A New Entrant's

Market Entry Strategy.

Many companies are considering

RFID product linesSubmitted by:-

Adil Musain(11067)

Anirban Mazumdar(11074)

Ankit Chouksey(11075)

Ankit Dubey(11076)

Ganesh Parvekar(11088)

Manish Prasad(11096)

Sachin Saurabh(11112)

Marketing StrategyThe marketing concept of building an organization around the profitable satisfaction of customer needs has helped firms to achieve success in high-growth, moderately competitive markets. However, to be successful in markets in which economic growth has leveled and in which there exist many competitors who follow the marketing concept, a well-developed marketing strategy is required. Such a strategy considers a portfolio of products and takes into account the anticipated moves of competitors in the market.

Marketing Research for Strategic Decision Making

The two most common uses of marketing research are for diagnostic analysis to understand the market and the firm's current performance, and opportunity analysis to define any unexploited opportunities for growth. Marketing research studies include consumer studies, distribution studies, semantic scaling, multidimensional scaling, intelligence studies, projections, and conjoint analysis. A few of these are outlined below.

Semantic scaling: a very simple rating of how consumers perceive the physical attributes of a product, and what the ideal values of those attributes would be. Semantic scaling is not very accurate since the consumers are polled according to an ordinal ranking so mathematical averaging is not possible. For example, 8 is not necessarily twice as much as 4 in an ordinal ranking system. Furthermore, each person uses the scale differently.

Multidimensional scaling (MDS) addresses the problems associated with semantic scaling by polling the consumer for pair-wise comparisons between products or between one product and the ideal. The assumption is that while people cannot report reliably which attributes drive their choices, they can report perceptions of similarities between brands. However, MDS analyses do not indicate the relative importance between attributes.

Conjoint analysis infers the relative importance of attributes by presenting consumers with a set of features of two hypothetical products and asking them which product they prefer. This question is repeated over several sets of attribute values. The results allow one to predict which attributes are the more important, the combination of attribute values that is the most preferred. From this information, the expected market share of a given design can be estimated.

Multi-Product Resource Allocation

The most common resource allocation methods are:

Percentage of sales Executive judgment All-you-can-afford Match competitors Last year based

Another method is called decision calculus. Managers are asked four questions:

What would sales be with:

1. no sales force2. half the current effort3. 50% greater effort4. a saturation level of effort.

From these answers, one can determine the parameters of the S-curve response function and use linear programming techniques to determine resource allocations.

Decision algorithms that result in extreme solutions, such as allocating most of the sales force to one product while neglecting another product often do not yield practical solutions.

For mature products, sales increase very little as a function of advertising expenditures. For newer products however, there is a very positive correlation.

Portfolio models may be used to allocate resources among major product lines or business units. The BCG growth-share matrix is one such model.

New Product Diffusion Curve

As a new product diffuses into the market, some types of consumers such as innovators and early adopters buy the product before other consumers. The product adoption follows a trajectory that is shaped like a bell curve and is known as the product diffusion curve. The marketing strategy should take this adoption curve into account and address factors that influence the rate of adoption by the different types of consumers.

Dynamic Product Management Strategies

Two fundamental issues of product management are whether to pioneer or follow, and how to manage the product over its life cycle.

Order of market entry is very important. In fact, the forecasted market share relative to the pioneering brand is the pioneering brand's share divided by the square root of the order of entry. For example, the brand that entered third is forecasted to have 1/√3 times the market share of the first entrant (Marketing Science, Vol. 14, No. 3, Part 2 of 2, 1995.) This rule was determined empirically.

The pioneering advantage is obtained from both the supply and demand side. From the supply side, there are raw material advantages, better experience effects to provide a cost advantage, and channel preemption. On the demand side, there is the advantage of familiarity, the chance to set a standard, and the choice of perceptual position. Once a firm gains a pioneering advantage, it can maintain it by improving the product, creating a standard, advertise that it was the first, and introduce a new product in the market that may cannibalize the first but deter other firms from entering.

There also are disadvantages to being the pioneer. Being first allows a competitor to leapfrog the early technology. The incumbent develops inertia in its R&D and may not be a flexible as newcomers. Developing an industry has costs that the pioneer must bear alone, and the way the industry develops and its potential size are not deterministic.

There are four classic price/selling effort strategies:

Selling EffortPrice

Low High

Low Necessity Goods Classic Skim StrategyVulnerable to new entrants

HighClassic Penetration Strategy

Luxury Goods

In general, products are clustered in the low-low or high-high categories. If a product is in a mixed category, after introduction it will tend to move to the low-low or high-high one. Increasing the breadth of the product line as several advantages. A firm can better serve multiple segments, it can occupy more of the distributors' shelf space, it offers customers a more complete selection, and it preempts competition. While a wider range of products will cause a firm to cannibalize some of its own sales, it is better to do so oneself rather than let the competition do so.

The drawbacks of broad product lines are reduced volume for each brand (cannibalization), greater manufacturing complexity, increased inventory, more management resources required, more advertising (or less per brand), clutter and confusion in advertising for both customers and distributors. To increase profits from existing brands, a firm can improve its production efficiency, increase the demand through more users, more uses, and more usage. A firm also can defend its existing base through line extensions (expand on a current brand), flanker brands (new brands in an existing product area), and brand extensions.

The history of the global economy is characterized by boom and bust.

Today, business schools are still teaching the same philosophies they taught in the 1980s. They include the:

Unmatched power of the free market Pre-eminence of the shareholder Inevitable inefficiencies of government intervention

These assumptions, however, are now under growing scrutiny. The free market didn’t work, the shareholder is not the only stakeholder, and government intervention has been essential in rescuing the private financial services sector.

Many believe that the recent financial crisis has raised issues that may require a fundamental rethink about how the global economy should operate.

Business may never return to "normal"

As a follow-up to our investigation into their economic forecast, we asked companies when they believed that business would return to "normal". Instead of giving us a timeline, 31% responded that they believed business would never return to "normal".

The number of business leaders who think that the changes made necessary by the crisis will be permanent has increased over the last six months. Our May 2010 research has discovered that this number has now increased by 25%.

Further exploration revealed that our respondents share this sentiment across sectors (from 29% in financial services through to 35% in manufacturing), but not across countries.

Pessimists

The most pessimistic group of countries included France, the UK, Sweden and the US. These developed economies have undergone significant market change for some time. Almost 50% of these respondents believed that business would not return to normal.

