Effective Distribution Methods for Intel China: A Marketing and Strategy Analysis

This article analyzes effective distribution methods for Intel China to address competitive threats and actualize market opportunities. The recommended methods include B2C services, online distribution channels, and mergers and acquisitions. The article also discusses the importance of understanding market segmentation, targeting, and positioning, as well as the marketing mix for China business. The goal is to help Intel China regain its competitiveness and growth in the China market.

Running head: MARKETING AND STRATEGY 1
Marketing and Strategy
Student Name
Institution Affiliation

MARKETING AND STRATEGY 2
Question 1
Effective distribution is the key factor behind demand generation and success in the
Chinese markets. Establishing a healthy balance between the broad mix of distribution among
local original equipment manufacturers, MNCs, and distributors are the main approaches that
would enable Intel China boost its expansion in the market; failure to which would derail its
growth and competitiveness (David, 2011). Distribution is among the leading challenges that
Intel faces in its attempt to sell its products to Asia and other global economies. This part
proposes the most appropriate distribution methods that would help Intel in addressing the
competitive threats from AMD and actualizing the market opportunities in both short run and
long run.
Business to consumer techniques (B2C Services): From the case, Intel’s channel of
distribution consisted of approximately 30 sub-distributors based in China who sold the
company’s products to the resellers who in turn sold the Intel PC Processors to the target
customers. This is a great challenge and offers Intel the threat of losing reliable markets,
prolonged processes of offering products as demanded by customers, and also possibility of loss
of the products while in the hands of middlemen. The use of B2C services by Intel would help
eliminate this prolonged process of offering the demanded product to the end users by
eliminating all these intermediaries who contribute to increased distribution costs (Jiang, Jun, &
Yang, 2016). B2C services would eliminate the reliance on sub-distributors network hence
exploit all market opportunities and eliminate all related threats to the use of middlemen. As a
result, both short run and long run goals of Intel would be achieved.

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Online distribution channels: Today, technology has taken the lead in all sectors. There is
no doubt that over 95 percent of the customers targeted by Intel are connected to and use the
internet on a day to day basis (Tim Jackson, 1997). The fact that the company already uses
internet to eliminate middlemen, not all customers have the access to the internet. In this regard,
Intel China needs to introduce advanced techniques in demand planning, logistics networking,
and inventory management in order to meet more markets in both short run and long run.
Mergers and acquisitions: Intel China is known to sell its own brands of PCs to the
Chinese markets. Due to stiff competition from AMD and other companies in the Chinese
market, Intel needs to merge and acquire more companies in the country in order to increase
brand awareness across the market. For example, Lenovo’s acquisition of IBM’s PC division in
2004 contributed to 30 percent increase of the Chinese market. Intel China needs to copy
Lenovo; by this doing the company would hence strengthen its distribution channels. The
original brand sales would also increase in the market and thus increase Intel’s profitability
which would help in meeting the long run objective of profit maximization.
Question 2
The recommended distribution methods to Jon Antonne include:
i. Business to Consumer (B2C) services
ii. Online distribution channels/ Internet
iii. Mergers and acquisitions (M&As)
These distribution methods relate to market share, revenue, and profit in China for Intel in
various ways, these ways include:

MARKETING AND STRATEGY 4
Increase in sales revenues and profits: Business to customer (B2C) services would assist
Intel in expanding its products reliability and availability to consumers/ end users disposal. The
technique is internet aided and will help in the elimination of middlemen who increase
distribution costs for Intel hence lowering sales revenues and profits. The customers in the
market will get Intel PC products at lower prices and hence buy more of the company’s products.
As a result, sales will increase and hence boost profits too.
Let us assume that currently the company spends $111500 per year on distribution costs (for
intermediaries)
The average price per Intel product is $210
Company sells approximately 1M products per years
Total sales; $210*1M= $210 Million
Let us assume all other costs amount to $2,440,000
So; total costs will be $(244,000+11500) = $ 2,551,500
Annual revenue/ Profit will be;
Annual sales 210M
Less; Annual costs 2.5515M
Profit before tax 207.4485M
On the other hand, with the elimination of middlemen and by the adoption of B2C services, the
company operates as follows;

