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ANTI-HYPE OR GETTING RFID MARKETING MESSAGES RIGHT
We do not think that there is a 'problem', but rather, a few core issues that we, the industry, are not managing well. In this piece we will write about one of those issues: marketing communications and messaging. While RFID is not a new technology, the open-loop supply chain application is providing a significant new revenue opportunity for suppliers of specific types of RFID technologie, UHF EPC and even more narrowly, EPC Class 1 Gen2. Vendors have been vigorously developing working, scalable solutions, particularly those supported by EPC Class 1 Gen2-compliant technology. Many of these solutions are tightly defined technical marvels. Some fall short of dreamy, absolute zero-defect supply chain nirvana. Both the good and the bad are in equal abundance right now in the RFID market. And suppliers have a number of challenges ahead of them before their target markets open up, and their forecasts materialize. But you would have a hard time learning this, you may have a hard time believing this, based on the mountain of 'evidence' to the contrary. Because alongside some of the most impressive wireless component and system development we have seen in some time, is some of the most aggressive and counter-productive marketing communications we have seen since April 2000. We all need to check our marketing communications selves, RFID suppliers, influential RFID end-users and RFID analysts, publishers and other observers. We can all police ourselves, and we do, but, VDC believes that the RFID market needs the supplier community to rise up and become the beacon for, if not the arbiter of, the clearest, most accurate and reliable messaging on RFID. Yes, the suppliers. Remember that in an emerging, dynamic market, the best sources of relatively accurate information are the suppliers. After all they are developing, building, testing, installing, integrating and supporting the vast majority of systems deployed. They have the God's eye view. In thousands of end-user telephone and web surveys, VDC finds that suppliers are the preferred source of information on all things RFID. Suppliers are also the preferred source for purchasing, installing, integrating and supporting the solutions that are evaluated, piloted and rolled out. We understand that marketing has an agenda and that no intelligent marketing communications or PR professional would turn their department into a mea culpa machine offering an endless stream of failed tests, shortfall pilots and lost deals. We also recognize suppliers' fiduciary responsibility to keep a significant amount of the most valuable information proprietary. But, at the end of the day, emerging markets rely on suppliers for accurate, complete, and timely information. In the RFID market, evaluators and end users from virtually every market segment are singing from the same song sheet: We want it from the suppliers. We need it from the suppliers. There are other sources, but, unless we want the RFID market to splinter further, sputter longer and resist investment in rollouts, we need to work with suppliers to incorporate new levels of accuracy, specificity and even objectivity to their messaging. If the market, no, if we all, cannot trust the messages of the suppliers, we will have a hard time trusting the suppliers. No trust, no investment. We can all imagine where that will lead us. Some messaging serves the industry well, for example, when vendors take the lead offering conservative approaches to exploring RFID and its potential value propositions. These ideas give the markets confidence that the RFID supplier community is not hyping, over-selling, spinning, or worse. The latter type of messaging creates confusion over critical things such as installed capabilities, actual cost of operation, and vendor position and capabilities. We would encourage RFID suppliers to move away from the marcom and PR strategies based on a calculus that requires hype to offset market cynicism. That cynicism is rooted in the hype from the last cycle. A deeper reading of this model would reveal that suppliers might be emulating Don Quixote. Reading some RFID press, from suppliers, analysts and others, you would think that we forgot what type of people were signing-off on the purchase orders. On the subject of audience, we recognize that marketing communications and PR have a number of discrete audiences. The relative importance of each is a debatable subject that we will not engage. However, when a market such as RFID is at a crossroads such as it is, with persistent delays in adoption, revenue, margin, performance, ROI, etc., we believe that the most important audience is the end-user decision-making team. That team usually includes a number of operating professionals (many doubling as IT-hype cycle cynics) who have years of experience filtering wheat from chaff. These are middle and senior level managers in operations, network administration and IT, and finance. They are considering significant risks when they approach RFID. I think they would do better, and we would do better, if our messaging did not get in the way of the facts. If suppliers are their preferred source, suppliers get the first impression. We think that the most successful suppliers in the near future will be those with the most accurate, reliable and conservative messaging. They will make the most accurate impression as the best impression. Analysts and editors have much to gain, and lose, in lockstep with the suppliers. While our interests are aligned, analysts and editors also fall prey to self-service publishing (test this piece) and axe grinding. We need to be as careful as all the rest. Consider market share estimates and claims of market leadership. In a nascent segment such as UHF EPC RFID, it is often difficult to gauge market share and position. The competitive environment is highly fragmented and highly convoluted, with scores of suppliers offering 'RFID solutions.' Some are cradle-to-grave, ground-up designs; others are classic distributors donning RFID integrator covers. Furthermore, market share and position in terms of revenue and unit shipments can drastically shift - for example with one large order for hundreds of millions of transponders or thousands of readers. As an industry, we must work on sending effective, fact-based messages that create an accurate, cohesive picture of the RFID market. Without question, market research studies and data often play prominent roles in vendors, investors, analysts, and media outlets making market assertions. However, a danger exists in not providing context that surrounds published claims. So, how do we combat sending messages that may prove counterproductive or may be misconstrued by audiences? In his 1991 book, How We Know What Isn't So, Thomas Gilovich describes the details of many studies that make it clear that we must be on guard against the tendencies to: misperceive random data and see patterns where there are none; misinterpret incomplete or unrepresentative data and give extra attention to confirmatory data while drawing conclusions without attending to or seeking out disconfirmatory data; or make biased evaluations of ambiguous or inconsistent data, tending to be uncritical of supportive data and very critical of unsupportive data. Gilovich explores these issues in depth in his book. Whether applied to everyday life or the RFID market specifically, it is an eye-opening experience to see how our intuition can lead us astray, particularly in the presence of large quantities of data. In our effort to coax information from the vast sea of data, the distinction between belief (an untested hypothesis) and fact is an important one. In the rapidly changing RFID market, the biases that help us process an overload of complex information inevitably distorts what we would like to believe is reality. Awareness of our propensity to make these systematic errors, Gilovich argues, is the first step to more effective analysis and action. Mr. Gilovich says, '…there are inherent biases in the data upon which we base our beliefs, biases that must be recognized and overcome if we are to arrive at sound judgments and valid beliefs.' The cost of these biases is real and severe. It is because of these tendencies that the RFID market requires clearly defined, controlled, publicly presented claims and statements. Otherwise, we run a great risk of deceiving ourselves and believing things that may not be 100% true. This serves as a call to the RFID industry to validate published claims of technology performance, product certification, market share, etc.; to provide a larger context around data points being discussed; and to communicate clear messages that leave little room for misinterpretation. We believe in RFID as the solution to a number of asset and transaction management challenges. We have been covering this market for more than 20 years. We hope to be covering it, and your firm, for another 20.
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