The presence of France, the UK and Sweden is not surprising because these countries are aware of the ongoing challenge of competing in a global economy from a high cost base.

The presence of the US is surprising, given the robustness of the US economy, and the optimism and cultural confidence the US is associated with. This suggests that the impact of the financial crisis, whether real or perceived, has been particularly large.

Middle of the road

The neutral respondents included those from the Netherlands, Germany and Russia, who mirrored the overall results, with around 30% believing that business would not go back to usual. The Netherlands and Germany are both developed trading nations that have seen many recessions before and have historically exported their way to growth. But it is interesting that Russia, one of the leading emerging economies, is in this group.

Optimists

The most optimistic group of respondents comprised some of the major emerging economies; China, India, Brazil and the Middle East. Over 80% believed that business would return to normal.

Characteristics of the optimistic, emerging economies group

In exploring this final group, we can make two observations:

1. The financial crisis has had less impact in emerging economies where lending is less widespread, more companies are state-controlled, and GDP has continued to rise over the past two years, e.g., China’s predicted GDP growth for 2010 is 8% and India’s is 6%.

2. The concept of rapid change – perceived as a threat to "business as usual" in many countries — is more ingrained into emerging economies’ perceptions of what "business as usual" means.

For example, it is common for companies in China to expand from employing a handful of people to a workforce of several hundred in just a few years: and in India, companies like Tata have acquired many international competitors in recent years, turning themselves into global corporations.

The future will not resemble the past

We asked respondents why they thought business would not return to usual. It’s possible to group their responses into five categories:

1. The market has fundamentally changed.This response was driven by observations that customer behavior has altered because of the crisis, with fewer consumers prepared or able to increase their personal debt this will act as a major damper on some business models. Similarly, there is a greater awareness that there has been a shift in economic power toward the new economic giants such as China and India, which have already demonstrated that they have a different perspective on economic management than the West.

2. Businesses will be more cautious. This is because tighter regulations and business failures are expected; therefore risky behavior, such as derivatives investment, is now out of favor. This may only be temporary, but it could refocus business efforts onto innovation in product and process, rather than finance.

3. Businesses need to operate more efficientlyThere is still a strong emphasis on cost reduction, with much more competition from international rivals; this will raise the threshold for companies as they review their activity portfolio.

4. Businesses need to become more adaptable to market changes.This factor is applicable to all sectors, but particularly real estate and retail, where a reduction in credit availability has caused a dramatic downturn.

5. Lessons have been learned from the crisis.There are significant variations in the lessons that could, or should, be drawn from the downturn. The financial services sector, in particular, has had to learn some tough lessons about responsibility and transparency.

For US respondents, the most important issues concerned adaptability and the fact that both the market and consumer behavior had changed. For respondents in Western Europe, there was less emphasis on changing consumer behavior and

more importance given to businesses becoming more cautious and operating more efficiently.

Predictably, drivers of change also vary by industry sector.

Manufacturers noted fundamental change and a slow rate of recovery Financial services companies stressed the need to learn lessons Consumer product companies know that customer behavior has changed

and that they require greater efficiency Real estate, health care, and chemical industry respondents noted the

need for cost reduction and efficiency, along with the necessity to become more adaptable to market changes

Market Entry Strategies: Pioneers versus Late ArrivalsWhat is the best way to move into a new market? If you do not have a first-in advantage, attack the one who does.

Want to be King of the Mountain in a new marketplace? Here is some advice: be first or a close second, and do not pause for breath. Others want to be King of the Mountain too. Even though you have a huge advantage in being first, you can lose it in the blink of an eye over pricing or service or lagging technology. Aggressive competitors have a vast array of weapons to knock you down.

Today's strategic planners, having created as much value as they could by cutting costs, are looking now to grow domestic markets, as well as build new markets and revenues in such countries as Brazil, China, India, Malaysia and Mexico. Before striking out, though, they need the answers to some crucial questions:

Does it pay to be first with a product or service? Is being an innovator worth the risk? Is it better to wait and learn from the experiences of the first entrant to the market? What is the proper balance between the risks and rewards? If you are a pioneer, what can you do to prevent share erosion when a new player enters the market? If you are a late entrant, what strategies should you adopt to make your entry successful?

Studies show that in most cases, being first to the market provides a significant and sustained market-share advantage over later entrants. Still, later entrants can succeed by adopting distinctive positioning and marketing strategies. Pioneers in most industries, once they have reached the status of incumbent, are powerful. Sometimes, however, they get complacent or are not in a position to cater to the growing or shifting demands of the marketplace. New entrants can take advantage of gaps in the offerings of these aging pioneers, or find innovative ways to market their product or service. Pioneers with a distinctive presence in the marketplace need to be in a position to react, or even better, anticipate potential entrants and increase the barriers to their entry. For example, a pioneer may be in a position to reduce its price and decrease the value of the business for a new entrant, or it can block entrance entirely by controlling key distribution channels.

Whether a late entrant or a pioneer seeking to foil newcomers, it helps to have a thorough understanding of the entry and defensive strategies available, a good sense of timing and a game plan for decision-making.

BASIC STRATEGIC PLANNING

Competitive strategies typically depend on the market environment and the positioning and product portfolio of the existing players. These are the basics:

Reduce price to penetrate an existing market. By introducing a product at a lower price than the pioneer's, a latecomer can attract new customers who would not have otherwise purchased such a product in effect expanding the total market. Reduced price can also induce the pioneer's current customers to switch.

Still, this strategy is likely to result in reduced margins for the new entrant compared with other players in the market, unless the new entrant's cost of production is relatively cheaper. This can be adopted by both the incumbents and pioneers.

Improve a product or service, with focus on a niche market. Companies can compete by being innovative in the marketplace. The innovation may be radical or incremental. One example of incremental innovation is an enhanced version of an existing product. The enhanced product can compete directly with existing products, or it can be positioned to attract a smaller segment of the existing market. In addition, the improved product or service can sometimes attract new customers that are not the current target for the existing product or service. For example: potential satellite-based wireless service providers are currently offering a new feature called global coverage. This service could both complement and replace options available to current customers but most of the potential players in the marketplace are targeting either traveling professionals who need to be in constant touch or the rural market, in which the cost-to-provision telecommunications infrastructure is very high and satellite-based options help governments offer ubiquitous telecommunications services. In both cases the telecommunications market is expanded, generating additional revenue.

