Situation Analysis

Situation Analysis: INTEL is the world’s leading microprocessor vendor with over 70% market share, and seeing rapid growth year on year (Exhibit1). The industry is characterized by high barriers to entry, and high innovation (Exhibit4). INTEL’s customers are OEMs for computers Competition like AMD exists for INTEL for high end products and on the low end with smaller clone players. INTEL is very strong in R & D and has innovative products (Exhibit5). In the year 1988, INTEL faced slow adoption of its microprocessor product 386 because end users were not aware of product differences compared to its predecessor product 286. The microprocessor market segment was characterized by very short product life cycle of about 3 years (Exhibit3). To improve adoption, INTEL started heavy investments in marketing campaigns for its products. However, due to short PLC, INTEL quickly realized that it could not afford to brand each new generation of released product. Thus there was a need to create an umbrella brand that could span successive generations of products. Thus the “INTEL INSIDE” brand was born. The “INTEL INSIDE” brand signified the microprocessor inside a computer, and INTEL wanted to associate two attributes with the brand 1) safety (reliability) of the product 2) leading technology. The brand was intended to get consumers to pay more attention to microprocessors. The brand made an emotional connect with customers with its safety and performance emphasis rather than product feature emphasis and was therefore highly successful. The brand created a perception with customers that nothing else, but INTEL product is acceptable. The messaging strategy can be described as cognitive, using a unique selling proposition; it is well aligned with the business strategy of creating awareness. Another factor for brand success was the solid alignment between campaign message and product performance.

Options to be considered: The options are: a) should INTEL plan on extending INTEL INSIDE brand to other product categories like cell phones and PDAs b) should INTEL create a new brand for other product categories?

Weighing each option’s positives and negatives: The INTEL INSIDE campaign was successful in creating one of