Marketing Promotional Strategies

📄 Words:	4324
📝 Subject:	Advertising
📑 Pages:	18
💼 Companies:	Intel

Introduction

Marketing and other effective promotional strategies play a very important role in creating a good impact for prospective consumers. In today’s time, many marketing strategies are focused mainly on attracting the consumer’s attention by creating a good impression. This is the very reason why various forms of media have been used so as to promote the products extensively. More so, there are a number of marketing mixes which most companies try to use regularly so as to ensure high profits.

Marketing Communication

Brief Background of the Organization – Intel Corporation

Founded in 1968, Integrated Electronics Corporation is considered the world’s largest semiconductor company. Intel Corporation engages in the manufacture of semiconductor chips, as well as in the development of advanced integrated digital technology platforms for the computing and communications industries. The company’s products include microprocessors, chipsets; motherboards; flash memory; wired and wireless connectivity products, communications infrastructure components, including network processors; application and cellular baseband processors; and products for networked storage. Its products are incorporated primarily into desktop computers, the infrastructure for the Internet, enterprise computing servers, notebooks, wireless connectivity products, and handheld computing devices.

Intel Corporation’s microprocessors primarily include Intel Core, Intel Pentium, Intel Celeron, and Intel Xeon; wireless connectivity products consist of Intel PRO/ Wireless 5116 Broadband Interface; cellular base-band processors comprise Intel PXA 901, and communications infrastructure products primarily include brand name Intel Pentium M processor 760. The company’s customers include original equipment and design manufacturers, PC and network communications products users, and industrial and communications equipment manufacturers. It offers its products through its sales force and distributors in the Asia-Pacific, Europe, the Americas, and Japan. Intel’s core competency is based not only on its chip design capability but on its world-class manufacturing operation; the company is at the leading edge of advanced process technology and also has advanced research projects in all aspects of semiconductor manufacturing, including MEMS.

Chemist and Physicists Gordon Moore and Robert Noyce were the two responsible individuals who founded Intel Corporation, now located in Santa Clara, California, USA. They run the company for almost a year under the name NM Electronics until they decided to call it Intel, short for INTegrated ELectronics. They had even bought the rights for the name from a hotel chain at the beginning.

The company currently has nearly 100,000 employees and 200 facilities worldwide. Its revenues for 2005 were $38.8 billion, and its stock symbol is INTC.

In terms of leadership, Robert Noyce was Intel’s CEO at its founding in 1968, followed by co-founder Gordon Moore in 1975. Andy Grove became the company’s President in 1979 and added the CEO title in 1987 when Moore became Chairman. In 1997 Grove succeeded Moore as Chairman, and Craig Barrett, already company president, took over. On May 18, 2005, Barrett handed the reins of the company over to Paul Otellini, who previously was the company president and was responsible for Intel’s design win in the original IBM PC. The board of directors elected Otellini, and Barrett replaced Grove as Chairman of the Board. Grove stepped down as Chairman but will be retained as a special advisor.

Otellini received a bachelor’s degree in economics from the University of San Francisco in 1972 and an MBA from the University of California, Berkeley in 1974. He joined Intel in 1974, and since then, he had held a number of other positions during his career. From 1998 to 2002, he was executive vice president and general manager of the Intel Architecture Group, responsible for the company’s microprocessor and chipset businesses and strategies for desktop, mobile, and enterprise computing.

From 1992 to 1998, Otellini served as executive vice president of the Sales and Marketing Group. Previously, he served as general manager of the Microprocessor Products Group, leading the introduction of the Pentium® microprocessor that followed in 1993. He also managed Intel’s business with IBM Corporation, served as general manager of the Peripheral Components Operation and the Folsom Microcomputer Division, where he was responsible for the company’s chipset operations, and served as a technical assistant to then-Intel President Andrew S. Grove, now the immediate past-chairman of Intel. Previously served as Intel’s president and chief operating officer, positions he held since 2002, the same year Otellini was elected to Intel’s board of directors.