Target new geographic markets for existing products. As markets mature in the home base, companies traditionally look outside to more lucrative markets. Most consumer goods companies, for instance, are setting their sights on China. Many heavy equipment manufacturers are targeting newly emerging markets that will need tractors and cranes for building. Faced with intense competition and maturation in the local markets in the United States, regional Bell operating companies such as BellSouth are expanding into emerging markets such as Brazil.

Develop new channels of distribution to access new markets or better penetrate existing ones. Going global is not the only solution. Sometimes the risk and the investment required to penetrate international markets may not be worth the return. Focusing on existing markets, where your company has a good understanding of the environment, can prove less risky and bring quicker successes. This can be accomplished by repositioning the product or service through marketing, advertising, packaging and so on. For instance, Dell Computer went after the mass market by having customers place their orders directly with

Dell by phone, fax or computer. This direct channel revolutionized the method of selling computers to the end users, including corporate clients.

In addition to choosing the appropriate marketing strategy, it is crucial to determine the timing of the introduction of any new product. This is especially true in high-tech industries, in which product life cycles are short and it is difficult for late entrants to catch up and extract reasonable returns. In most cases, if you are entering second or later in such a market, you should do so immediately after the pioneer.

PIONEERING ADVANTAGE: FICTION OR REALITY?

Put simply, it costs the most to be the first, for two reasons:

1) The product innovation requires a higher investment in research and development than does product imitation, and

2) The necessary marketplace education and testing forces the pioneer to spend heavily on advertising and promotion. A second entrant enjoys the fruits of the pioneer's labor.

Are there higher returns on market share and investments to offset the pioneer's increased costs and relatively higher risks? Companies such as the Hewlett-Packard Company and the 3M Company, which generate growth through innovation, garner more than 60 percent of their revenues from products introduced over the most recent three-year period. Obviously, these companies have succeeded in pioneering at a very high level.

Does this occur in other industries and in countries other than the United States? In fact, numerous studies have found that later entrants in a market achieve a lower market share than earlier entrant’s and that this holds true in a variety of product categories and industries, such as consumer packaged goods, industrial goods and pharmaceuticals. Even when a company's tangible (e.g., financial) and intangible (e.g., brand equity) resources and business skills are considered, early entrants continue to hold market-share advantage.

What is the magnitude of market-share penalty for later entrants? A 1995 study by Gurumurthy Kalyanaram and others in Marketing Science suggests that the new entrant's forecasted market share divided by the first entrant's market share equals, very roughly, one divided by the square root of order of entry of the new entrant. (See Exhibit I.) Therefore, if there are two players in the market, the first entrant will have a market share of 59 percent and the second entrant will have a market share of 41 percent (which is 70 percent of 59 percent). This is validated in the cellular industry in several countries in Europe in which the average market share of the first entrant in Belgium, France, Germany, Italy, the Netherlands and

Spain is 58.5 percent and the second entrant is 41.5 percent. The figures are consistent with the results in Exhibit I since the second entrant has about 70 percent of the pioneer's market share. (See Exhibit III.)

Why do early entrants so frequently enjoy a higher market share? First, consumers in general are risk averse. If a product or service provides enough satisfaction, consumers do not want to risk switching to a new product. Second, the pioneer becomes the prototype for the product category. Later entrants are compared to the pioneer, and always somewhat unfavorably. Whenever consumers think of photocopying for example, Xerox is the name that jumps to mind. Third, consumers learn best the attributes of early entrants. More knowledge translates into more strongly held beliefs and great confidence in choice. And lastly, early entrants are able to secure the best positioning in the marketplace.

Does the pioneering advantage manifest itself in return-on-investment metrics apart from market share? Yes, after substantial research and development investments, being early in the market is rewarding. Research shows that the pioneers enjoy a higher return on investment in both consumer and industrial goods. (See Exhibit II.) This research and development investment and continuous new product launch is also used as an entry barrier by several pioneers.

A recent analysis of the evolution of wireless markets in Europe indicates that first entrants are also market leaders in most countries. (See Exhibit III.) Pioneers in cellular service establish a presence in the marketplace, build brand equity and create an excellent distribution network. Also, a peculiarity of this industry is that the quality of service is primarily determined by coverage. Having evolved over time, the first entrant's network usually has much better coverage. The customers become used to enhanced coverage over time. So new entrants have to invest significantly to achieve this same coverage -- an effort that is capital intensive and time consuming. All new networks have initial bugs that take time to fix. Subscribers are just not willing to go through another learning curve, when there is already a robust supplier of service. Another frequent constraint is access to property to build the towers, since the first entrants have already seized the ideal sites for coverage. This, in turn, may require the later entrant to invest larger amounts in network infrastructure to gain similar coverage. Given these hurdles, it can take two to three years before a challenger achieves coverage competitive with the incumbent's.

In addition to coverage and related quality of service, another huge barrier to entry for new entrants is the issue of number portability. Customers would have to get a new cellular number when they switch carriers since they cannot take the same phone number with them as is done in land line networks. In general customers do not like to change their phone number, especially in Europe, where customers receive calls in their mobile phones. Thus, we see the inherent advantages to being first in the market in the wireless industry: control of ideal sites; freedom to evolve and fine-tune network coverage; building of brand loyalty by offering superior customer service; locking in customers by subsidizing equipment for an extended period under fixed-service contracts, and gaining control of key channels of distribution.

AGILITY NEEDED FOR LATE ENTRANTS

The picture, however, is not always so rosy for pioneers and bleak for late entrants. In some industries and some geographic areas, pioneers have lost market-share advantage relatively quickly. This can happen for any of several reasons:

1) An entrenched pioneer may not be offering a superior level of customer service.

2) A new technology may have changed the cost equation, so that a new entrant can offer similar or better service at a lower cost.

3) The new entrant may have developed a new way to access the market, with an innovative distribution strategy.

4) The latecomer may simply be pricing aggressively, targeting selected segments by taking advantage of the incumbent's tendency to average pricing across all segments.

In what situations is the pioneering market-share advantage muted? For a start, when consumer learning is limited, the pioneering advantage is likewise bound to be limited. Consumer learning becomes very difficult if the product becomes complex and technical. For example, when picture phones were introduced in the late 1970's, the market did not respond because consumers could not find occasions to use the product.

