| Mi Amigo EPC/RFID
by Gregor Gimmy
RFID/EPC technology promises to deliver significant cost advantages to companies: multimillion-dollar savings are anticipated in the logistics chain. But, does RFID/EPC have substantial advantages for the consumer? Or, on the contrary could it threaten their privacy?
All of these questions motivated Sennse to investigate RFID/EPC’s potential benefit to the consumer. From a study of consumer needs, Sennse analyzed how RFID/EPC could be utilized to enhance the experience of purchasing and consuming and also studied which services and products consumers preferred. Sennse came to the conclusion that RFID/EPC has the potential to benefit the consumer, and Sennse encourages companies to create an RFID/EPC system for the consumer that will take advantage of its potential as a tool for growth, as an efficient source of market knowledge, and to increase customer loyalty.
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RFID/EPC promises to be a revolutionary technology because of its potential to substantially improve improve logistic processes. Leading global distributors and manufacturers such as Wal-Mart and Procter & Gamble, predict multimillion-dollar savings due to RFID/EPC.
However, once the advantages of RFID/EPC have been identified for logistics, the question is could there be significant benefits for the consumer, or, on the contrary, will it represent a threat to their privacy. Sennse initiated the project “My friend EPC” due to a lack of accurate information on this subject, with the goal of identifying if RFID/EPC offered significant benefits for the consumer, and how to translate these benefits into competitive advantages. The study, which we have summarized in this article, answers the following questions:
-What are the consumer needs that can contribute to improving RFID/EPC technology utilization?
-What RFID/EPC products and services satisfy these needs, creating a better purchasing and consuming experience?
-What should the RFID/EPC innovation strategy be to achieve the previously mentioned improvements and generate new competitive advantages.
What are the consumer needs that can contribute to improving EPC technology utilization?
The main challenge to determine the use of RFID/EPC technology is to recognize, in depth, the needs of the consumer, in respect to different product categories This has particular importance in this case because it is a relatively unknown technology for the consumer.
To obtain an in depth knowledge of the consumer we combined traditional market study techniques, such as polls, with advanced innovation techniques, including Shadowing and Lead User Studies (as part of our research we worked with the chef Ferran Adria, of El Bulli). The latter techniques allow identification of future and hidden needs (download the PDF to see table 1). The needs study was focused on the food industry and consisted of two principle parts: 1) To create a global inventory of consumer needs in reference to food and 2) to determine which needs are specific to RFID/EPC technology,that is to say, how RFID/EPC technology can significantly contribute to satisfying consumer needs.
1. Inventory of food needs
In the study we identified a large number of important needs. They can be summarized in five categories: Efficiency, Know-How, Consumer confidence, Personalization and Order.
Efficiency: needs related to efficiency refer to the optimization of economic and time resources for the consumption of products and includesreducing time required automating decisions, access to recipes and controlling their shopping budget
Know-how: refers to how to consume products, and includes needs of identifiying products and their ingredients and experimenting with new products and cooking styles
Trust: refers to peace of mind in relation to products, point of sale and the technology to consume products..
Personalization: refers to physical needs and personal habits, such as health, diet, style of life, personal care, etc.
Order: refers to needs of organizing comestibles such as which ingredients are available and how ingredients should be stored.
2. RFID/EPC needs Once the previous inventory was created, we defined which needs were RFID/EPC needs: in other words, which needs RFID/EPC technology could significantly answer. In order to measure the contributions we created two categories: 1) the level of urgency of the need and 2) because the RFID/EPC is information technology, the consumer’s level of dependency on information needed for their own satisfaction.
Following the above perimeters, the resulting RFID/EPC needs were identified (for more information, see next page):
Efficiency: Saving time and automating decisions.
Trust: recognizing products, knowing how to use them and experimenting with them.
Know how: refers to peace of mind in relation to products, point of sale and the technology to consume products.
Personalization: looking after their diet and lifestyle.
Order: knowing what products they have.
