Intel Versus AMD: Comparative Analysis

Background

The American company ‘Intel Corporation’ (Intel) derived from ‘integrated electronics’ founded in 1968, is now one of the biggest known computer processing unit (CPU) brands in today’s market. Intel is my chosen favoured product, as it is the more ‘premium’ product in this critical reflection and can achieve greater performance against its competitors. Advanced Micro Devices (AMD) the biggest competitor to Intel was shortly founded a year after Intel. A company similar to Intel also specialized in manufacturing semiconductor devices used in computer processing. AMD is the biggest direct competitor to Intel within the CPU market, both companies deliver products that provide the same service and will both satisfy its job as a CPU.

Analysis

Intel products have always been known for their powerful single-core processing power as compared to AMD's more cost-effective processing units, comprising of more cores in their CPUs. Intel’s micro-environment competitor has greatly impacted their product line, due to their competitive cost-efficient performance. AMD has achieved this by increasing the amount of processing cores within their products at a lower price point than that of Intel products. This has greatly influenced and impacted Intel’s product line. By forcing them to stay competitive through keep up to the growing demands of consumers’ appeal to CPUs with greater amounts of cores.

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Competitive advantage

Intel is favoured in this choice because of “marketing mix that is heavily focused on advertising and public relations”. Intel is mostly viewed by the public as the more ‘premium’ and ‘faster’ product when put in a side-to-side comparison between AMD. A recent survey done in the rapidly expanding market of gaming, shows roughly 80% of users are currently using Intel processing chips than the low 20% of AMD chips. Most popular CPU manufacturers on Windows and Linux (Source: Steam)

Intel has also well-developed public relations, this has helped Intel create beneficial relationships between organizations and the public, allowing for credible third-party validation and greater brand awareness. This relationship is mutually beneficial, as specific media organizations may get exclusive information from Intel in turn, also helping their organization to report and publicize exclusive content. Intel also invest much greater amounts into Research & Development (R&D) than AMD, approximately triple the amount AMD does during the entirety of 2018.

• Source: https://ycharts.com/companies/INTC/r_and_d_expense (Intel), https://www.statista.com/statistics/267873/amds-expenditure-on-research-and-development-since-2001/ (AMD)

This creates a differential competitive advantage because AMD does not have the budget to duplicate the cost or scale of ‘innovative offerings’ provided by Intel. Hence, Intel is the leader in this market which gives Intel First mover advantage allowing them to gain greater profit margins, resulting in a greater competitive advantage.

• Able to leverage its manufacturing capacity
• (This means it can increase production to bring product to market in large volumes. Increasing volume and getting the product onto the market as quickly as possible are important elements in creating and maintaining a competitive advantage.)

Marketing Mix

Product

Although microprocessors are the most well-known product from Intel. They also have other products widely used in the computer industry such as memory chips. Intel has a larger product variety than its competitor AMD. This shows the company’s growth is greater and its larger company size compared to AMD. Intel’s current products are constantly updated, with their latest ninth-generation processors just recently being announced late last year in October. Intel is also slowly expanding its product line as it seeks out new revenue streams and new computing markets to enter, Intel was reported to be joining the ‘discrete graphics market’ set to be releasing its own graphics processing units (GPU) in 2020. This is a good market segment to enter for Intel as GPUs are most relevant to the gaming side of the computer industry. This side of the computer industry has received a steady growth over the past few years this shows the market is expanding in the gaming sector. (CONSUMERS) (NVIDIA AND AMD ARE PREEXISTING IN THIS MARKET)

Place (distribution)

Intel has three main distribution points, at their own shops, computer stores we find locally in our shopping centres, and systems/computers with their products already installed inside.

Official Intel stores

Intel have their own online store on their official website alongside physical store locations across key locations worldwide. This style of direct distribution allows intel to have complete control over their products as it comes directly from the manufacturer to the consumers. This allows intel to maximise profits as they avoid sharing profits with a reseller. Consumers also get their product faster, intel is also able to gather accurate data from consumer buying habits.

Third-party resellers

Intel also sells their products through third-party resellers, this indirect distribution allows Intel to have lower shipping and storage costs compared to direct distribution. This form of distribution also allows Intel to benefit from their third-party reseller’s branding and salesforce.

Authorized seller of embedded products

Intel also sell their products already installed in systems. This type of distribution can be very beneficial for Intel, because Intel may consider an exclusive distribution of harder, high-end products to make sales on. Exclusive distribution may mean, that third-party reseller is the only supplier selling that specific product from Intel. Hence, these high-end products viewed from the reseller can be seen as ‘prestigious’ as they are only receiving that product directly from Intel to sell. This allows Intel to have steady sales on their higher-priced or harder-to-sell products.