The pioneering advantage is also limited in a cluttered market: If there are many available brands, consumers react by becoming confused.

Moving beyond such issues, what can later entrants do to overcome any inherent market-share disadvantage? First, the later entrant should differentiate itself substantially in the minds of the consumers. Such positioning can be accomplished through substantial changes in either the product or promotion strategies. For example, the Chrysler Corporation redefined perceptions of its minivans by introducing Caravan, a two-door van. The Ford Corporation's Windstar, expected to be a marquee van, substantially lost its glamour to the Caravan. When the General Motors Corporation decided to reposition its Oldsmobile, it changed not only its product but also its advertising copy. The new copy appealed to consumers over 30 years old, projecting the image of a younger professional woman via this voice-over: "This car is not only for your father's generation, but it's for you too."

A second route for later entrants is to discover creative ways to increase product trial. At best, one study has found that the market-share advantage for the early entrants comes from higher trial penetration. If the later entrant can generate greater trial market share, then its disadvantage can be overcome. Sample-product trial is an appropriate mechanism. For example, in consumer goods,

consumers can be supplied with a sample product for trial. In non-consumer goods, other creative mechanisms must be designed. Limited demonstration of usage or prototypes is possible in software products, and test usage is possible in automobiles. Also, distributing the product through new channels such as direct marketing (think of the Lands' End catalogue or the Mary Kay cosmetics parties) or a home-shopping-network channel would place the product in the hands of more consumers.

The later entrant can also segment the market, focusing on a particular target. By providing appropriate value, the later entrant can extract additional rents. A good example of this is the competition among the International Business Machines Corporation, Compaq Computer and Dell Computer in the personal-computer market. Finally, later entrants can position themselves as variety enhancers, rather than as replacements or substitutes for the pioneers.

An example is Orange, the late-entry cellular service provider in Britain, which successfully nudged aside the pioneers. Orange entered the market almost 30 months after the first entrant, Vodafone, and nine months after One-2-One, and with technology similar to One-2-One's. Orange, however, has followed a very aggressive entry strategy. It has not only invested heavily in the network over the first two years of introduction, but also developed aggressive pricing strategies. Orange seized a third of Britain's total market's first quarter 1996 growth by offering about a 30 percent savings to end users, compared with Vodafone and Cell net. The pricing strategy was effective enough to compensate for Orange's relatively poor network coverage. (This rapid increase in penetration of new subscribers decreased in the second quarter, after Vodafone and Cellnet lowered the price differentials in key segments.) Thus, aggressive pricing tactics, investment in network infrastructure and innovative marketing tactics such as aggressive advertising and creative service bundling have made Orange a credible player.

Different markets require different strategies. What worked for Orange in Britain, for example, will not work for new entrants in Scandinavia. There, the incumbent's monopolies are not driven by profits from the wireless industries, and thus they price their wireless services below the average price for the rest of Europe. This is a significant barrier to entry for new players, especially since entering the industry requires a high capital investment. So the key source of differentiation for new entrants in such situations is going to be creative

marketing, innovative advertising, new service packages and superior customer service. This is especially true since the incumbents offer a relatively poor level of customer service, a concern to end users.

Later entrants can also succeed by attacking high-growth markets particularly when there is a significant shift in the industry. Such shifts can be due to changes in regulation, or technological breakthroughs that improve the product, or breakthroughs that improve the process of manufacturing and delivering the product. The classic example is MCI's success in penetrating the long-distance market and winning a regulatory battle with the AT&T Corporation.

Another strategic option for the later entrant is micro-segmenting the customer base -- that is, targeting high-value customers who are able and willing to pay a higher price for the product or service relative to the cost incurred in catering to that segment. For example, the competitive-access providers (now Competitive Local Exchange Carriers, or CLECS), in order to provide local telecommunications services, basically skimmed the best customers of the regional Bell operating companies by offering a lower price. This was possible because the regional companies had adopted an average price scheme partly dictated by the Federal Communications Commission.

Innovators have also been successful in entering markets with a significantly better technology. Usually, however, technological innovation gives a company an edge for only a time, since incumbents catch on fairly quickly. Given that this is the case, new entrants should support their innovations with effective positioning, appropriate pricing and aggressive advertising. For example, I.B.M., a later entrant to the personal computer market, captured the lead in the 1980's by developing the technology and using its powerful marketing engine. Later, Compaq and Dell fundamentally redefined the business. Compaq reduced the cost by changing the manufacturing process and having superior logistics. Dell, in addition to using an efficient manufacturing process and superb logistics, invented the mail-order or direct channel to access end users, who by now were comfortable with personal computer technology. I.B.M. was not able to react to these changes fast enough and lost its lead in the 1990's.

DEFENSE STRATEGIESFOR PIONEERS

Even as new entrants attempt to redefine the business or formulate niche strategies to attack profitable industries and market segments, pioneers can fight back to retain their competitive advantage. The major strategies for the pioneers:

1) Increase the barriers to entry for later entrants,

2) Innovate faster than the latecomers, and

3) Build a market-responsive and flexible organization.

In most markets both pioneers and later entrants operate with incomplete information. Pioneers can take advantage of this by using effective signaling mechanisms as a deterrent. For example, pioneers can cut price, signaling to potential new entrants that it is a low-cost industry and it will be difficult for them to survive. Pricing below variable cost, however, is illegal in most countries. On the other hand, new entrants traditionally focus on a few key segments of the market typically those that are subsidizing the cost to serve other segments of the incumbents. So, it is important for pioneers to understand their end-user segments and to adopt a differential pricing scheme to extract optimal rent from each of the segments.

Pioneers can also attempt to lock up the key channels of distribution, making it difficult for new entrants to get access to the market. In several industries and countries, however, it is not possible to get exclusive distribution rights. Pioneers can also offer special types of enhanced customer service packages or reward programs to make it harder for key customers to switch.

Another route, especially in the high-tech industries, is for a pioneer to remain innovative and launch the next generation of products or at least announce the next generation of products, thus deterring the entry of competition. The Intel Corporation's strategy in this regard is an example.

Finally, a responsive and flexible organization may be the most productive route, especially when the structure of an industry changes drastically or there is a seismic shift in the regulatory environment. In the telecommunications industry, for instance, the 1996 Telecommunications Act has fundamentally changed the rules of the game, leaving almost all the markets open for competition. This has forced both the regional Bell operating companies and the long-distance carriers such as AT&T and MCI to revise their strategies. Aging pioneers in other industries

have also followed the strategy of attack as best defense, targeting potential new entrants' home bases -- be it geographic or product markets. As Fuji penetrated the photographic film market in the United States, for example, the Eastman Kodak Company's strategy was to attack Fuji in its home market. This strategy met with mixed results, due to the tight controls in the Japanese market.

