Identifying

 and  creating  new  markets  -­‐  a  

new  strategy  for  a  global  leader  
An  Intel  case  study  
Introduction  

 
Nearly  everyone  is  aware  of  Intel.  It  is  the  world's  fifth  most  valuable  brand  valued  at  
around  $35  billion.  Most  of  the  world's  personal  computers  are  driven  by  Intel  microprocessors.  

By   concentrating   on   producing   great   microprocessors   Intel   was   able   to   leave   its  

competitors   behind.   The   company   invested   billions   of   dollars   in   highly   productive  
manufacturing   plants   that   could   produce   more   processors   in   a   day   than   some   of   their   rivals  
could  produce  in  a  year.  

Today  Intel  is  continuing  to  raise  the  bar.  In  January  2006  the  company  launched  its  new  
strategy   based   on   identifying   and   creating   new   markets.   Instead   of   just   focusing   on   personal  
computers  (PCs)  Intel  will  play  a  key  technological  role  in  a  range  of  fields  including  consumer  
electronics,  wireless  communications  and  healthcare.  

Intel   has   been   one   of   the   world's   high   achieving   businesses.   Its   global   appeal   is   not  
surprising.  In  recent  years  almost  every  time  you  opened  up  a  laptop  you  would  see  that  it  was  
labelled  'Intel®  Inside'.  Seeing  this,  the  user  knew  that  they  had  a  high  performing  and  reliable  
computer.  
 We   all   want   to   be   able   to   use   more   powerful   technology,   which   is   simple   to   operate,  
and  helps  us  to  do  things  without  having  to  think  about  it.  However,  Intel  has  moved  on.  The  
problem   with   simply   being   a   producer   of   processors   is   that   other   firms   can   move   into   your  
market.   Once   they   produce   similar   products   the   only   way   you   can   differentiate   is   by   offering  
lower  prices.  

Intel's  new  strategy  is  to  create  lots  of  different  types  of  chips  and  software  and  then  
combine  them  together  into  platforms.  A  platform  is  an  integrated  set  of  proven  technologies  
designed   to   work   together.   They   provide   people   and   businesses   with   improved  
communications   and   computing   capabilities.   These   platforms   will   enable   Intel   to   bring   added  
value  for  consumers,  win  a  larger  share  of  consumer  expenditure  and  increase  revenue.  

Platforms   will   make   life   easier   for   people   in   a   range   of   settings   from   the   home,   to  
business,   and   medical   settings.   Intel's   vision   involves   giving   people   access   to   easy-­‐to-­‐use  
technologies  through  these  platforms.  It  is  seeking  to  continually  satisfy  customer  requirements  
by  producing  a  range  of  new  and  exciting  products.  

Developing  a  new  strategy  

 
Organisations  live  or  die  as  a  result  of  the  strategies  they  choose.  A  business  strategy  is  
a   plan   for   the   whole   organisation.   The   strategy   must   fit   with   the   business   environment   -­‐   the  
changing  world  in  which  the  business  exists.  

 
 Intel   has   been   at   the   centre   of   a   growing   industry   for   over   thirty   years.   However,   the  
growth  in  the  sales  of  personal  computers  is  slowing  down  in  a  very  competitive  environment.  
In   addition,   mobile   phones   and   hand   held   devices   have   become   increasingly   important  
alternatives.  

Since  2003  Intel's  sales  revenue  has  grown  by  an  average  of  13%  a  year.  However,  as  the  
market   segment   matures,   laptop   sales   are   growing   whilst   desktop   sales   are   slowing   down.   As   a  
result  Intel  generated  record  revenues  of  $38.8  billion  in  2005.  

Intel   is   an   'ingredient   brand'.   Its   products   and   processors   form   part   of   the   products   that  
consumers  purchase.  Building  key  relationships  with  leading  electronic  firms  such  as  Sony  and  
Philips   is   an   important   strategy.   The   aim   is   to   provide   the   manufacturers   of   products   such   as  
laptops,   mobile   phones   and   entertainment   personal   computers   with   integrated   packages   of  
chips  and  software  -­‐  in  other  words  a  complete  solution.  

