the firm can tell customers about the brand in their communications. Designing and delivering a product that fully satisfies consumer needs and wants is a prerequisite for successful marketing, regardless of whether the product is a tangible good, service or organization.

The specific performance attribute and benefits that constitute functionality will vary widely by category. Nevertheless, there are five important types of attributes and benefits that often underlie brand performance:

1.     Primary characteristics and secondary features. Intel customers often hold belief about the high level at which the primary characteristics of Intel microprocessor chips operate. They usually hold beliefs that the secondary element of Intel microprocessor chips, which are its affiliation to the product itself (laptops, PCs) completely complement the Intel microprocessor chips inside.

2.     Product reliability, durability and serviceability. As noted, customers can view the performance of Intel products or services in a broad manner. Essentially, Intel microprocessor chips offer reliability by being consistent in its performance over time and from purchase to purchase; durability by having a long expected economic life of its products; and serviceability by providing ease of servicing the product if it needs repair, or simply replacing it if needed.

3.     Service effectiveness, efficiency, and empathy. Customers often have performance-related associations with the service interactions they have with brands. Ultimately, Intel is able to satisfy the laptop and PC manufacturers service requirements, which in turn satisfies the users. Intel, even though it is a technology semiconductor company, as service providers are seen as trusting, caring, and having the customer’s interests in mind.

4.     Style and design. Consumers may have associations with Intel’s products that go beyond its functional aspects to more aesthetic considerations. Clearly, Intel was able to transform a commodity – generic microprocessor chip – into a brand that communicates reliability, style and design that affects the sensory aspects of its consumers – dependability.

5.     Price. Finally, the pricing policy for the brand has created associations in consumers’ minds to the relevant price tier or level for the brand in the category. Generally, premium priced laptops and PCs with Intel microprocessors are priced higher. Users are willing to pay a premium for the reliability and peace of mind that having an Intel component brings. The pricing strategy therefore, adopted by Intel and its partners dictate how consumers categorize the price of the brand and how firm that price is perceived to be (at this case both high).

Brand performance thus transcends the “ingredients” that make up the product or service to encompass aspects of the brand that augment these ingredients.

Often, the strongest brand positioning involves performance advantages of some kind, which clearly Intel has been able to gain a foothold against its competitors. It has excellent computing capabilities and reliable performance that can be seen as consumers use the electronic devices that have Intel.

Brand Imagery

The other main type of brand meaning involves brand imagery. This deals with extrinsic properties of Intel products, including the ways in which Intel attempts to meet customers’ psychological or social needs. This can be clearly conveyed in its user profiles such as brand ambassadors; purchase & usage situations in real life and electronic device users; personality & values that are clearly portrayed in its advertisements as it comes out as sincere (cheerful), exciting (up-to-date), competent (reliable), sophisticated (premium) and rugged (tough); and history, heritage and experiences through engaging people in consumer electronics shows.

Did you know ??

Evolution of the name Pentium:

In 1980s, Intel started developing a series of products (286, 386 and 486) named as an extension to the base 8086 chip. As competitors started using the tag line ‘compatible with 486 processors’, Intel decided to go for a patent in order to avoid confusion and thus filed for a trademark for their processor chips. This was denied in US because series numbers could not be considered distinct and that they could not have a patent for the number. As a result, to continue the naming pattern for their series of processor chips, Intel decided to launch the 586 processor by the name ‘Pentium’ (Pent – 5^th generation, and ium – fundamental ingredient of a computer). This patent was in line with the slogan ‘Intel Inside’ and created a brand name for Intel which was leveraged to charge a premium based on the high perceived value.

How Intel became a household name.

Things change, even if we don’t want them to. No company operating in the free market can be successful in perpetuity by delivering the same products with the same marketing and the same margins. While it is easy and natural to crave consistency and avoid risk, the changing nature of life and our environment requires us to change, to adapt, and to take chances in order to survive.

If one thing distinguishes Intel’s innovative thinking, it is their 1990s strategy of branding a semiconductor chip as a valuable feature that consumers would look for when they purchased a computer. The campaign’s two decades of ubiquity make us forget this now, but at the time it was an incredibly novel approach to marketing. People bought computers because of the software, the specs, or a friend’s recommendation. Who cared about who made some tiny chip inside the box that you couldn’t even see?

But with the proliferation of PCs, and with consumers at a loss in trying to figure out what made one better than the other, Intel saw an opportunity, and so it took a major risk. Intel’s leadership was convinced this was the way to grow market share, however, and the company invested hundreds of millions of dollars in the effort.

Intel’s plan was to shift the image of Intel from that of a chip company to that of a producer of a coveted, brand-name product that stood for performance.

Intel’s strategy was to go all out in the CES (Consumer Electronics Show) by rolling out ever-larger, more elaborate and immersive exhibits showcasing the company’s cutting-edge technology. Visitors could not forget being inside the “Intel experience” and feeling like they were touching the future. By using an amazing multimedia cascading exhibit, Intel managed to convey to the audience that it was way ahead of almost everyone else. The same impression could not be felt by reading a two-dimensional ad in a magazine or even watching a television commercial. Intel wisely used the live experience to change the very perception of its company, its products, and its importance.

Today, Intel is pushing the "Intel experience" even further

Intel also cleverly used its CEO keynote and marketing around the show, including signage, publications, and live events, to ensure that every CES visitor knew about “Intel Inside.” Soon, consumers looked for that label before buying a computer, much in the same way that they look for the American Dental Association Seal of Acceptance when shopping for a toothpaste. By marketing itself in that way, Intel transformed into a brand known to millions of otherwise technology-illiterate consumers. Those consumers might not have known a motherboard from a mainframe, but they had “Intel Inside.”

The Intel marketing campaign brings to light three key things:

First, a clever company can create something out of almost nothing by thinking outside the box. Intel turned a chip into a brand and that brand into billions in added sales. 

Second, Intel’s success reveals the power of trade shows to create an indelible live, interactive marketing experience. Intel captured the critical influencers who attended the trade show, including the media, retailers, and Wall Street. Intel’s marketing wizardry impressed upon them that the company was becoming not just another chip fabricator, but a brand in its own right.

Craig Barrett, former Intel
CEO shows the 2005 version of
the Entertainment PC while
giving the keynote address

Finally, Intel teaches us the value of a visible CEO in enhancing and transforming the image of a company. Almost every other year, Intel CEO Craig Barrett delivered a keynote address at CES. (His successor, Paul Otellini, delivered the CES keynote in 2012.) Barrett used every second of his allotted sixty minutes to demonstrate how Intel “got” the future. The audience perception was that Intel was at the center of the product offerings of so many other companies. The CEO would not only convey factual information about the company and its products, but also leave every audience member impressed by the importance and future of Intel.

Reference: GARY SHAPIRO