The underlying parameters for all these strategies are that companies should be aware of the market dynamics and have an organization that is flexible with the right culture to adapt, not only reacting to potential competition but also proactively developing their strategies. It is easier to lose a market-share point than it is to gain one.

An example of a good blocking strategy is Vodafone's decision to lower its prices in key market segments to match those of its new competitor, Orange, thereby reducing the price differential between the two companies. While doing this, Vodafone kept its average price in the market constant and extracted more rent from customers who were not targeted by the competition.

Managers should have a feel for the marketplace, to correctly estimate the switching barriers for customers and set the price differential accordingly.

Another example in the wireless industry is the case of cellular companies in the United States. These companies have undertaken a suite of counterattacks, including innovative service packages and special deals on the equipment for one-year contracts, thereby increasing the switching barriers for the customers. This has also slowed the penetration of personal -communications-services (P.C.S.) players among the cellular customer base. But as these companies, which offer a service similar to cellular but based on a different technology, build their networks and offer enhanced services, they will inevitably begin to attract cellular customers unless cellular companies can offer similar features in the long run. Meanwhile, both the P.C.S. companies and the cellular companies have launched aggressive advertising campaigns.

KEY SOURCES OF DIFFERENTIATION

It is important to note that in the case of the telecommunications industry, pioneering advantage can be sustained only through continuous investment in building network infrastructure and the offering of superior customer service the

two key sources of differentiation. In the wireless industry, customers are repeat purchasers, since their contract terms typically last for only one year and the cost of handsets is dropping rapidly. This situation could enable a late entrant to compete effectively by developing a good network infrastructure and by gaining access to good distribution networks. This is evident from the fact that the incumbents in several countries have not been able to sustain their lead and the differences between early entrants and second entrants are decreasing rapidly. For example, in Britain, Vodafone had an 18-month advantage over its prime competitor, Cellnet, with similar technology. Three years after the launch of Cellnet, however, the difference in market share in annual net additions between Vodafone and Cellnet is only 11 percent. Vodafone has been able to retain its lead in the recent past only by fighting back efficiently on the customer-service dimension and by developing creative service-bundling strategies.

MARKETING-STRATEGY FRAMEWORK

Having thoroughly analyzed the various strategies adopted by successful pioneers and later entrants, we have developed a framework both can employ to formulate strategies for growth, penetration or share retention, as the case may be. The first component in our framework involves developing an understanding of the dynamics of the market. The critical areas to be analyzed are:

1) Those fundamental drivers of technology that may cause a significant shift in the market;

2) Changes in governance, such as any shifts in regulatory policies that might have a marked impact on the industry structure;

3) The size and growth of the potential market, and

4) The competitive profile.

Several qualitative and quantitative tools are available to assist in evaluating these critical issues. For instance, the model developed by F.M. Bass, the Bass model (1969, 1987), and the Booz-Allen & Hamilton model (1997) are highly useful for forecasting market size and growth. Competitive assessment on the other hand, is primarily done by conducting extensive secondary research on the key players. Our experience indicates that more than 60 percent of relevant

information can be found in public sources and that the challenge lies in the gathering and synthesis of this information.

The second component of the framework involves conducting an internal assessment of your company's capabilities and product offerings. Product or service development is an iterative process between developers and researchers, one involving marketplace feedback.

Once a product is defined and the positioning determined, it is important to understand the economics of manufacturing. In a competitive environment in which a technology edge is short-lived, try to think beyond simply making a good product in an economical way. Companies need to evaluate and develop non-product-related sources of differentiation, such as customer service, innovative ways to access end-users, creative marketing partnerships with other services such as frequent flyer programs, and so on.

At the completion of external and internal assessment, a company is ready for the final component of the framework: the actual development of the product

strategy. Strategic elements here include segmentation, positioning and decisions on marketing instruments.

One of the most important strategic elements is the timing of product entry. Should the company be the first to enter the market or a later entrant? Just what are the risks and rewards? Again, there are some important tools available to facilitate scenario planning and decision making. These include the formulation suggested by Dr. Kalyanaram in the journal Marketing Science (1995) and market share models by Dr. Kalyanaram and Glen L. Urban (1992) and by Dr. Urban and others (1986), again in Marketing Science. Other useful approaches for product strategy are the lead-user technology proposed by Eric Von Hippel, and the "wargaming" simulation analysis methodology developed by Booz-Allen. Thus, based on the market, internal and product strategic assessments, an optimal strategy can be formulated.

Competing for growth: Winning in the new economy Customer reachWhen asked, some 60% of respondents believed that it would take over a year before they would break even in a new market.

Growth is a reflection of how effectively a company can meet the demands of a market. The scale of opportunity is therefore determined by the size of the market that a company can reach. Customer reach is a good starting point for any discussion on growth.

Maximizing reach — and opportunity

Given the sheer size of some of the emerging markets and their relative economic growth, they are often cited as likely sources of growth. But our survey suggests this is not always where companies will find competitive success. When asked, some 60% of respondents believed that it would take over a year before they would break even in a new market — time to break even is only slightly shorter with high performers than the others.

Which factors have driven the increased competitiveness of your market over the past two years?

% of respondents

Focus on segment — who is your buyer?

It remains true that the cheapest route to market is through an existing relationship. High performers have been investing more time and resource in seeking to both secure and strengthen their position with current customers.

While 35% of respondents reported having increased their focus on the most profitable customer and product segments, a full 45% of high performers reported that this was one of their top priorities.

Which of the following tactics have been most effective in driving growth for your company?

Similarly, there is a focus on developing new distribution routes to serve the existing client base and enhanced marketing activities to maximize the current opportunity.

Broaden product/service offer — what are you selling?

Part of the process of maximizing the return from existing customers is introducing a broader range of products and services to better meet their needs

— both across the value and the life cycle. This is the top priority for high performers.

Effective account management is believed by high performers as being the greatest source of growth for the next two years. High performers are innovating new products, increasing marketing, opening new distribution channels and innovating market-entry approaches to reach those markets more effectively.

