Finally, MAD needs to switch the consumer's fixation from specifications such as GHz and KGB, to visual experience. Although Llano is already delayed, it will be ready by mid-201. The next selling cycle, right after mid-2011 , is the Back - to - School season. This means that waiting until mid-2011 is not necessarily a bad thing. Intel already rushed out a CHIP+SPIN processor called Sandbagging in order to be the first to market, and in doing so produced a mediocre product. According to analysts, "Intel GAP technology is a generation behind its CPU technology and cannot Offer an outing-edge graphics experience. Unlike Intel, Mad's strength is in dedicated Spies, due to the acquisition of AT I. Therefore, MAD can release a more complete CHIP+SPLIT processor, aka APP, in time for the Back-to-School season. Usually, incentives are negotiated prior to each selling cycle: Back-to- School, Holiday season, and Spring. MAD can offer incentives to retail stores such as Best Buy, H. H. Gregg and Office Depot prior to the Back-to-School season. The incentives would benefit the retailers because they would be paid an extra 5-10 dollars per PC sold, that contains one of Mad's chips.
MAD would also benefit from giving retail incentives by getting more exposure on prominent displays, promotional merchandise available at the retail stores, PC's with MAD chips featured in ad circulars, and MAD would have access to sales associates for training purposes in return for the incentive. MAD specifically should have a combination of merchandising and training because studies show that when merchandising and training are combined, the VISION brand is better communicated and recommended to customers via retail sales associates.
For example, when comparing VISION awareness, Merchandising Alone scored 88%, whereas Merchandising + Training scored 97%. For VISION recommendation, Merchandising Alone scored 46%, whereas Merchandising + Training scored 69%. The Fusion product line consists of one high end product called Llano that was suitable for high-performance desktops and laptops, one mid-tier product called Acetate suitable for low-end notebooks, and one low-end product called Ontario mainly used for notebooks. Acetate and Ontario were also referred to as Bravos.
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The reason why we choose to launch Llano first, and not Bravos, is because the VISION rand needs to be associated with quality processors and reasonable prices in comparison to Intel. We assume that if MAD launches Bravos first, the VISION brand will run the risk of being miscommunication as a low-end, weak processor and thus MIS-positioned in consumers' minds, due to a negative first impression. In the past, MAD lacked the ability to court high-end markets, and VISION's Llano is an attempt to break into high-end markets which will give MAD an opportunity for larger profit margins and market share gains in PC's.
Odessa said, "Internal projections forecasted that Llano, which would cover all mainstream and high-end products, would account for 70% of Fusion APP sales and that Acetate and Ontario would account for 30%". Looking back at Mad's history with Intel, the companies seem to always have a response to one another, or a way to get back at each other. Whether it is by launching a better product, price-cutting, acquisitions, or rushing products to the market, they usually respond within a year or two.
For instance, when Intel's Titanium failed because it could not service 32-bit software, MAD developed the Petrol, which could service both 64-bit and 32-bit software hush creating success for MAD. Part of its success was due to the fact that users did not have to buy new software packages for the processor, unlike Titanium which required new software and proved to be costly. We would rather have the Llano be like a repeat of the Petrol in comparison to Intel's Sandbagging.
This means that even though Intel went to market first with a CPU+SPIN processor, MAD can release a better APP about six months later, which is a relatively quick retaliation to Intel when compared to their history. In order to not make the same mistake that Titanium did, we recommend MAD ark with content and software makers before launching Llano. Another important characteristic about Llano is that it needs to be able to function with both 64-bit and 32-bit programs. The plan is to release Llano with only a few major necessary software applications and programs optimized for 64- bit, so that the Llano APP can be fully experienced by users.
As mentioned in the case, "the lead time for optimizing applications was typically a yea'. Releasing Llano with only a few optimized programs allows Llano to roll out in mid-2011. Also, the idea is that developers can create optimized software ever time, much like how Google Chromate was released with a few notable APS and has gained more over time. Some programs we would optimize are: Direct 1 1, Directorates, Photo and video editing APS, Adobe Acrobat. A large number of optimized programs and applications will come after Llano's debut.
MAD should be concerned with improving relationships with Memos by not forcing the Memos to exclusively use MAD processors and logos, unlike Intel, which according to management "used its dominant position to dictate terms to Memos or threaten not to work with them if they did not use Intel chips exclusively". By not imposing on Memos, MAD opens itself to being used by companies such as Apple, which prefers not to put other brands on its devices. MAD should continue following its new branding strategy VISION, which focuses on how the computer is used and not on how fast the computer can calculate excel spreadsheets. If we make the experience matter most, the VISION campaign has done its job. " Currently the conversation between salespeople and consumers revolves around hardware specifications, but MAD wants the conversation to be about what the computer can do. MAD should define its CPU and JPG in simple terms that re straightforward, unlike Intel which is very technical. Communicating the change from Intel style specifications to MAD visual experience will require in person demonstrations done by retail sales associates.