MARKETING AND STRATEGY 5
We assume distribution costs for intermediaries are eliminated to $0 per annum
Then average price per Intel product reduces from $210 to $200
We assume, due to price reduction; the company increases its sales from IM to 1.5 Million per
annum
Total sales will be $200*1.5= 300 Million
Let us assume all other costs amount to $2.3 Million
So; total costs will be 3 M
Annual revenue/ Profit will be;
Annual sales 300M
Less; Annual costs 2.3
Profit before tax 297.7M
From the assumption and analysis, Intel Company will boost its profit and sales revenues from
207.4485M to $297.7M ($90.2515) within one year.
Increase in market share: The adoption of efficient mergers and acquisitions with other
Chinese firms in different industries like the way Lenovo did would contribute to increased
market share and size for Intel. Acquisitions have the capacity to boost market size to larger
scales. Also, the use of online distribution channels such as credit cards has the capability to
boost more sales within the Chinese markets (Kennedy & Kennedy, 2009). This is because,
products will be delivered in a fast, more affordable, and reliable manner to both Intel and the

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customers. To Intel, sales revenues and market share will increase and to the China markets,
products will be readily accessible to them at any time they require them. The current market
size will increase by approximately 20 percent in the next 2 years and cumulatively increase by
60 percent in the next five years.
Question 3
In brief, there are high chances that John Antone will drive Intel China business to high
scales of success. Intel offers high quality products. In reference to 2003/04 financial period,
Microprocessors, chipsets, and boards sold by Intel accounted to 85 percent of the overall
revenue for the company (Li et al., 2013). While these profits were realized, the company was
not using the right distribution methods and still faced stiff competition from AMD and other
strong players in the market. Other companies such as Ali, NVIDIA, VIA Technologies, and SiS
also are strong in the market and sell the same products that are sold by Intel. Therefore, John
Antone should come to the industry with new technological strategies of marketing and
distributing Intel’s products in the market (Sigala, 2010).
Intel China business requires extensive brand marketing campaigns for the company’s PC
and Microprocessors in order to boost brand positioning in the market. While marketing Intel
products, John Antone needs to understand the segmentation, targeting, and positioning of both
the market and company in the China market. Segmentation refers to the demography,
geographies, and economic levels of the targeted market (Hassan & Craft, 2012). Targeting is the
target market/ customers or end users of the product that is made and manufactures by Intel.
Positioning is understanding the brand positioning of Intel in the Chinese market in order to

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determine the right marketing and promotional tools to increase the company’s brand positioning
in the market.
Also important to understand about China business is that distribution of products
remains a top challenge to most companies in the industry. The marketing mix for China
business entails the product, price, promotion, and place (distribution) which are critical to
business success in the market (Schmidt, 2015). In the past, Intel emphasized more on the
product improvement, pricing, and promotion in the market; but failed to give proper concern to
the place and distribution of its products in the market (Kumar & Reinartz, 2018). As a result, the
company has been losing its competitive advantage to the other players in the industry such as
AMD. John Antone needs to understand that the establishment of better channels of distribution
creates balance in business, and this boosts performance and convenience in the market place.
Finally, every manager operates using his own strategies, approaches, perspectives, and
business policies. These strategies and policies must be aligned to the overall goal and objective
of a company. Most businesses in China, with Intel included exist to make profits and offer high
quality products and services to customers in a more reliable and convenient manner (Kim et al.,
2012). For Intel to regain its competitiveness and growth in the China market, John Antonne will
need to adopt different strategies and approaches of marketing, distribution, and management of
resources within the company so as to meet both short run and long run goals as designed in the
company’s strategic plan.

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