While low performers are focused on cost competition, high performers are driving into new markets and product areas.

What action is your company taking to increase sales?

Many companies in developed markets have recognized that innovating new services and products is central to their competitive strategy. Interestingly, leading players are focusing on incremental innovation around distinct buyer groups.

Prioritize market — where are you selling it?

By some margin, the focus of all our respondents has been on finding growth from existing markets, but leading performers are also ahead of others in identifying the “thread that connects” groups across national borders and in following that thinking to establish new operations and outlets.

When respondents were asked where they thought their growth would come from in the next two years, 60% cited developed markets as the likely source —

down from the 67% who had achieved most growth in these markets in the past two years.

They are significantly more optimistic about China, India and other parts of Asia Pacific than other parts of the world. The slight decrease in focus on Western Europe, and increased focus on Africa and Latin America is shared by low performers.

What growth have you experienced over the past two years and what growth do you anticipate over the next two years?

In almost all cases, companies are looking to their own region as their first source of cross-border opportunity, but subsequent interests vary significantly.

Why would they buy from you?

Marketing has typically been included as a cost in this and has, consequently, suffered. But as companies turn their attention back to growth, there seems to be recognition — especially among high performers — of marketing as a driver of growth that goes well beyond sales support.

Marketing builds awareness to establish products in new markets, and branding builds differentiation and loyalty, mitigating the impact of price reduction. It remains a truism that companies compete on price only when they have failed to achieve a meaningful differentiation based on performance or perception.

Of particular note is the growing importance of branding in emerging markets in creating a value segment, often for the first time. Leading performers seem to recognize that branding can play a central role in taking existing products into new markets and building barriers to new competitors in existing markets.

Market Entry Strategies:

What is the best way to move into a new market? If you do not have a first-in advantage, attack the one who does.

Want to be King of the Mountain in a new marketplace? Here is some advice: be first, or a close second, and do not pause for breath. Others want to be King of the Mountain too. Even though you have a huge advantage in being first, you can lose it in the blink of an eye over pricing or service or lagging technology. Aggressive competitors have a vast array of weapons to knock you down.

Today's strategic planners, having created as much value as they could by cutting costs, are looking now to grow domestic markets, as well as build new markets and revenues in such countries as Brazil, China, India, Malaysia and Mexico. Before striking out, though, they need the answers to some crucial questions:

Does it pay to be first with a product or service? Is being an innovator worth the risk? Is it better to wait and learn from the experiences of the first entrant to the market? What is the proper balance between the risks and rewards? If you are a pioneer, what can you do to prevent share erosion when a new player enters the market? If you are a late entrant, what strategies should you adopt to make your entry successful?

Studies show that in most cases, being first to the market provides a significant and sustained market-share advantage over later entrants. Still, later entrants can

succeed by adopting distinctive positioning and marketing strategies. Pioneers in most industries, once they have reached the status of incumbent, are powerful. Sometimes, however, they get complacent or are not in a position to cater to the growing or shifting demands of the marketplace. New entrants can take advantage of gaps in the offerings of these aging pioneers, or find innovative ways to market their product or service.

Pioneers with a distinctive presence in the marketplace need to be in a position to react, or even better, anticipate potential entrants and increase the barriers to their entry. For example, a pioneer may be in a position to reduce its price and decrease the value of the business for a new entrant, or it can block entrance entirely by controlling key distribution channels.

Whether a late entrant or a pioneer seeking to foil newcomers, it helps to have a thorough understanding of the entry and defensive strategies available, a good sense of timing and a game plan for decision-making.

BASIC STRATEGIC PLANNING

Competitive strategies typically depend on the market environment and the positioning and product portfolio of the existing players. These are the basics:

Reduce price to penetrate an existing market: By introducing a product at a lower price than the pioneer's, a latecomer can attract new customers who would not have otherwise purchased such a product ¬¬ in effect expanding the total market. Reduced price can also induce the pioneer's current customers to switch. Still, this strategy is likely to result in reduced margins for the new entrant compared with other players in the market, unless the new entrant's cost of production is relatively cheaper. This can be adopted by both the incumbents and pioneers.

Improve a product or service, with focus on a niche market: Companies can compete by being innovative in the marketplace. The innovation may be radical or incremental. One example of incremental innovation is an enhanced version of

an existing product. The enhanced product can compete directly with existing products, or it can be positioned to attract a smaller segment of the existing market. In addition, the improved product or service can sometimes attract new customers that are not the current target for the existing product or service. For example: potential satellite-based wireless service providers are currently offering a new feature called global coverage. This service could both complement and replace options available to current customers -- but most of the potential players in the marketplace are targeting either traveling professionals who need to be in constant touch or the rural market, in which the cost-to-provision telecommunications infrastructure is very high and satellite-based options help governments offer ubiquitous telecommunications services. In both cases the telecommunications market is expanded, generating additional revenue.

Target new geographic markets for existing products: As markets mature in the home base, companies traditionally look outside to more lucrative markets. Most consumer goods companies, for instance, are setting their sights on China. Many heavy equipment manufacturers are targeting newly emerging markets that will need tractors and cranes for building. Faced with intense competition and maturation in the local markets in the United States, regional Bell operating companies such as BellSouth are expanding into emerging markets such as Brazil.

Develop new channels of distribution to access new markets or better penetrate existing ones: Going global is not the only solution. Sometimes the risk and the investment required to penetrate international markets may not be worth the return. Focusing on existing markets, where your company has a good understanding of the environment, can prove less risky and bring quicker successes. This can be accomplished by repositioning the product or service through marketing, advertising, packaging and so on. For instance, Dell Computer went after the mass market by having customers place their orders directly with Dell by phone, fax or computer. This direct channel revolutionized the method of selling computers to the end users, including corporate clients.

In addition to choosing the appropriate marketing strategy, it is crucial to determine the timing of the introduction of any new product. This is especially true in high-tech industries, in which product life cycles are short and it is difficult for late entrants to catch up and extract reasonable returns. In most cases, if you are entering second or later in such a market, you should do so immediately after the pioneer.

Integrating RFID: how and when will this technology change supply chain management?

RFID commanded the attention of nearly everyone at Frontline's International Supply Chain Week Expo in Chicago. Attendees sought out conference programs and symposiums to learn what the new technology was and how it worked. Exhibitors worked hard at explaining how they were incorporating RFID into their product lines. And vendors tried to sell their vision of a future that included the technology. These are all pieces of a gargantuan effort to figure out how RFID will fit into the existing supply chain infrastructure and how companies should use it, from the introduction of the technology to more mature deployments.

