Intel Corp.'s Successful Gaming Processor Segmentation Strategy – Motley Fool

In October of 2017, chip giant Intel (NASDAQ:INTC) released a new family of processors, known as Coffee Lake, for the desktop personal computer market.

The initial wave of chips and related platforms was primarily targeted at computer enthusiasts and gamers, with the company releasing Coffee Lake-based products for more mainstream consumers earlier this month.

Image source: Intel.

Considering, though, that sales of chips to gamers and other computer enthusiasts are growing despite a sluggish overall computer market, this segment is increasingly important to the company. Intel’s goal is to, of course, capitalize on this market as best it can.

In this column, I’d like to go over how Intel’s product segmentation strategy with respect to the Coffee Lake chips for the enthusiast/gaming market has been very successful.

The goal of product segmentation

Intel builds different products with a range of performance levels and features for each of the markets it serves. The idea is to have compelling products with good cost structures at each price point, while at the same time structuring the product line in such a way that prospective customers find value in paying more to buy the higher-end product if they’ve got the money to spare.

A good segmentation strategy achieves three goals: It allows a company to maximize its shipment volumes (a product for everyone), its profit margins (the products at different price points have cost structures appropriate to their selling prices), and its average selling prices (customers who can spend more will find value in spending more for the highest-end products).

Enough theory now, though — let’s see how this applies to Intel’s latest Coffee Lake gaming processors.

The lineup

Intel has three gaming/enthusiast-specific Coffee Lake processors in the market today: Core i3-8350K, Core i5-8600K, and Core i7-8700K. I’ve provided a brief set of specifications

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