Retail sales associates will carry out blind tests for consumers by showing shoppers two computers side by side, one with an Intel Sandbagging processor and the other with an MAD Fusion processor. Customers will then choose which computers they feel have the better graphics and visuals, from the demonstrations of the Intel vs.. MAD blind test. Another way to communicate to consumers that MAD APP processors are better, not only for use of Excel but also for visuals, is to show them an experience comparison with the competitor; in this case it is Intel.
The VISION Experience Comparison would be signage that translates industry standard specification lingo; it would show that Intel's processor is equal to choppy, fixated gamely, whereas Amid APP is equal to vivid, clean, smooth game play. The VISION Experience Comparisons would be displayed on the retailer's shelf, where the specifications are typically shown for each computer. The VISION Experience Comparisons would only be splayed for computers that contain MAD Pap's. Add Apes for new form factors such as smoothness and tablets to the Fusion product line.
Create relationships and incentive Memos to use the smartened and tablet APES. Rationale #1 The Fusion line currently consists of three different processors: Llano, Acetate, and Ontario. Each processor in the Fusion line is geared toward a certain type of PC. For example, Llano is for powerful desktops and laptops, whereas Acetate is for low-end notebooks. Ontario is for notebooks. The Fusion line up competes with Intel's 'Core' product line nicely. One area of concern is new form factors, such as tablets and smoothness. Currently, Intel is selling the Atom for tablets and smoothness.
MAD should include an APP that can service these tablets and smoothness, as well. Looking at the competitive landscape, one can see that tablets and smoothness are under great demand from consumers. Apple's phone has had major success since 2007 and pads, which were recently released in April 201 0, have shown strong sales. MAD has the ability and should position itself in the tablet and smartened markets as a graphically strong PAPAL maker. It is in Mad's best interest to become an industry standard for smoothness and tablets. MAD can do this by creating good relationships with manufacturers through flexible deals.
For example, MAD will not require Apple to show MAD labels or logos on its products. Also, MAD will strive to have better prices than Intel. In addition, since some of the smartened Memos are also the same companies that create PC's, MAD can offer bundles. For example, if the same MEMO uses MAD processors in both desktops and smoothness, MAD could Offer a larger discount on advertising or products. Strategy #2 Keep Mad's VISION marketing strategy, but include a marketing campaign using various media to better portray the VISION marketing strategy.
In addition, improve retail and Memos relationship with MAD, to further increase sales. Rationale #2 Mad's new branding strategy for the introduction of the integrated CHIP/ SPIN, VISION, focuses on consumers' experience, visuals, and graphics instead of concentrating on the specifications, speed, and numbers a computer may have. The MAD PC purchasing study showed, "consumers want a simple, straight forward way to compare and choose computers", which indicates hat most consumers are more concerned with "what the computer does, over what is inside Of it".
An example Off circular ad featuring VISION is provided in the case; however, it only shows specifications on the MAD processor found inside the Notebooks, completely omitting the message of the VISION strategy. The idea is to provide customers with the most important specifications and also integrate the message, 'the experience matters most". For the Fusion processor, customers would want to experience HAD quality video online gaming, enhanced video and photo viewing, high-performance photo editing, and AD gaming. This would be a more social, recreational use for a computer or notebook.
The new Vision marketing strategy would include a marketing campaign that involves an initiative to change the consumer message throughout various types of media. The campaign will communicate to consumers that MAD APP processors are better, not only for use of Excel, but also for visuals. The ads in the campaign will show consumers a direct comparison with the competitor, in this case Intel. The campaign will be called the VISION Experience Comparison. The VISION Experience Comparison itself would include ads hat show translations of industry standard specification lingo.
For example, the ads will demonstrate that Intel's processor is equal to choppy, fixated gamely, whereas Mad's APP is equal to vivid, clean, smooth game play. The campaign will be in use two months before each Computer selling cycle. For instance, VISION Experience Comparison commercials will be displayed most heavily two months before the Back-to-School cycle, in order to generate demand. Marketing strategy is important, but relationships with retailers and Memos are also crucial in order for MAD to deliver its new APP processor to ND-users.
Intel has the lead on MAD when it comes to MEMO relationships; Intel goes as far as using threats as one of its partnership strategies by making Memos deal exclusively with them. MAD needs to use a non- threatening strategic partnership; make deals with Memos by not forcing them to place Mad's VISION logo on its devices. For example, "Apple hasn't allowed Intel to place a logo on its computers and the company has the most market share for notebooks over $1000". This means that MAD has the opportunity to make a business deal with a top tier computer brand like Apple.
This is cause MAD will not threaten to not cooperate with Apple, in case Apple does not wish to display MAD logos on its devices. MAD should partner with leading Memos such as Hewlett-Packard and Dell Inc. , which have the lead in sales over Leno and Acre as seen on Exhibit 4 of the case. By introducing incentives, MAD could make itself more appealing to Memos. As mentioned in the case, "MAD can offer Memos 75% refund on full price of all print ads if Memos use the VISION brand". Instead of reimbursing HP 3-5% of the purchase price of the chip, MAD could raise the percentage to 10%, making the deal appear more appealing to Memos.
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