"People are just now getting past the gee-whiz factor the technology evokes to explore how this can create value in their supply chain," says John Thorn, general manager of the supply chain and brand solutions group at Checkpoint Systems Inc., Thorofare, N.J.

Questions and issues

RFID is not new. Some areas of the manufacturing sector (e.g., automotive) have been using it for a while now. But for many retailers and consumer goods manufacturers, RFID is a newcomer on the scene, and it comes with more questions than answers.

"While the benefits of RFID technology in the supply chain are rapidly being realized in real-world applications and installations, companies are going to have to answer a number of important questions," says Michael Liard, a research analyst at Venture Development Corp., Natick, Mass.

* How will RFID tie into existing systems, such as warehouse management, ERP and customer relationship management?

* Who will help with the bar code/RFID transition? Large systems integrators, pure software vendors, RFID hardware suppliers or traditional data collection hardware manufacturers?

* Who is responsible for post-installation support?

* If there is no standard developed for RFID's use in a particular industry or application environment, should customers wait to implement or move forward without a standard?

* What do end users do with all the data RFID can provide?

Liard believes data synchronization concerns also need to be addressed, because the lack of a common nomenclature could be the Achilles' heel for RFID in the supply chain. The lack of education among end-user employees will require companies to spell out what RFID is, how it's used, what the benefits are and why the company is implementing RFID.

Probably the biggest question is: Will RFID supplant bar code? The answer is no.

"It is important to understand that RFID won't replace bar code," says Dan Bodnar, director of product marketing for data capture systems at Intermec Technologies Corp., Everett, Wash. "It's really going to be used to augment the existing data collection system."

Bodnar says that Intermec's customers are facing compliance issues with RFID because of mandates from companies like Wal-Mart, and that's what will drive companies to implement RFID in a more timely manner. But in the long term, they need to understand how they can integrate RFID into their existing data collection system.

"The systems will coexist as folks become comfortable with the data they are extracting from these systems. If the promise of RFID pans out--that is, the benefits outweigh the cost--there will be certain areas of the supply chain that will be converted to the new technology. But this may take years before any substantial impact is seen," says Checkpoint's Thorn.

What to do

Many companies will be tempted to hold back. But a wait-and-see approach will hurt more than it will help. While there are no scientific or tested roadmaps to integration, companies can do some things to make the migration to RFID smoother.

Venture Development's Liard suggests you take the following actions:

* Find a need--if you don't require an RFID solution, don't force its implementation.

* Gain an understanding of the technology (e.g., the physics, use, frequency and various parts of the system), and then educate your colleagues.

* Review and evaluate commercially available technologies.

* Select the appropriate frequency range for your requirements and environments and narrow the field of suppliers.

* Talk with other end users and share experiences and information.

* Obtain references for each player being considered for your system implementation (e.g., hardware, software/middleware, and integration providers).

* Determine the ROI with those vendors you are seriously considering.

* Select a vendor/integrator.

* Perform a site evaluation.

* Test the solution in a real-world setting.

"As they go through this process, they need to fully understand their business processes and benchmark them against the legacy systems. With a baseline established, they can then begin to look for opportunities to reduce error, reduce labor/handling and speed throughput," says Thorn.

Applications

If bar code and RFID are expected to coexist within the consumer product goods and retail vertical markets, in which segments of ADC will each dominate?

Venture Development's Liard believes that bar code technology will continue to dominate item labeling and marking, and that RFID use will center around the crate and pallet.

RFID: Payback for Manufacturers

The RFID mandates issued by Wal-Mart, the DoD, and others place a significant burden on suppliers, but of course this kind of thing has happened before. EDI, for instance, required major expenditures on software, systems development, and ongoing VAN fees. RFID deployment has its own systems costs--for integration to the ERP; for an ongoing supply of tags; for the network infrastructure, portals, and readers; and for "savant" software that can sort and select specific data from the myriad signals emanating simultaneously from thousands (or tens of thousands) of tags. And for many manufacturers (particularly makers of "low-impact “products like groceries and household commodities), tag cost alone is a significant barrier to RFID mandate compliance.

Industry observers and analysts were quick to note that, in order to justify the cost of RFID compliance, manufacturers would need to find other ways to make RFID technology pay off for them. Thus, an unplanned benefit of the movement toward RFID is that manufacturers have renewed their focus on business process improvements in the factory. Smart manufacturers are already thinking well beyond RFID "slap and ship."

Companies that are considering RFID will have to choose one of two paths. On the first path, there is no clear return on investment (ROI) other than the follow-on benefits of being in compliance with customer mandates. The second path leads to where the real benefits can be found: RFID can be used to make business processes more efficient.

Not all companies can benefit equally from internal use of RFID technology, but many (or even most) can benefit from process improvements that are driven by data capture. This is especially true if the flow of real-time data is fully integrated to the ERP such that ERP processes become automated. The amount of benefit

you can get from RFID is relative to the performance level of the company. In looking for potential RFID benefits, find the processes in which barcodes are currently being used.

Companies that take the second path will find opportunities to eliminate tasks, save time, and add a new dimension of value through strategic application of more accurate and timely transaction data. Although this approach is likely to require a bigger initial investment, operating cost reductions can easily justify it. In "closed-loop" applications in the factory, even the gap between RFID tags and barcode labels begins to narrow. Each time the tag is read or written to, the cost of the tag will continue to go down. In contrast, label cost accumulates over time.

The world of data capture has become more complex in recent years. Gone are the days when one technology or symbology was all that a manufacturer needed to meet its data capture needs. RFID creates compelling opportunities to change how the data is captured and used, but you can be sure that barcodes and RFID will co-exist for a long time. These are the key questions to ask: Where is the barcode method failing, and what can RFID do that barcodes cannot do?

Here's one example of the answer to those questions: RFID can report finished production and reconcile the product quantities with the finished goods warehouse. Picture the end of a production line, where product is being put onto pallets. The pallet contains a barcode that is associated with the items put on the pallet. Such a barcode is referred to as a "license plate." Full pallets are picked up by a forklift operator. Each time a pallet is picked up, the forklift operator is supposed to scan the pallet barcode to record the production yield and back-flush the components used. The same transaction also automatically receives the finished product into a generic holding area in the finished goods warehouse. We'd like to think that this happens correctly every time a pallet is moved, but it doesn't. The forklift operator's concern is to move the material quickly, so the barcode scan is not always done. And even if it is done, the barcode label may be missed so the read may not be completed.

