Ingredient Merchandising

So you think your boss is formidable? Or that your company's products are earth-shaking? Or that you face a challenge communicating with consumers?Forget about it -- Shannon Smith and Judy Shintani have you beat. They have to run their latest P-O-P ideas past Time magazine's Man of the Year. They are responsible for merchandising a brand that, according to some experts, has fundamentally "changed the world." And they have to help sell a product that most consumers barely understand, rarely see and will never actually touch.Those are a few of the everyday challenges that marketers at Santa Clara, Calif.-based Intel Corp. face. When Andrew Grove, Intel's chairman and chief executive officer, was named Time's "Man of the Year" in the Dec. 29, 1997 edition, the cover language pulled no punches: "His microchips have changed the world."That's big talk for a product not much bigger than a matchbook. It is up to Smith, manager, worldwide channel marketing communications ("MarCom") and Shintani, senior project manager, worldwide channel marketing communications, to make sure retail customers can see, hear and learn all they need to know about those tiny chips.Techno-RootsIntel introduced the world's first microprocessor, the 4004, in 1971. A microprocessor, also called the central processing unit (CPU) or chip, is considered the "brain" of a personal computer. Intel's empire has grown through the manufacture of the chips that run personal computers, not the PCs themselves. Intel left that part of the game to PC pioneer IBM and a variety of clone-makers such as Compaq, Hewlett-Packard, Dell and Packard Bell.The chip business was chaotic in the 1970s and 80s. It was said that microprocessor power doubled every 18 months. That left consumers befuddled by the sudden obsolescence of their recent computer purchase, and a host of chip-makers in a constant scramble. True to its Silicon Valley techno-roots, Intel was content to name its products with simple serial numbers, shortened in the PC marketplace to 286, 386 or 486 chips. However, in the late 1980s, a court ruled that Intel could not protect the trademark of products named after such generic numbers.Intel feared that chips might become a commodity component that could be displaced by cheaper manufacturers. The company developed what was called an "ingredient branding" campaign -- Intel Inside -- with a simple message for PC buyers: The microprocessor does make a difference, and you'd better look for Intel's logo as an assurance of quality.Just in case you weren't paying attention, the ads always ended with the swirling logo and the distinctive sound of the five-note "signature i.d." (a.k.a. the bong sound). "The advertising stops with the signature i.d., and the P-O-P takes off from there," says Smith. "We wanted consumers to walk into a store looking for that brand." The earliest forms of Intel in-store merchandising were stickers applied to PCs and static clings on retail doors. Soon, more sophisticated temporary materials such as foamboard "monitor crowns" were developed, along with another key element, interactive programs that run on demonstration PCs in stores. In 1994, Intel began introducing permanent P-O-P displays to the field. That same year, the successor to the Intel486 chip, the "Pentium" chip, was introduced.Today, most consumers still wouldn't know a microchip if they sat on one, but they do know Intel. Financial World magazine estimates that Intel is now the tenth most valuable brand in the world. According to Time, nearly 90 percent of all PCs sold this year will have an Intel chip inside them. More than 1,300 licensees worldwide participate in the Intel Inside program.Worldwide IdentityLast year was unusually busy for Intel as it introduced two new products: the Pentium processor with MMX media enhancement technology (in January 1997) and the Pentium II processor (in September). Smith's 10-person retail merchandising group works within Intel's Worldwide Channel Marketing Communications department. And they aren't kidding about "worldwide." Intel has a merchandising presence in more than 4,000 store locations in the United States, mainly computer and office superstores, consumer electronics stores and mass merchants. In Asia, Intel delivers merchandising materials to more than 15,000 "dealers," which are typically small store operations; in Europe, a combination of retailers and dealers are served.There are three primary types of merchandising media offered: temporary P-O-P, interactive demos and permanent displays. "Our number one objective is to create a brand identity with the consumer," says Smith. "The other thing our P-O-P does is educate the consumer on what the Pentium II processor does in terms of 3-D graphics, performance and capabilities. It's important because seeing the merchandising and using the demo usually is the customer's first hands-on experience with our product."Typically in the U.S., Intel has its own display positions secured in-store. Quite often, the company will work with the retailer to devise custom displays for this space. For example, Intel has a special lightbox endcap in Circuit City stores and a special display wall at CompUSA stores. "We offer retailers a level of customization by creating pieces specifically for them that work in their structure and planograms," says Shintani. On approximately 1,000 retail endcaps in various superstores, the displays feature a "live demo" that lets consumers connect to Intel's call center via a video-phone and talk to a technician.Intel uses fairly rugged materials