Andy D. Bryant is executive vice president and chief financial and enterprise services officer of Intel Corporation. He is responsible for financial operations, human resources, information technology and e-business functions and activities worldwide. Bryant joined Intel in 1981 as a controller for the Commercial Memory Systems Operation and, in 1983, became Systems Group Controller. In 1987 he was promoted to director of Finance for the corporation and was appointed vice president and director of Finance of the Intel Products Group in 1990. Bryant became CFO in February 1994 and was promoted to senior vice president in January 1999. Bryant expanded his role to Chief Financial and Enterprise Services Officer in December 1999. Prior to joining Intel, he held positions in finance at Ford Motor Company and Chrysler Corporation. Bryant holds a bachelor’s degree in Economics from the University of Missouri and a master’s degree in Business Administration with a concentration in finance from the University of Kansas.

Arvind Sodhani is senior vice president of Intel Corporation and president of Intel Capital. He received an MBA from the University of Michigan in 1978. He joined Intel in 1981 as assistant treasurer of Intel Europe, was promoted to the position of assistant treasurer of the corporation in August 1984 and was named treasurer in July 1988. Sodhani was elected vice president by the board of directors in May 1990 and promoted to senior vice president in February 2005. As Intel’s treasurer, Sodhani was responsible for treasury, investor relations, corporate credit, mergers & acquisitions, post contracts management and risk management.

He became president of Intel Capital in March 2005. Intel Capital, Intel’s strategic investment arm, directs the company’s external investments, mergers and acquisitions in support of Intel’s strategic objectives. Intel Capital is also responsible for internal new business incubation. Sodhani has been a member of the NASDAQ Board of Directors since 1997.

The Three Key Audiences that Marketing Communications Are Required to Address for Intel

The three key audiences for the marketing communications of Intel are:

The members of the labour force.
The teenagers (ages ranging from 14-21), and lastly.
The management of private and government-owned companies.

First, members of the labour force are the best target audience of the marketing communications plan because Intel as a company is a proud holder of the tag “One of Fortune 100 Best Companies to Work”. Any members of the workforce would then be curious about what is in Intel that makes it a model company.

Meanwhile, teenagers are also the best people to address the marketing communication plans because it cannot be denied that this age bracket is included those who are technology-savvy. They are the ones who would prefer having the most updated form of technology, and they can even be the deciding factor on whether or not to buy a particular computer gadget or not. Teenagers will serve as the good recipient identity for having a

Lastly, the members of the management team of both the private and the government-owned companies are also one of a target for the majority of marketing communications plan of Intel. It is because it cannot be denied that most companies would want to maintain a competitive edge over its rival. More so, they would want to ensure that the company is using the most up-to-date technology so as to make sure that the operation of the business is running smoothly. And because Intel is said to have the ability to sustain its technological advantage, most members of the management team of the company will seek Intel’s products.

The company’s involvement in the community and its desire to in bringing a more convenient lifestyle to its customers is one factor that makes Intel able to sustain its technological advantage. As each new dawn breaks, society becomes more competitive. Thus, people’s lifestyle follows. They seek a more advanced and faster way of getting information from the different parts of the globe. Intel has the answers to these needs. It creates more

Since 1987 where Intel was among the top ten worldwide semiconductor sales leaders until it attained the number one ranking in 1991 and has held it ever since Intel is perceived to maintain its highest spot for the succeeding years.

Intel’s ability to measure up with the demands in the market of more technologically advanced products ensures its continuous competitive advantage technologically wise. Not only does it becomes aware of itself the demands in the manufacturing industries, but it has to widen its scope with the company’s ability in contributing to the public a more convenient and more comfortable lifestyle.

The Customer Relationship Cycle

All this information about the target audience of Intel’s marketing communication campaigns plus the various competitive advantages of this company over its rival is very much related to the real essence of the Customer relationship Cycle. Buying Behavior is the decision processes and acts of consumers involved in buying and using a product or merchandise (Brown, 1996). There are certain stages that every consumer undergoes before finally purchasing a product. This includes problem recognition or being aware of the needs and wants, searching for information regarding the desired merchandise, evaluating the alternative if another product will be bought, then deciding for the purchase. Not if this purchase is made on a regular basis, the post-purchase evaluation is included, which is the assessment of purchase done before.