A basic source for determining the urgency of the needs and their information dependency was our Lead User Ferran Adria, a world renowned cooking and food expert. know-how and efficiency are the most relevant criteria for Ferran. He emphasizes that during the purchasing and use of the products, the consumer receives very little relevant information, resulting in wasted time, when time is limited. He highlights that it is important to use the information to make, not only the process of purchasing faster, but also food preparation.: Solutions are needed that speed up the preparation of food, without sacrificing quality. Also he points out that the general consumer has little cooking knowledge, and he/she needs more help lto learn in a fast and easy manner. He is convinced that new technologies will play an important role in the satisfaction of these needs.
Another important source of information used for determining the RFID/EPC needs was a poll of consumers in Caprabo and Carrefour that was performed by Sennse (see table 2 in the PDF version). This poll supports RFID/EPC’s potential to contribute relevant information about the product in real time. The results show that the lack of immediate information causes the majority of consumers to forget to buy products. Also, they don’t want to risk buying new products because they are concerned that they will not know how to prepare them. It is hard for them to improve their culinary skills, so their diet has no variation, and they prepare the same meals with the same products continuously. For the companies, if they do not respond to the RFID/EPC needs, it means that they are not only losing money when selling current products, but the risk of innovation is increased. In other words, if companies had products and services based on RFID/EPC technology, oriented to resolving the detected consumer’s needs, companies could increase their sales and customer loyalty, and consumers would enjoy an improved shopping experience.
RFID/EPC can satisfy important needs Synopsis of the consumption and purchasing of food needs that RFID/EPC can resolve.
Order
Efficiency
Know-how
Trust
Personalitation
Efficiency: Saving time and decision automatization
Consumers want the process to be automated in order to reduce the amount of decisions, to be able to act faster. They wish that the process of food preparation could be easy, without having to think about it oo much, or make a plethora of decisions.” I have to defrost the product the day before I eat it…this forces me to be one step ahead of what I am comfortable with, and I do not like it”.
Know-how: Knowing the methods
The consumers need to know what some of the possible uses of the product are in order to decide to buy them. When the consumer has a higher knowledge of the possible uses of the product, they feel more comfortable. “There is a wide variety of fish that I do not know how to cook”.
Trust: Confidence in the point of sales
The consumer demands honesty from the brand and of the advice given at the point of sale. Due to a lack of trust, new products are avoided and only known products are purchased. “I do not trust super-markets, they try to manipulate you.”
Personalization: Diet and life style
The consumers want to customize recipes to their diets and lifestyles. They value the ability to improvise with the ingredients that they already have. At the moment, learning to improvise is a long process, of either years of cooking or expensive cooking classes. “It is tiresome to decide what I am going to cook every day…there are so many things I have to decide every day!”
Order: Inventory management
Consumers want to know what products they already have, especially the prepackaged, home wrapped and frozen ones. Today this is a difficult situation: in order to know what products they have, and in which quantities, the consumer has to open cupboards and refrigerators, often unwrapping the products with little success. “I have a steak (the consumer looks in the freezer) “buf! I already ate it!, in, I don’t know what’s inside this package…because my partner bought it.”
What solutions based on RFID/EPC technology could contribute to satisfying the consumer’s needs?
Knowing that important needs exist that are not being dealt with; the question is, which RFID/EPC solutions can contribute to resolving them. With RFID/EPC solutions we are referring to software and services that receive, process, and send information about products that have RFID/EPC technology to the consumer in order to benefit them. For this reason, we have created an innovative template where we have built in a series of solutions. Below we have presented a series of concepts and user scenarios (see next page).
1. MyButler concept
MyButler is a software program that receives relevant information about products ( for example, origin, recipes, etc) through RFID/EPC and manages it. MyButler learns the consumer’s habits, and is able to advise them about how to save time, history of the dish etc., and therefore improves the experience of the consumer. MyButler automatically recognizes products with the EPC chip. Products without chips are manually entered. The product information is also gathered from the Internet and through collected data stored on loyalty cards.
2. WiPort concept
WiPort is a small cordless reader and transmitter placed in different parts of the house. WiPort reads the EPC and sends it to the home computer. The home computer, with myButler software installed, shows the information related to the product. The WiPorts are aesthetically designed to fit quietly into the background of a home
3. PCA concept
The PCA (Personal Consumer Assistant) is a PalmTop, similar to a PDA. It is equipped with an EPC reader and myButler software, it allows the consumer to manage his/her products at home and in the store. The PCA can be connected to the home computer to complement the EPC data with information from the Internet. It is small, light and easy to use, so it can be carried around in a pocket.
