Tag & Trace Marketing
Authors: Melchior Angelika 
Published: October 2020

The use of RFID (radio frequency identification), also called “smart tags”, is on the rise in the retail industry. In short, RFID are tiny microchips using short range radio signals to emit information and can be used to tag goods, buildings, cars, pets, people etc. Unlike bar-code scanners, which must be held directly in front of the item being scanned, one of the benefits of RFID tags is that they can be scanned from a distance. It is expected that RFID will eventually replace the bar code and its use is likely to save companies like Wal-Mart, Procter & Gamble and Gillette millions of dollars as they can track every bottle of shampoo or packet of razor blades from the factory floor to the store shelf (Baard, “Lawmakers”).

Most agree that using RFID to track goods from the point of manufacture to the location of sale in order to prevent goods being lost, stolen or handled inappropriately, is acceptable and not cause for privacy concerns. But as marketers often take every opportunity to learn more about consumers and their purchasing behaviours, some fear that tags embedded in clothing, membership cards, mobile phones etc. may be scanned inappropriately and used to target individuals with cleverly tailored marketing messages. In the effort to provide a more customised experience, business is at risk of becoming increasingly intrusive – something that will not be universally acceptable. But is it all bad? Privacy concerns aside, smart tags can add new functions as well as enable a whole range of innovative products and services when joined with other technologies.

RFID beyond Traditional Value Chain Management

Prada is often mentioned as an example of how RFID can be taken beyond the traditional value chain management. Prada has implemented some ground-breaking technology in their Manhattan (New York) store, all based around RFID. RF-receivers automatically detect and scan garments brought into the dressing room. Via a touch screen the customers view tips on how to mix and match, access information about available sizes, colours, fabrics and styles, and watch video clips of models wearing the very outfit they are trying on (Grassley, ”Prada’s”). Eventually customers will be able to create virtual closets and store information about what they have tried on or bought on their Prada Web account (”Prada’s”). Customers’ details, including notes made by sales assistants, e.g. preferences, can be stored automatically in customer cards, readable by sales assistants’ handhelds or at the cash register (”Prada’s”) – information that could be used by the assistant to spur further sales by suggesting for example: “Last time you were here, you bought a black skirt. We have a sweater that matches that skirt” (Batista).

Another example is Precision Dynamics Corp (PDC), which developed an automatic identification wristband incorporating RFID technology. One application is the AgeBand which is used to verify the bearer’s age when purchasing alcohol. ID is checked when entering the venue and the customer receives a plastic wristband printed with personal details that cannot be removed without being damaged or destroyed (Swedberg). The embedded chip can be linked to a customer’s credit card number or a cash deposit to pay for purchases while on the premises. “It is also an easy way to collect statistics for marketing”, says PDC’s senior marketing communications specialist, Paula Maggio (qtd. in Swedberg).

Although the RFID clearly provides benefits and new opportunities to business operations, there is an argument over whether consumers will ultimately gain or suffer when smart tags become more commonplace. Certainly it may be convenient to have smart hangers that project virtual clothes onto a customer’s reflection in the mirror so they can try on a range of outfits without having to remove their clothes, but the collection of personal information necessary to provide this convenience also raises complex privacy issues.

Fear of Intrusive Marketing

Hesseldahl believes that our homes, workplaces, shops, malls, cars, trains, planes and bicycles will all be environments that constantly notice who we are and what we are doing, and which – according to a detailed profile of our habits – will try to service us in ways we can hardly even imagine today (25). This may be helpful to us in many ways, but there are concerns that organisations will use RF-technology to connect product information to individuals in order to create personal profiles which can then be used for pin-pointed marketing purposes, or even for tracking individuals, without their knowledge or consent. A possible scenario is one where consumers are bombarded with intrusive advertising based on what they are wearing, what they are purchasing, their history of past purchases, demographics and more.

“Kill Machines”

Fearing that the technology will be abused, many privacy advocates suggest that RFID must only be used to keep track of goods in the supply chain and thus be deactivated as soon as they leave the store. For example, consumer organisations such as CASPIAN (Consumers Against Supermarket Privacy Invasion and Numbering), the American Civil Liberties Union, and Electronic Frontiers Australia, lobby for the obligatory deactivation of the tags at the point of purchase.

But companies such as Procter & Gamble and Wal-Mart would prefer to keep the tags active after checkout, rather than disabling them with so called “kill machines”, so they can match the unique codes emitted by RF-tags to shopper’s personal information (Baard “Watchdog”). They will want to use RF technology to support the sales process and to provide the consumer with new and better services than what is otherwise possible. And without doubt, if the tags are deactivated some genuinely helpful applications would be lost to the consumer, e.g. being able to call your refrigerator from the supermarket to check if you need milk or your washing machine alerting you if you have accidentally put a delicate garment in your white wash.

Looking at the Bright Side

Privacy concerns aside, RFID technology, in fact, has the potential to empower consumers as it will put more information about products at consumers’ fingertips. Consumers will for example be able to go into competing supermarkets and scan items with an RF-receiver embedded in their mobile phone, record prices, store and process the information to evaluate which store offers better value. The information can then be shared with other shoppers via the Internet, and suddenly we have a powerful “shopping bot” which transcends the online world. Consequently, RFID has the potential to make competition between retailers tougher than ever before and to benefit consumers through lower and more transparent pricing.