Consumer buying behaviour may be affected by different factors; hence many marketers are really finding ways to classify every buying behaviour of the customers. Types of consumer buying behaviour can be determined by (Brown 1996): determined by:

It is analyzing the level of involvement in purchase decisions. Is it the person who will use the merchandise, or is it for somebody? More so, is he deciding for himself, or are there other people who should be deciding for him?
Knowing the buyers’ level of involvement is equivalent to being able to determine the reason why he/she is motivated to seek information about certain products and brands but virtually ignores other merchandise.

The factors affecting the buyer’s behaviour includes personal, physiological, sociological and cultural factors. Personal factors refer to the buyer’s ability to decide and purchase. With this, the age, life-cycle stage, occupation, economic status and lifestyle of the buyer him/herself is very important (Brown, 1996).

Physiological factors, on the other hand, involves looking after the buyer’s desires, wants and needs. With this, Maslow’s hierarchy of needs comes in very handy.

Sociological factors answer the issues on how the norms of society influenced the buyer’s buying behaviour. Will he/she be buying a product that is commonly used by the people in his/her community, or will he she go against the norm? Cultural factors, as the name implied, are factors that are culturally being done by the people. This tackles products that are used by the family members (which started from the grandparents to the youngest child in the family). It is a common practice that one member of the family will not be buying a product if it is not the usual product that is being used or bought by the family. This also goes with the whole community. What one of the neighbours uses is most often the same merchandise used by the other neighbour.

Upon deeper understanding of the consumers and their buying behaviours, fashion merchandisers can easily get a grasp on how they should position their products and their marketing or promotional ideas. They will also be able to know how to seek their target market and eventually be in contact with that target market. Merchandisers will also be able to reach their prospective consumers, understand their needs and provide that need in a fashionable way they can. This, of course, will provide them with a better summary of profits.

Role and Task of Marketing Communication and (D.) How it can be Improved

The role and tasks of marketing communication are then aimed at addressing the three core points and/or advantages of Intel as a company.

The first is to highlight the company for its being ‘One of Fortune 100 Best Companies to Work For. Intel’s corporate responsibility is doing what is right. Upon adherence to this honest responsibility towards the production of reliable products to its customers and recognizing equality among the members of society, the company had made it to the Fortune 100’s Best Company to Work For this year.

Intel Corporation’s self-proclaimed campaign GPTW (Great Place to Work) is lived through its core value, along with discipline, quality, and results in orientation. This should be highlighted in every company profile that will be distributed. More so, this should be included in every TV, radio and print media ad. Another thing that can be added is about Intel which does not alone provide its employees good compensation, but they make sure the working environment is that of an interesting and meaningful one. Innovatively good ideas are welcomed, providing each employee with room to grow professionally.

It is also worth noting in every marketing communications plan that Intel considers each employee as an integral part in the success of the company upon the achievement of its goals. Therefore, the company shares to its people the success that it is experiencing for the past years through exceptional benefits and compensation that they distribute to its employees equally. The company rewards two cash bonus programs; one is the Employee Cash Bonus Plan which is a profit-sharing tied directly to Intel’s financial performance.

This program rewards employees through a cash payout twice each year. Over the inception of the plan, the corporate average is 7.7% of annual eligible income or 20 days pay. The other one is the Employee Bonus that is based on individual and business group performance, as well as corporate earnings per share. This reward is paid out once each year and could represent as much as 1 to 4% of your eligible earnings.

The major highlight of most marketing communication ads about beetles profile as a company should be the summary of Intel’s employment development; employees in the United States have currently reached 48,655 while Intel’s employees outside the US have reached 35,974. Since inequality is never an issue in the company, it has hired 33% minorities and 24% women. Within a year, there were 488 new jobs opened with a 1% job growth. Now, it has a total of 38 professional training years since it was first established in 1968 and has made 4% voluntary turnover of positions. Its salaried most common job, which is a Component Design Engineer, gets an average annual income of $101,816, while a Manufacturing Technician who gets an hourly compensation gets an average annual pay of $55,690.