What RFID/EPC strategies should be utilized to create innovations that will improve the experience of the consumer and in doing so obtain new competitive advantages?
In order to reap the benefits of the RFID/EPC for the consumer and the company, it is important to define a clear strategy of RFID/EPC innovations. This strategy depends on the products, the capabilities and the objectives of each company. Due to our experiences, we offer the following recommendations to guide the creation of RFID/EPC strategies.
1. Taking advantage of the RFID/EPC as a growth strategy
Until now, RFID/EPC has been seen as a cost reduction strategy because of its potential to create greater efficiency within the logistics chain. After recognizing the benefits that can be offered to the consumer, the potential for growth is in the improvement of sales and client satisfaction. Therefore, we recommend using the RFID/EPC as a growth and differentiation strategy.
2. Deep understanding of the customer
Only strategies based on a deep knowledge of the consumer will achieve an increase in sales and consumer satisfaction and decrease the risk of innovation. So, it is essential to apply advanced methods of investigation, like ethnographic observations or participative innovation. These methods create useful solutions with efficiency and a high level of knowledge of the client’s needs.
3. Initially converting a few selected products to RFID/EPC
We recommend implementing RFID/EPC solutions first to a select group of products, preferably, to high range items. Starting with a few selected products decreases the global investment, minimizes the complexity of the innovation project and creates experiences of great utility for the further implementation of RFID/EPC in other products.
4. Placing the products with RFID/EPC as intelligent products with premium prices
We recommend viewing RFID/EPC as an element of added value, and placing the products with chips in a new product class, for example, intelligent products. This action makes it possible to offer them at a premium price. Because the product with RFID/EPC resolves emergency needs, the client will be willing to pay for the product.
5. Using communication to illustrate the added value of the product
Communication plays a crucial role in the RFID/EPC strategy. If we do not succeed in this area the consumer will not know the RFID/EPC advantages, or even worse, he/she will perceive it as a threat to their privacy. This puts the whole RFID/EPC Project at risk, even in relation to logistics. It is crucial to focus the communication on the added value of the product (“EPC helps you to save time”), and not make excuses for its risks, as for example the concept of privacy (“Do not worry, the EPC can be disconnected”).
6. Taking advantage of the existing technologies
It is important to use technologies, products, data and services that already exist as a platform for the first RFID/EPC systems, for example PDAs, PCs, WiFi, commercial electronics and client cards. Not only will it limit the financial investment, but it will significantly reduce the risk of consumer non-acceptance.
7. Initiating EPC-C projects promptly
EPC-C has an expiration date. It is important to start the implementation of RFID/EPC systems for the consumers (EPC-C) as soon as possible. We recommend taking action before RFID/EPC is consolidated in the logistics chain. There is a rush, because the window of opportunity for EPC-C has an expiration date, referring to the negative public opinion of RFID/EPC that is already being created. This is because consumers only know about the negative aspects of the technology (i.e the threat to their privacy), and they are not aware of the advantages.
Let’s not forget that other new technologies also infringe privacy, such as, the Internet. Although the consumer accepts the disadvantages considered against the advantages that the product offers. It is crucial to achieve this win-win situation as soon as possible with RFID/EPC technology.
It is also important to take into account that the technology infrastructure to create a basic EPC-C system already exists, it is mature and the consumer knows how to use it (PCs, Internet, BlueTooth, PDAs, etc)
Conclusion
We have seen that RFID/EPC technology can deliver new and important advantages to companies and consumers: for companies, the RFID/EPC solutions represent competitive advantages to increase their sales opportunities, customer loyalty and market intelligence. And for consumers, it represents a considerable improvement in their consuming experience, because it resolves their most urgent needs: saving time, and increasing relevant know-how, in regards to purchases and product management. A strong RFID/EPC strategy will not only revolutionize logistics, it will also revolutionize the interaction between products and the consumers, becoming a key tool for growth and differentiation, as long as companies start as soon as possible to invest in RFID/EPC for consumers. 
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For further information about this topic please contact Gregor Gimmy |