In addition, RFID tags may also make possible faster and more accurate services, particularly in supermarkets. Shopping carts are mounted with computers which automatically register all items put into the cart and enable the customer to keep track of items, their prices and their total amount (Blau). RFID can also be used to find the location of items in the store and show more detailed information on a product (origin, use by date, content etc.) and as the customer passes through the checkout, all purchases are registered automatically in a matter of seconds.

Privacy Protection

In Australia, the Privacy Amendment (Private Sector) Act 2000, with its ten National Privacy Principles (NPP), has been highly criticised over the last few years as being much to open for interpretation and thus difficult to reinforce. In short, the NPP allows for marketers to use non-sensitive personal information for direct marketing purposes without seeking the individual’s consent if it is impracticable to do so (“Guidelines”). That is, as long as they make available a privacy policy explaining why the data is collected and who will have access, they ensure that the data is correct and up to date, protected from unauthorised access, and that individuals are given access to their data upon request (“Guidelines”).

In 2003 the Spam Act was introduced in order to take a tougher stand on the escalating problem with massive amounts of unsolicited emails filling up inboxes, threatening the whole concept of the Internet and its many benefits. In essence, the Spam Act will not allow commercial electronic messages to be sent without the recipient’s prior consent or without a possibility to unsubscribe (“Spam”).

In the same manner that the Spam Act was passed to regulate the collection of Internet users’ contact information, it may become necessary to regulate the collection and use of data obtained via RFID if the NPP are deemed inadequate. The difficulty will be to do so and at the same time safeguard many of the positive side-effects the technology may have for businesses and consumers.

As argued by Roger Clarke, privacy has to be balanced against many other, often competing interests: “The privacy interest of one person may conflict with that of another person, or of a groups of people, or of an organisation, or of society as a whole. Hence: Privacy Protection is a process of finding appropriate balances between privacy and multiple competing interests.” It is therefore recommended that legislators and policy makers keep up with the development and undertake significant research into both sides before any legislation is passed so that the best interests of consumers and business are catered for.

Can There Be a Win-Win Situation?

Although business can expect some significant gains from the use of RFID, particularly through a more effective value chain management but also from more substantial and better quality business intelligence, consumers may in fact be the real winners as new and better business concepts, products and services are made available. Further, with the increased transparency in business, consumers can use the vast amounts of information available to find the best products and services, at the best price, and from the best provider. With the aid of smart software, such as search agents, it will be a rather effortless task and will provide consumers with a real advantage. But this assumes consumers are aware of the benefits and how they can be exploited, and have the means to do so – something that will require some skill, interest, money and time.

Consumers will also have to give up some privacy in order to take full advantage of the new technology. For the industry, the main challenge will be communicating what these advantages are, as acceptance, adoption and thus also return on investment will depend upon it. For legislators and policy makers, the major dilemma will be to provide a regulatory framework that is flexible but distinct, and that will prevent abuse and at the same time enable positive outcomes for both business and consumers. A fine line that should be treaded wisely in order to create a future where everyone can gain from the benefits of using this technology.

References

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Baard, Mark. ”Watchdog Push for RFID Laws.” Wired News 5 Apr. 2004. 6 Apr. 2004 http://www.wired.com/news/privacy/0,1848,62922,00.html>.
Batista, Elisa. ”What Your Clothes Say about You.” Wired News 12 Mar. 2003. 8 Mar. 2004 http://www.wired.com/news/wireless/0,1382,58006,00.html>.
Blau, John. ”Så fungerar det digitala snabbköpet.” PC för Alla 1 (2004). 8 Mar. 2004 http://www.idg.se/ArticlePages/200402/27/20040227165630_IDG. se760/20040227165630_IDG.se760.dbp.asp>.
Clarke, Roger. Beyond the OECD Guidelines: Privacy Protection for the 21st Century. 4 Jan. 2000. 15 Mar. 2004 http://www.anu.edu.au/people/Roger.Clarke/DV/PP21C.html>.
Grassley, Tanya. ”Retailers Outfit Stores with Tech.” Wired News 18 Dec. 2002. 8 Mar. 2004 http://www.wired.com/news/holidays/0,1882,56885,00.html>.
“Guidelines to the National Privacy Principles.” The Office of the Federal Privacy Commissioner 2001. 4 Apr. 2004 http://www.privacy.gov.au/publications/nppgl_01.html#sum>.
Hessledahl, Peter. Den globale organisme. Copenhagen: Aschehoug, 2002. 24 Apr. 2004 http://www.global-organisme.dk/e-bog/den_globale_organisme.pdf>.
”Prada’s Smart Tags Too Clever?” Wired News 27 Oct. 2002. 9 Mar. 2004 http://www.wired.com/news/technology/0,1282,56042,00.html>.
“Spam” DCITA 2004. 4 Apr. 2004 http://www2.dcita.gov.au/ie/trust/improving/spam>.
Swedberg, Claire. ”Putting Drinks on the Cuff.” RFID Journal 15 Jun. 2004. 15 Jun. 2004 http://www.rfidjournal.com/article/articleview/987/1/1/>.

Citation reference for this article

MLA Style
Melchior, Angelika. "Tag & Trace Marketing." M/C Journal 8.4 (2005). echo date('d M. Y'); ?> <http://journal.media-culture.org.au/0508/03-melchior.php>.
APA Style
Melchior, A. (Aug. 2005) "Tag & Trace Marketing," M/C Journal, 8(4). Retrieved echo date('d M. Y'); ?> from <http://journal.media-culture.org.au/0508/03-melchior.php>.