A   key   part   of   Intel's   more   integrated   platform   strategy   involves   the   development   of  
several   technologies.   These   improve   processor   efficiency   and   allow   computer   users   to   take  
better  advantage  of:  

•   multi-­‐tasking  

•   security  

•   reliability  

•   manageability  

•   wireless  computing  capabilities.  

Understanding   how   people   actually   use   technology   and   then   driving   the   power   of  
Moore's  Law  to  deliver  increased  capabilities,  means  that  end  users  obtain  more  benefits  and  
increased  usefulness  from  the  technology.  
  

Systems  are  continually  updated  giving  the  user  greater  freedom.  Intel's  strategy  is  to  be  
at  the  heart  of  new  developments  in  home  entertainment,  security,  medical  care,  etc.     Its  new  
strategy  is  about:  

•   working  with  customers  to  share  a  vision  of  future  technologies  

•   developing  new  customer  focused  technologies  

•   giving  people  new  products  that  are  easy  to  understand  and  use  

•   communicating  clear  messages  about  these  new  products.  

Launching  a  new  strategy  

When   an   organisation   changes,   it   is   important   to   communicate   the   nature   of   that  
change  so  that  everyone  knows  about  it.  Typically,  this  means:  

•   externally  to  customers,  partners,  suppliers,  the  media,  etc  

•   internally  to  staff.  

On  January  5th,  2006  Intel  launched  its  new  strategy  at  the  Consumer  Electronics  Show  
in  Las  Vegas.  

 
The  high-­‐profile  launch  featured  the  hip-­‐hop  band  Black  Eyed  Peas,  with  the  hit  single  
'Let's   get   it   started'.   A   key   part   was   the   unveiling   of   a   new   corporate   logo.   A   logo   is   a   visual  
representation  of  what  a  company  stands  for.  The  new  logo  sets  out  clearly  that  Intel  is  moving  
forward.  The  swirl  around  it  signifies  movement.  The  strapline  'Intel.Leap  aheadTM'  has  been  
introduced.  The  launch  was  backed  by  a  multi-­‐milliondollar  advertising  and  marketing  campaign.  
Today   Intel's   communication   messages   show   it   is   at   the   leading   edge   of   technology.   Intel's  
marketing  focus  is  on  helping  consumers  to  understand  in  a  clear  way  how  new  technologies  
can  help  them  to  live  better  lives.  

Intel's  values  are  straight  forward,  they  involve:  

•   being  prepared  to  take  risks  

•   operating  in  a  disciplined  way  

•   focusing  on  achieving  great  results  e.g.  high  performance,  sales,  and  profits.  

Great  results  are  achieved  through  developing  the  right  products  for  the  right  markets  
before  competitors  do  so.  

 
Developing  new  products  
In  our  fast  changing  modern  world,  it  is  essential  to  find  out  what  consumers  want  and  
need.  It  is  possible  to  predict  trends  and  developments.  Because  Intel  is  at  the  leading  edge  of  
technological  developments  it  is  well  placed  to  anticipate  consumer  requirements.  

In  addition,  it  uses  customer  focus  groups  to  find  out  what  they  think  of  the  scenarios  
for   the   future   that   Intel   anticipates   e.g.   lifestyle   developments.   A   focus   group   consists   of   a  
relatively  small  number  of  consumers  representing  a  market  segment  Intel  is  targeting.  

For   example,   lifestyle   trendsetters   who   are   very   knowledgeable   about   home  
entertainment   developments   or   medical   professionals   interested   in   improving   patient   record  
systems.   There   is   also   huge   scope   for   intelligent   organisations   like   Intel   to   increase   their  
presence  in  the  health  industry.  This  industry  has  been  slow  in  adopting  IT  applications  because  
healthcare   primarily   involves   person   to   person   contacts.   However,   health   professionals   are  
increasingly  recognising  the  benefits  of  IT.  

 
 New  product  development  to  meet  anticipated  needs  involves  a  considerable  outlay  of  
capital   e.g.   building   new   factories   to   build   the   products   of   the   future.   Being   market   focused  
therefore   lies   at   the   heart   of   Intel's   success   and   direction.   Intel's   digital   home   division   is   part   of  
the   Digital   Living   Network   Alliance,   an   alliance   of   over   250   companies.   Their   aim   is   to   create  
joint   standards,   improve   interoperability   and   ease   of   use   between   different   products   in   the  
home.  Intel  was  one  of  the  key  founders  and  still  sits  on  the  Board  of  Directors.  