for its temporary display elements. For example, the Pentium II campaign materials included a monitor top with an injection-molded "II" mounted onto double-laminated chipboard. This extra detail makes the display truly stand out, although there is a downside: some shoppers like to steal the "II" off the displays for a souvenir. Barring that, however, materials sent out with the Pentium II launch in September 1997 are expected to stay in service until mid-1998. Intel also supplies Pentium-themed materials to PC manufacturers, "so we can get a lot of hits in different areas around a store," Shintani notes."When we create our materials, we try to create things that are simple, bold and break through the noise that is out there in retail," Smith says. "We also create materials that are easily adapted by our geographies, which vary worldwide. Our merchandising is translated into more than 16 languages and shows up in more than 30 countries, so it is very important for us to have a consistent look and feel. A consumer who shops a CompUSA in Illinois will see the same campaign in Tokyo or Beijing. The Intel blue [which is a PMS color] is maintained strictly so it matches everywhere."Bunny BusinessIntel works with a variety of suppliers. Grafton, Wis.-based Frank Mayer & Associates has produced much of Intel's P-O-P over the years, working closely with Primo Angeli, a packaged goods creative design agency based in San Francisco. Another key supplier is Chicago-based Rapid Displays (through its office in Union City, Calif.) The CompUSA wall display was produced by Hawthorne, Calif.-based AdBox. Intel also relies on a network of printers and other suppliers throughout the world to help manufacture international materials.Smith says Intel believes in keeping all elements of its campaigns, from ads to in-store displays, in synch. For example, when the first "BunnyPeople" ads (Intel technicians must wear "bunnysuits," clothing that protects chips from contamination during the manufacturing process) aired during Super Bowl 1997, all in-store materials were updated within a few months.While Intel is consistent in execution, it is constantly updating its taglines. The Pentium with MMX campaign tagline was "See It- Hear It- Experience It." In September 1997, the Pentium II was introduced with "This Changes the Whole Picture." The newest tagline, introduced in March, is "Performance at Your Command."Technology can change the P-O-P picture, as well. A key display item, the "iComp index chart," is constantly updated as processors with new megahertz speeds are added. The Pentium II processor rolled out in 233-MHz and 266-MHz versions; a 300-MHz version was introduced later in 1997; a 333-MHz Pentium II chip was introduced in January 1998.The merchandising group is not only focused on the retail channel (which accounts for about 80 percent of their efforts), but a new area, small business. "In 1997, we realized that there was an opportunity to promote our message and brand to the small business user," says Smith. "We started doing some merchandising -- both P-O-P and interactive demos -- to reach this segment through chains like OfficeMax, Staples and Office Depot." The P-O-P materials are similar to the Pentium II campaign, with a tagline "Technology Growing with Your Business."Intel has a 45-person team of retail channel representatives who help manage field merchandising, train retail salespeople and run "demo days" for consumers. "They are our eyes and ears," says Shintani. "We also have task forces, in which a person from a region comes in for a meeting every couple of weeks and reports on what is happening in the field. The retail channel representatives also submit weekly database reports in which they report on activities and problems out in stores." Shintani says her staff also frequently goes out for day-long store tours.Through the cooperative advertising agreement with retailers, Intel obtains information on sales. "It is difficult to attribute sales to P-O-P because there is advertising and a lot of PR activity," says Smith. Intel also does in-store testing, watching customers interact with the retail demo so managers can gauge usability. Intel will also ask consumers to walk through a store to evaluate P-O-P, analyzing how well they notice Intel merchandising and imagery.Mystery shoppers, armed with pictures and lists of the merchandising elements that should be on display in a store, are sent out regularly to report back on retailer compliance. "They report on general trends," says Smith. "We can track which types of stores or which regions are and aren't using certain types of merchandising elements, perhaps monitor toppers or tear sheets, so we can adjust the mix on the next campaign."Shintani says that computer retailers seem to be trying to clean up the merchandising. "Some are cutting back on P-O-P, so our merchandising presence remains the biggest. They are putting in their own signing systems and focusing on their own store brands. When we get involved with retailers upfront, before we roll out a new campaign, we find that things run more smoothly."And, of course, there's someone else involved: Time's Man of the Year is just down the hall in his cubicle. (Yes, Intel's CEO works out of a cube.) "He is very involved in the marketing, the advertising and the messaging," Smith says. "Twice a year, there are major presentations to him where strategies are mapped out. And he gives us his opinion. He sees everything."

Ingredient Merchandising

P2PI MEMBERS

JOIN P2PI

Related Images

Business Topic

Company

Market Segment