Intel has numerous distribution strategies which allow Intel to have great market coverage, this can make it easier for consumers to purchase their products and could allow them to recognise Intel as a large and reliable brand to purchase from.

Promotion

1. Advertising
2. Public relations (journalist, gaining publicity)
3. Direct Marketing

Intel uses numerous promotional strategies to promote their products to consumers. The main goal of promotion is to determine the needs and wants of consumers alongside, influencing them into feeling the need of purchasing their products and tricking the consumers into thinking their product will satisfy their needs.

Advertising

Intel employs advertising as an effective way to promote their products, and ultimately their brand. This helps consumers become more aware of their brand, and feel a degree of fidelity towards Intel. During the 2017, Super Bowl (NFL), Intel was able to advertise their brand through a commercial break starring a very popular athlete Tom Brady. Since the NFL is a widely-watched sport averaging over 100 million views on television. Intel is able to increase its brand awareness from the people in their internal environment. This is what creates the beneficial relationship between the consumers and their brand, especially what may be considered slightly unethical. By creating a false positive connection between their products and a world class athlete promoting their brand, makes it seem like their brand is represented as ‘world class’ or as good as Tom Brady.

For example, the company sponsors special events, such as science fairs for high schools. Such sponsorship supports brand awareness and customer loyalty. These public relations programs are also part of efforts to address corporate social responsibilities (Read: Intel’s Corporate Social Responsibility Strategy & Stakeholders). Moreover, the company promotes its products through direct marketing. The company engages in direct communications with equipment manufacturers and sellers to reach profitable arrangements. This aspect of Intel’s marketing mix indicates considerably equal significance of advertising, public relations, and direct marketing in supporting the company’s promotional objectives.”

Prices and pricing strategies

Intel Corporation uses the premium pricing strategy to maximize its profits. In this strategy, the company’s prices are relatively higher than those of competitors, such as AMD. (Maximises profit margin)

Disadvantage

Difficult to implement new products, and could be risky in a price–sensitive market.

Advantage

Maximises, profit margins, growing revenue despite cheaper products from AMD.

Target marketing strategies

Corporation applies advertising as a way to attract end-users and equipment developers and designers. Considering the variety of products available from the company, the marketing mix also involves a corresponding variety of potential places or venues for distribution. In this way, Intel ensures that target customers and end-users are effectively reached. An effective marketing mix facilitates business resilience and long-term success by supporting competitiveness and efficiency in marketing. In this regard, it is essential that Intel continue to monitor the appropriateness of its marketing mix relative to the conditions of the semiconductor industry and target markets around the world.

Undifferentiated targeting strategy is used by the company as most of its productsand services are standardised and are easily available worldwide.

1. Objectives point of difference
2. Intel’s mission is to ‘Utilize the power of Moore's Law to bring smart, connected devices to every person on earth’ make it simpler for the consumer, new slogan
3. Insert other people’s opinion as what it is viewed
4. Compared to AMD and what other thinks (low budget)
5. Critique (talk about bad things) from distribution
6. Weakness
7. Opportunities

Ways to improve

Explain type of competition between intel and AMD, tell them what can be done on Intel to eliminate AMD as competition

References

1. http://panmore.com/intel-corporation-marketing-mix-4ps-analysis
2. https://publicrelationssydney.com.au/the-difference-between-advertising-and-pr/)
3. (https://www.theverge.com/2018/10/8/17950968/intel-9th-gen-core-chips-2018-desktop-processors-8-core-i9-9900k)
4. (https://www.digitaltrends.com/computing/intel-gaming-gpu/)
5. (https://newzoo.com/insights/articles/global-games-market-reaches-137-9-billion-in-2018-mobile-games-take-half/)
6. (https://marketingmix.co.uk/place/)
7. (https://www.learnmarketing.net/Place.htm)
8. (https://www.marketing91.com/marketing-strategy-intel/#Segmentation-targeting-positioningin-the-Marketing-strategy-of-Intel-8211)
9. (https://www.quora.com/What-are-the-differences-in-Intel-and-AMD-processors)
10. http://businesscasestudies.co.uk/intel/using-innovation-to-create-competitive-advantage/competitive-advantage.html
11. https://publicrelationssydney.com.au/the-difference-between-advertising-and-pr/
12. Research & Development Budget in 2018 Sales Intel AMD 3430.0 1434.0