RFID, marketing and privacy

A few years ago, when the RFID (Radio Frequency Identification) tag was a new idea for tracking products in warehouses, toting tolls and taking store inventory, the cost per tag was high and consumers knew little about this technology.

Today, the price per tag is much lower, which means RFID can be a cost-efficient way to handle many marketing functions. As the price of RFID tags and readers drop, RFID will become commonplace in stores, factories, airports and other public places.

The Finnish furniture manufacturer Martela, for example, adds RFID tags in hidden areas of its products (see left). As part of its full service to business customers, Martela then returns to the customers' facilities every year to inventory the furniture and identify broken or worn-out items to be replaced. Thanks to RFID, this is a speedy process that saves business customers time and money--and gives Martela a competitive advantage over other suppliers.

Privacy concerns remain, however. Consumers don't want RFID tracking their movements or use of individual products. Security is another issue: because RFID tags communicate via radio signals, they might be intercepted and/or blocked.

Walmart, for instance, has added RFID tags to many clothing items in its US stores. Although the retailer plans to "turn off" the RFID when clothing is purchased, privacy advocates worry that some tags will be missed or that the tags will be used to link individual purchasers to specific items and transactions, raising the threat of identity theft.

Stay tuned for more on the future of RFID and marketing.