Intel Inside Marketing Strategy

OverviewNot many years ago, if you mentioned the word "microprocessor" you'd likely get mystified stares from consumers. Few mainstream consumers knew anything about the processor, even though it was the "brain" that powered the computer. But today many personal computer users can recite the specification and speed of the processor, just like car owners can tell you if they have a V4, V6 or V8 engine. The awareness of "Intel" has grown along with the awareness of the chip, and today is associated with "technology leadership," "quality" and "reliability."

You can credit this to the Intel Inside® Program, which launched in 1991. The program repre-sented the first time a PC component manufacturer successfully communicated directly to computer buyers. Today, the Intel Inside® Program is one of the world's largest co-operative marketing programs, supported by thousands of PC makers who are licensed to use the Intel Inside® logos. The Intel brand is one of the top ten known-brands in the world, in a class with Coke*, Disney* and McDonalds*, according to various rankings.

HistoryFrom the dawn of the personal computer in the late 1970s, marketing was mainly driven by computer vendors and software publishers. During that time the rapid technical advances of Intel processors had played a central role in transforming the PC from a basic production and business management tool in the 1980s into a rich new information, entertainment, education tool, along with being a business device. The processor was driving the rapid increase in the performance, which in turn helped systems run more smoothly, quickly and reliably. But Intel relied on its PC vendor customers to convey this message; these were OEMS, otherwise known as Original Equipment Manufacturers. Thus it had little brand identification among users, who knew no more about the processor than they did the company that built the engine in their cars.

In fact computer users were generally unaware of what advanced processors were available or of the continually improving cost performance that was being delivered by "Moore's law" (industry guiding principle, named after Intel's co-founder and Chairman Emeritus Gordon Moore, that states that the number of transistors on a microprocessor roughly doubles every 18 months to two years). Intel believed people needed to know more about the processor and the company behind it. So in 1989 an Intel marketing manager Dennis Carter formed a small group and for the first time launched a program aimed at marketing a microprocessor, the 386SX, to the Information Technology (IT) managers who purchased PCs for business.

This effort was successful; IT learned about the new 386SX and converted to it rapidly. However several challenges quickly emerged, such as legal issues. In the late 1980s Intel assumed its 386 and 486 processors were protected trademarks; no other company could use them. But when the courts ruled that they were not trademarks, it opened the door for rivals to use them at will. The time was ripe for a new marketing program.

In order to correctly communicate the benefits of new processors to PC buyers it became important that Intel transfer any brand equity from the ambiguous and unprotected processor numbers to the company itself, while raising awareness of its name. Intel invested billions of dollars in developing cutting edge technology and billions more in assuring performance and reliability. A stronger brand was needed to communicate this to consumers, separating Intel from the pack.

Clearly, marketing directly to the end user was a novel idea for a semiconductor company. Although the company was widely recognized among computer manufacturers, the brand had little name recognition amongst end users, despite the fact that Intel microprocessors were the "brains" inside their PCs. The media raised questions as to whether a pure technology company could play in the same league with Proctor and Gamble*, General Motors* and McDonalds*. Even to many within the company, the program seemed like a stretch.

A second issue was that the processor, although a key component of personal computers, was only a component. To effectively market this component to the PC buyer it was important to work with the manufacturer of computers. After all, the processor was buried deep inside the computer and despite its significance it was hard to tell which processor the PC contained before it was purchased.

Carter and his team studied successful consumer marketing techniques and examined tactics used by well-known companies supplying a component or ingredient of a finished product, like NutraSweet™, Teflon™ and Dolby™. They also began a variety of marketing experiments and soon began envisioning how a branded ingredient program would play out in the computer industry.

Key to this strategy was gaining consumer's confidence in Intel as a brand and demonstrating the value of buying a microprocessor from the industry's leading company, the pioneer of the microprocessor. At the suggestion of its advertising agency, Dahlin Smith and White, Intel adopted a new tag line for their advertising: "Intel. The computer inside." Using this to position the important role of the processor and at the same time associating Intel with "safety," "leading technology" and "reliability," the company's following-and consumer confidence-would hopefully soar. That would create a new "pull" for Intel-based PCs. Later, this tagline was shortened to "Intel Inside."

The important role of the microprocessor was being communicated, but to be truly effective the ingredient status of the microprocessor needed to be dealt with. In 1991 Carter launched the Intel Inside® coop marketing program. The heart of the program was an incentive-based cooperative advertising program. Intel would create a co-op fund where it would take a percen-tage of the purchase price of processors and put it in a pool for advertising funds. Available to all computer makers, it offered to cooperatively share advertising costs for PC print ads that inclu-ded the Intel logo. The benefits were clear. Adding the Intel logo not only made the OEM's adver-tising dollar stretch farther, but it also conveyed an assurance that their systems were powered by the latest technology. The program launched in July 1991. By the end of that year, 300 PC OEMs had signed on to support the program.

After the OEM program was underway, Intel started print advertising around the world to explain the logo to consumers. In early 1992, made by George Lucas' Industrial Light Magic, Intel debu-ted its first TV advertising stressing speed, power and affordability. It used state-of-the-art spe-cial effects to take viewers on a sweeping trip through the innards of the personal computer before hovering over the campaign's raison d'être - the then new Intel i486™ processor.

Television was especially effective in communicating the Intel Inside® program messages to the consumer. Along with colorful TV advertisements, Intel added a distinctive and memorable three-second animated jingle (known as a signature ID audio visual logo), displaying the logo and playing a five-tone melody. Starting in 1995, the now-familiar tone helped cement a positive Intel image in the minds of millions of consumers.

The marketing investments were beginning to pay-off in terms of consumer mind-share, aided by the high-profile launches of the Pentium® (1993) and Pentium® Pro (1994) microprocessors. The advertising results were stunning. Dennis Carter comments, "I believe that there has been a lot more (industry wide) advertising because of the Intel Inside® program than there would have been otherwise. That has helped to create more PC demand. If you believe that advertising works, then more people are getting educated about the benefits of the PC because of the Intel Inside® program."

By the late 1990s the program was widely regarded as a success. Intel's innovative marketing helped broaden awareness of the PC, fueling consumer demand while prices continued to plunge. This paved the way for the PC to become more commonplace in the home, emerging as a busi-ness, entertainment and education tool. Intel became a lightning rod for this electronics revo-lution. When Intel's "Bunny People"™ characters danced their way across the TV screen, during a break of the 1997 SuperBowl, "they became nothing less than the whimsical icons of a go-go PC industry," according to Advertising Age. After six years, and almost two decades in the PC busi-ness, Intel had arrived in the public consciousness as a world-class player. Its brand was known worldwide, its name synonymous with the computer industry.

While the Intel Inside® Program continues to evolve, it will remain true to its heritage of promo-ting: "technology leadership," "quality" and "reliability." These features will be as important to online users and high-end server buyers today as they were to the desktop computer buyer in the 1990s.

For more information about Intel, see www.intel.com/intel. For more information about jobs within Intel, see www.intel.com/jobs/ or for Intel Inside® Program specifically, contact Dolores Baum at (408) 765-1913.

About Intel Intel (NASDAQ: INTC) is a world leader in computing innovation. The company designs and builds the essential technologies that serve as the foundation for the world’s computing devices. Additional information about Intel is available at www.intel.com/pressroom and blogs.intel.com.

Intel, Intel Inside, Pentium, Xeon , BunnyPeople and Itanium are trademarks or registered trademarks of Intel Corporation or its subsidiaries in the United States and other countries.

* Other names and brands may be claimed as the property of others.