In  2006  Intel  is  rolling  out  a  series  of  new  products  reflecting  its  innovative  strategic  approach.  

Examples  include:  

•   Intel®  ViivTM  technology  -­‐  a  home  entertainment  platform.  

•   Intel®  Centrino®  Duo  mobile  technology  -­‐  a  dual  core  processor  notebook  platform.  

•   Intel®  ViivTM  technology  is  a  new  home  entertainment  platform.  ViivTM  rhymes  with  
five.   It   can   play/pause   TV,   download   films,   music   and   games,   and   will   develop   to  
enable  easier  movement  of  content  around  the  home.  

Restructuring  Intel  around  its  market  

 

Intel   built   its   early   success   on   providing   ingredients   for   personal   computers   with   its  
prime   driver   being   technology.   It   was   dominated   by   engineers   and   worked   closely   with  
Microsoft  and  PC  manufacturers  such  as  Dell,  Compaq  and  IBM.  

The   new   strategy   continues   the   emphasis   on   producing   excellent   products.   However,  
there  is  now  a  strong  focus  on  marketing-­‐  finding  out  what  customers  want  and  then  meeting  
their  requirements.  Customers  need  to  know  what  these  new  products  can  do  for  them.  Clear  
communication  is  therefore  essential.  

 
 The   company   has   been   restructured   from   top   to   bottom   affecting   over   90,000  
employees.  The  emphasis  is  on  marketing  and  communicating  with  customers  about  what  the  
new   technologies   can   do   for   them.   In   the   words   of   the   new   Chief   Executive   Officer:  'To   sell  
technology   now   you   have   to   do   it   in   a   way   which   is   much   more   simple.   You   can't   talk   about   the  
bits  and  the  bytes'.  In  other  words  it  is  about  what  people  make  possible  with  Intel  products.  

Today  Intel  is  working  with  a  broad  range  of  fellow  travellers  e.g.  with  Motorola  for    

mobile  devices  and  with  hospitals  for  digital  health.  

The   market   for   high-­‐tech   products   and   systems   is   broken   up   into   discrete   segments.  
Intel  recognises  this  and  has  therefore  created  four  divisions  representing  these  segments.  
 Although   different   target   groups   have   common   needs   for   information,   the   types   of  
information   they   want   at   home   or   work   will   be   different.   For   example,   a   recording   of   a  
romantic   movie   or   thriller   is   watched   at   home   whilst   at   work   it   will   be   a   training   video   or   video  
conferencing   facility.   Digital   home   is   committed   to   providing   the   ultimate   entertainment  
experience,  whilst  digital  health  will  work  directly  with  hospitals  and  health  care  professionals.  

New  product  development  focuses  on  specific  markets.  For  example,  in  hospitals  paper  
records   are   replaced   with   electronic   tablets   giving   immediate   access   to   patient   records,  
appropriate  drug  prescriptions  etc.  

In   business   Intel   has   developed   a   range   of   chips   for   personal   organisers,   servers   and   a   range   of  
other   applications.   In   mobility   it   has   provided   the   processing   applications   that   drive   new  
products  for  people  who  want  to  keep  in  touch  whilst  on  the  move.  

Within  product  divisions  there  is  a  strong  emphasis  on  team  building  to  share  expertise.  
Chip   engineers,   software   developers,   marketers,   and   market   specialists   work   to   develop   new  
and  exciting  products.  

Conclusion  
Intel  is  one  of  the  success  stories  of  the  high-­‐tech  world.  It  provides  vital  components  
for  personal  computing.  Now  the  company  is  moving  forward  into  a  range  of  new  and  exciting  
products  and  markets  with  a  much  stronger  focus  on  marketing.  

Question:  

1/   Identify   the   existing   4P   dimension   of   Intel   (especially   Product   and   promotion  

dimension)?    

2/  Analyze  the  differentiation  strategy  that  Intel  apply  for?  

3/  Analyze  the  new  product  development  strategy  of  Intel?