The second major role of the marketing communications specialists of Intel is to highlight the company’s competitive technological advantage. They should make it a point to inform the teenagers (as their target audience) that since the manufacturing of the first microprocessor in 1968 up to the fastest yet the minutest microprocessors, Intel has continuously led the course in technological advancement. One of the company’s advantages over its competitors is its highly competent employees working together to create new and innovative technologies that suit the need of society.

Also, all other updates or breakthroughs of Intel’s products should also be properly disseminated to teenagers. Like for example, recently, Intel has made another big leap getting way too far from its competitors with the installation of a WiMAX network in one of the most remote inhabited places on Earth, the Parintins, a town on an island in the Amazon River. The digital transformation of Parintins is expected to improve the healthcare and education of its 114,000 residents and advance the lives of future generations.

The marketing communications ads (may it be in TVs, radios or prints) should also not forget to include some statements from the top management of Intel. Like for example what Gartner Research Vice President Martin Reynolds said that he believes in Intel’s technological advantage over its competitors. According to him, Intel’s continued march toward smaller manufacturing and its time-to-market advantage put the chip giant ahead of the rest of the semiconductor industry. He also added that Intel had employed its own unique strategy of packing more performance onto its chips than competitors, which helps the company attract more customers and allows it to keep pricing up. Although its competitors have been trying hard to be as good enough, they have come only as close. Intel has been able to develop the minutest yet the best chip ever for their customers.

Lastly, it is the marketing communications’ task to give emphasis on the third core competency of the company, which is its ability to maintain a competitive edge over its rival. It is then part of the roles of Intel’s marketing communication specialist to provide pamphlets or brochures and other campaign materials that will bring about the company’s involvement in the community, and its desire to in bringing a more convenient lifestyle to its customers is one factor that makes Intel able to sustain its technological advantage. As each new dawn breaks, society becomes more competitive. Thus, people’s lifestyle follows. They seek a more advanced and faster way of getting information from the different parts of the globe. Intel has the answers to these needs.

With all this information of Intel being one of the most sought-after companies when it comes to labour and employment, it cannot be denied that their marketing communication plans have been doing really well. Sometimes, marketing is not just about the product. More often than not, it is better to market the company first. Highlighting the best attributes of the company would mean attracting more people and a bigger market. Because there is enough information dissemination (and, of course, positive movements inside the company), Intel has become widely heard all over the world – and this is the action from the marketing communication people.

Sales Promotion and Customer Loyalty

Sales Promotion Defined

Sales promotion of any company is the ways and means of the company to generate sales by doing some always programs in accordance to the company’s policies. The sales promotions are always aimed at (Aron et al., 2006):

Improving both short-term and long-term performance of the product.
Increasing sales generated by consumers.
Stimulating consumer interest.
Protecting market share.

And, for the manufacturer, the purpose is to get repeat promotions and develop a strong relationship with the retailer customer, thus earning customer loyalty.

Sales Promotion of Intel

Intel’s management and sales force believe in the common marketing and selling adage that “There are only so many promotional dollars… and the trick is understanding how and where they should be spent” (Aron et al., 2006).

Stimulating consumer interest is a key component in the roles and responsibilities of an effective sales promotion, thereby gaining a higher percentage of customer loyalty. Although these points could be stand-alone topics, the sales consultant should assist the retailer with proper informational signage for the promoted products as well as attractive point-of-sale material. Retailers understand the importance of signage and exciting promotional material, but sometimes it takes stimulation to get them to use it properly. A trip to the new growth merchants, in particular, demonstrates the importance of informational signage as a way to assist the customer in making a buying decision from a promotional display. Linked to this is coaxing the retailer to promote products in different locations and away from their normal home in the store. Incremental sales are the results of getting a customer to slow down and give a product unexpected attention (Roseman, 1991).

