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Advertising Promotion - MKT621 Spring 2007 Assignment 04

The "Intel Inside" cooperative advertising program has been hugely successful for Intel. It works by giving PC makers 5% of what they pay Intel for chips to use for joint advertising with Intel that features the "Intel Inside" logo. More than 150 computer makers signed on, pumping over $4 billion into the program. This led to Intel's market share growing from 56% to 83% as its revenue increased from $3 billion to nearly $30 billion. Experts say the "Intel Inside" program set the standard for ingredient branding and pre-empted branding of personal computers themselves.

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62 views2 pages

Advertising Promotion - MKT621 Spring 2007 Assignment 04

The "Intel Inside" cooperative advertising program has been hugely successful for Intel. It works by giving PC makers 5% of what they pay Intel for chips to use for joint advertising with Intel that features the "Intel Inside" logo. More than 150 computer makers signed on, pumping over $4 billion into the program. This led to Intel's market share growing from 56% to 83% as its revenue increased from $3 billion to nearly $30 billion. Experts say the "Intel Inside" program set the standard for ingredient branding and pre-empted branding of personal computers themselves.

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Marissa Marissa
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ADVERTISING AND PROMOTION (MKT 621)

Assignment No. 4
Marks: 10

Read the following case study and answer the questions given at the end.

Intel Inside: The Co-op Program That Changed the


Computer Industry
If you were to ask most owners of personal computers what is inside their PCs, chances
are they would respond by saying, an Intel. And theres a good reason why. Over the
past decade consumers have been exposed to hundreds of millions of dollars worth of ads
for personal computers each year that carry the Intel Inside logo. The logo has become
ubiquitous in PC ads as a result of a landmark cooperative advertising program that is
lauded as the most powerful ever and the definitive model for successful ingredient
branding.
In 1989 Intel was the first computer chip manufacturer to advertise directly to consumers.
Its goal was to persuade PC users to upgrade to Intels 386 SX chip from the 286. Known
as the Red X campaign, the ads depicted the number 286 with a bold, spray-painted x
over it. Dennis Carter, Intels vice president and director of strategic marketing and the
architect of the Intel Inside campaign, was a marketing manager at the time and was
working with a tech ad shop on Intels print, outdoor, radio, and in-store ads. He noticed
that the ads were changing peoples buying behavior and that the company had a model of
something that was working as Intel could communicate technical information in a basic
way.
In 1990 Intel selected a new agency, Dahlin Smith White, Salt Lake City, which created
the now-famous tagline Intel. The Computer Inside. The goal of the campaign was to
build awareness and position Intel as the real brains of the computer. In early 1991 Intel
began pitching the program to PC makers, and IBM, creator of the first Intel-powered
personal computer became the first computer maker to use the logo. Intel then began
talking to PC makers about the creation of a co-op fund in which Intel would take 5
percent of the purchase price of processors and put it in a pool to create funds for
advertising.
The Intel Inside co-op program was officially launched in July 1991 and works as
follows:
In return for showing the logo in print ads and on the PCs, a computer maker can get back
5 percent of what it pays Intel for chips, with the money to be applied to ads paid for
jointly by the PC vendor and Intel.
More than 150 computer makers signed on to the program and began using the Intel
Inside logo in their ads.
As the program began, Intel started playing up the logo in its own print ads as well. In
November 1991 it moved the campaign to television with the classic Power Source spot,
which magically took viewers on a whirlwind tour of the inside of a computer to show
how the Intel chip streamlined upgrading of a PC. In 1993 Intel introduced the Pentium
processor brand with a national TV campaign. However, the company was putting the bulk

of its advertising budget into the Intel Inside co-op program. In 1995 Intel expanded the
co-op program to include TV, radio, and in-flight ads. The move led to a boom in PC ads
on television featuring the Intel auditory signature at the end of each commercial. In 1997
Intel expanded the co-op program to include Internet ads and provided incentives to PC
makers to place ads on media-rich websites Intel has also extended the co-op program into
retail promotions as well.
Since the co-op program began, Intel has pumped into it an estimated $4 billion, and this
has been an awfully smart investment Intels share of the microprocessor market has
grown from 56 percent in 1989 to nearly 83 percent in 1999, and the companys revenue
has gone from $3 billion to nearly $30 billion. Nearly 90 percent of the more than 17,000
PC print ads run in the United States for the first nine months of 1999 carried the Intel
Inside logo. The program has influenced a generation of PC users and propelled growth
of the entire computer industry.
According to positioning expert Al Ries, Intel Inside will go down in history as one of
the more magnificent campaigns of the century. He notes, Its brilliant and, in a sense, it
pre-empted the branding of personal computers. Branding guru Jack Trout notes, They
took an old idea _ ingredient branding._ which Du Pont pioneered, and took it into
technology. Trout was an early believer in the program; he told Advertising Age in a
1991 interview that conceptually it was a good idea, although Intel would need consistent
advertising over time for the logo to have much meaning.
In its early stages the program encountered criticism, as many advertising and computer
marketing executives were skeptical about Intels ability to differentiate its chips. The
head of one agency noted: Most people who buy computers dont even know that chip is
there. They care about the performance of the computer. It really doesnt matter what the
chip is. Well, they may not know exactly what a microprocessor chip does, but apparently
it does matter if there is an Intel Inside.

Q 1. Why do you think the Intel Inside cooperative advertising program


has been so successful? Give reasons.
Q 2. Write down the example of any other company that might be in a
situation to benefit from this type of cooperative advertising
program and justify your answer.

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