Intel – The Inside Story Date:   Friday , December 15, 2006 Surfing through online videos you might bump into this one: A kid hanging a PC from a hanger, tied to a long rope on his windowsill. Lightning strikes and blows it up. Don’t be surprised—it’s just a kid being creative in the Intel viral marketing campaign. The campaign runs ‘101 ways to get rid of your old PC—so your mom or boss can buy you a new one with core 2 duo.’ This is one of Intel’s marketing strategies for the core 2 duo processor. In tune with its online marketing program, it foresees a separate website for Intel India, grabbing attention with Intel advertisements leading them to localized content. While spreading the marketing tentacles offline, Intel is closely following the 4Ps of marketing–Product, Price, Place (distribution) and Promotion. Place: Making Inroads “Unique to India is the Place—the distribution channels. And over the years we have developed dealer consistency establishing a unique breadth in the market,” says John McClure, Director–Marketing and Operations for Intel, South Asia. The fragmented Indian market compels companies to go through channel partners to make inroads. With over 3000 active channel partners, Intel has penetrated more cities than competitors. They constantly work with channel partners by giving them good products and increase their margins. Intel acts as a partner with dealers giving them cover for their marketing and advertising campaigns. They conduct training sessions for these dealers twice a year to reduce the dealers’ cost of staff training. The ‘Genuine Intel Dealer’ (GID) certificate provided at the end of the trainings acts as an accreditation. “Competitors do it only when they have money. We are consistent with our products and trainings,” informs McClure. Tie-ups with OEMs like LG, Zenith, Lenovo, HCL and Wipro Technologies to sell their products—helped Intel reach a larger market. Companies in turn develop their own brand value and get support with their sales and marketing programs from Intel. Products: Pushing The Envelope Added to these marketing strategies, Intel’s India Development Center develops products specific to the Indian continent. For example, for rural areas it has developed a community PC that can function in hot and dusty conditions and runs on a car battery for eight hours. They have an in-built remote management system to save on the cost of a mechanic. “Indians want the best technology for every penny invested. They demand a full system at the price of Rs. 10,000,” assesses McClure. This led to the development of the ‘Affordable PC’, looking more like a DVD player, having a mobile processor. Size, power consumption and noise were minimized with this product. For the future, Intel has designed a new product—Classroom PC, aimed at public school students to communicate faster with each other. With India’s growing wireless networks having datacard system connected via cellular networks, Intel sees wireless as the hottest area. It has designed a platform having a module for connecting to the wireless WAN system—to be launched next year. Price: Expensive But Sought After In spite of competitors having cheaper products, Intel is still the leader in India because of its strong brand image. “The Indian buyer has become more affluent, and the brand re-call has helped us a great deal,” says McClure. Promotion: Being Visible Intel has launched a $1 billion, five-year initiative known as ‘World Ahead Program’ in May 2006, looking to increase digital literacy, education, community outreach, research and development. It is working closely with the Government to improve rural education and to lower healthcare costs. It has co-developed Baramati’s first digital hospital by providing WiMAX network and a telemedicine program. The plan includes the donation of 10,000 PCs to state governments and training one million teachers. It has collaborated with other technology companies, setting up high-speed Internet network connecting the community computer centers and public kiosks. The tangible bottom-line benefits: Producing millions of potential PC consumers. And yes, inside the PCs lies the Intel microprocessor. “There is an increased flow of money for marketing. And we have to innovate to share the marketing voice,” says McClure. Twenty percent of the marketing expenses is allocated for pilot projects. Strategies like Intel advertisements on school buses and hoardings are proving to be good communicators. Currently Intel is experimenting with viral marketing, where students be creative and post online videos spreading the word. It is also teaming up with cyber cafe chains to have onscreen advertisements. The data at the end of the quarter will decide Intel’s next strategy. However, the company believes that traditional marketing strategies like PR campaigns have worked best for them. TV campaigns and displays at the community center showing the PC for fun and education have proved to be powerful sales campaigns. “Intel has better marketing strategies, they hold the market due to this,” says C. Yogesh, a private cybercafe owner and a PC assembler in Bangalore. Why The Slip? In spite of having the advantage, Intel has seen a decline in market share. In the Q2,’06 it had decreased to 78.6 percent from 82.2 percent in Q1,’06. The nearest competitor AMD has been gaining in the market reaching a high of 23 percent. On the Intel versus AMD front, software engineers from the IT industry comment that AMD products show better performance in terms of graphics, games and video conferencing. The G4 graphics card in gaming goes well with AMD processor, they added. “Comparing technical details, people feel AMD gives value for money. Intel has itself given competitors the opportunity to grow,“ perceives Vinay Mehta, a computer warehouse owner in Bangalore. Intel has already started working on newer processors to make them faster and more efficient. Supporting this, Paul Otellini, CEO, Intel informed that it would change its micro-architecture every two years rather than four like in the past to regain their market share. Intel for the last 17 years has been the lone player in the game, enjoying the benefits of being an early starter. Now the technology leader faces the challenge of sustaining its success.