Getting repeat promotions is relative to having customer loyalty. It is a function of good information given back to the seller. Retailers often report that they don’t get this information unless they take the time to fish it out or unless they ask for it. Top-notch sales consultants always give feedback, and they always develop sales goals with their customers with every promotion. This information is invaluable to both parties, and it demonstrates to the retailer the concern the manufacturer has in helping them grow their business profitably (Roseman, 1991). With loyal customers comes a continued increase in sales or profits.

Impact of Intel’s Sales Promotion

Intel Corporation is undoubtedly taking good consideration of their market’s buying behaviour. Their marketing and sales plans are very focused and strategically dominating all the aspects of the business – the company, the products and the ability to develop. These are all part of marketing communications mixes – advertising, personal selling, direct marketing and even public relations. The management knows that their profits cannot be sustainable if they are to highlight their products alone. Hence they do it in a multi-faceted tactic by giving equal ads about the beauty of their company, the greatness of the products and their dominion in developing more and more products.

Intel started with four rep firms four years ago with two of its business units–Wireless Computing and Communications Group (WCCG) and Intel Communications Group (ICG) – when the company made a huge push into the communications market. Intel chose technically savvy rep firms that had experience with silicon design. All carry products that complement Intel’s chips and target the communications and networking markets

Using an outside field sales force put Intel’s product in front of the reps’ established customer base. “It’s a more cost-effective way to sell,” in that the chipmaker doesn’t have to pay salaries and benefits to the outside sales companies because they work on commission. Reps, meanwhile, can spread these costs among the supplier base.

The program was such an immediate success that after the first 90 days, Intel’s communications divisions moved into deeper waters and began recruiting more rep firms. The communications units now use 25 firms: 18 in the United States, three in Europe, two in Japan and one in Latin America

Although there were sceptics, Intel’s senior management immediately understood that the economics of this program – paying straight commission – was very attractive. Senior management liked its simplicity. The reps function as Intel’s field sales force and supplement the rest of the sales force. They are trained alongside internal salespeople and work closely with the company’s staff on sales strategies and customer accounts.

Most appropriate methods used to evaluate sales promotion activities.

The combination of quantitative and qualitative methods is the best possible way to evaluate the sales promotion activities of Intel. A standard DCF model is used to assess Intel. Because Intel has almost no debt, there is virtually no difference between the WACC approach, the adjusted present value approach, and the capital flows approach. Using Intel’s lowest stock price in the year preceding September 2000, debt still represents less than 1% of the company’s capital structure. For simplicity, therefore, the valuation analysis proceeds as if the company were all-equity financed (Ruback, 2000).

Although the DCF model depends exclusively on expected future cash flows and not historical data, the past provides a benchmark to assess what can reasonably be expected in the future. First, Intel’s income statement includes the amortization of goodwill created by acquisitions. Unlike depreciation, this amortization is not tax-deductible. From a valuation standpoint, therefore, the amortization can be ignored – it need not be deducted from operating income nor added back when calculating free cash flow. Second, the income earned from Intel’s financial investments is excluded. Instead, the financial assets are treated as separate from the firm’s operating assets, and their value is added to the estimate of the firm’s operating value (Ruback, 2000).

The historical data show that Intel’s revenue grew at a geometric average rate of 16.1% during the years from 1995 to 1999. As revenues grew, moreover, gross margins improved, rising from approximately 50% to 60%. Because of rising research and development costs, operating margins fluctuated around 35% despite the improvement in gross margins. During the early part of the period, capital expenditures, as a per cent of revenues, were relatively high. They fell to an average of about 12.5% of revenues in the last two years. Depreciation averaged about 9.5% of revenues during the period. It was somewhat higher toward the end of the period, reflecting the relatively greater capital expenditures in the first three years. Cash flow as a per cent of revenues rose throughout the period to a high of 22% in 1999 (Ruback, 2000).

Intel is, without question, one of the world’s premier corporations. Intel’s success has been reflected in its stock price. However, it cannot be denied that the company’s success is also brought more significantly by the sales promotion strategies and adherence to customer loyalty of the company. In fact, this is the very reason why at various times during the year 2000, it was the largest market capitalization company in the world, and until now, the company is able to maintain it. In addition, Intel is one of the most actively followed and widely held companies. Major institutions hold well over half of their stock.

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