Then, a material handler from the warehouse moves the finished product away from the generic holding area. He scans the barcode and moves the material to a finished goods location and completes his transaction. Now the warehouse has finished product on the records, but because the first scan never happened, the

production was never reported as being completed. Every day, the finished goods warehouse reports how much finished product is put away and the report is compared with what was produced, at which time errors are found. It is commonplace in many factories for skilled personnel to spend significant time hunting down just where the transaction error occurred so that the error can be reconciled.

Fixing the Problem with RFID

The problem could be fixed if the pallets had RFID smart tags. A smart tag has both a bar code and an RFID chip. An RFID portal could be put in place at the passage point between the production area and the finished goods warehouse. As finished goods fill the pallet, the production number is encoded into the smart tag. This way, when the forklift operator takes the finished goods from the production lines to the generic holding location in the warehouse, passing through the portal, the transaction is completed every time, without doing a barcode scan. (Read-rate accuracy on slow-moving tags is not a problem.)

Similarly, RFID could be deployed anywhere in the factory that a reusable tote or container is utilized as product travels from one work center to another. Portals can be positioned in the automatic conveyer lines to automatically record the production transaction.

Take the Right Path

Many companies seem to view RFID utilization as one big, expensive deployment of challenging new technology. This leads them to try to identify everything that can be (or needs to be) done, which has the effect of stalling the whole effort. The best way to start is to focus on the small benefits that will add up to a big benefit. This can be called your "benefits stack."

In factory applications, RFID utilization can be far less difficult than RFID deployment in high-volume distribution. So rethink the top-down approach to the business case for RFID. Consider a bottom-up approach in which you start by fixing one problem at a time. It is surely more efficient to start with small, inexpensive tactical deployments, and the first solution doubles as your proof of concept. Then, following your "benefits stack" priorities, the small solutions combine to solve the bigger systemic business problem.

Part 2 of this article will look at more ways that RFID can be used to create value in the manufacturing process and more ways that potential benefits can be gained.

Anthony Etzel is VP of Data Capture Solutions at RTTX: RealTime Technologies, Inc. He has been designing and deploying automatic data capture solutions in manufacturing for over 20 years.

RFID Adoption in the Paperboard Packaging Industry

Introduction

Radio Frequency Identification (RFID) has generated much buzz in the supply chain arena. The technology itself is not new, and it has been used in various applications for more than 20 years. However, the technology is maturing and costs are continuing to decrease. Increasingly RFID is viewed as a tool to track the movement of items throughout a supply chain, not just within a facility (Hugos, 2006). RFID has the potential to add value across the entire supply chain. Both manufacturing and retail operations have the opportunity to be involved with the adoption of this technology. While much of the research to date has been focused on the retail industry, increasingly research suggests that RFID applications will be taking off in many other diverse industries including transportation, aerospace, utilities, and defense, to name a few (Bendavid, Lefebvre, Lefebvre, Fosso-Wamba, 2009; Bhattacharya, Chu and Mullen, 2008; Das, 2007; White, Johnson, and Wilson, 2008). One such industry seriously considering the adoption of RFID technology is the Paperboard Packaging Industry (Andel, 2005). Experts believe that many opportunities exist for early adopters of RFID technology within this industry.While numerous studies (Aberdeen Group 2006; Boeck and Fosso Wamba, 2007; Loebbecke and Palmer, 2006; Fosso Wamba, Lefebvre, Bendavid, Lefebvre, 2007;Vijayaraman and Osyk, 2006) have been conducted to study the impact of RFID technology on other portions of the supply chain including retailers and consumer goods companies, not much work has been published regarding the impact of RFID technology on packaging providers.

A review of the case study material available to date indicates that early adopters in the packaging industry are uncovering real bottom line benefits from the use of

RFID within their own operations and that further benefits arise when integrating applications with their trading partners (Poirier and McCollum, 2006). However, not all in the supply chain have looked at RFID as a strategic enabler.A majority of the early adopters have implemented RFID because of the mandate by their business partners. These adopters have simply looked at RFID as a technology upgrade and an added cost of doing business with no ROI in the near future.

In order to keep the deployment cost down and meet the compliance mandated by their business partners, many implementers have adopted the "slap and ship" approach to RFID technology deployment (Vijayaraman and Osyk, 2006). Since such an approach applies RFID tags at the last step in the fulfillment process, it limits the ability of a business to exploit the technology through its supply chain process and realize a positive ROI. White, Johnson, and Wilson (2008) found that companies employing a "slap and ship" approach did not expect the same benefits as those that integrated RFID into their enterprise systems.

A number of packaging companies, like other manufacturing companies have been mandated by their customers to implement RFID at the case and pallet level. Apart from this some of the packaging companies are exploring the option of embedding RFID tags in the individual packages such as cardboard cartons so that they can meet the mandates by the retail company without spending money on RFID tag applicators. According to Andel (2005), with rapid adoption of RFID technology in the consumer product goods industry, it is possible that these mandated suppliers and manufacturers would request packages with already applied or embedded RFID tags from their packaging providers. This presents double the challenge for companies in the packaging industry compared to companies in the manufacturing industry.

Strategic uses of RFID technology

It is difficult to determine the extent to which packaging companies are strategically using RFID within their organizations. Many of the reported benefits of RFID are anecdotal. Angeles (2005) cites a number of benefits realized or anticipated by diverse organizations including Unilever, United Biscuits,the Port of Singapore, and Toyota. These organizations and others have reportedly realized benefits in time savings, improved workflow, better tracking, and improved quality. From a business process standpoint, supply chain adopters, including packaging providers, stand to derive several potential benefits from RFID. First,

within the company's warehouses, RFID can improve receiving, picking, and shipping accuracies (Asif and Mandviwalla, 2005). This could in turn facilitate greater efficiencies in shipping and receiving of goods. Second, improving inventory visibility decreases stock failures (Moran, Ayub, and McFarlane, 2003). Benefits can be gained here with improved ability to track goods and savings of assets as well as eliminating loss of revenues through out-of-stock conditions. Industry research has also shown that retail shrink levels historically are approximately two percent of sales, costing retailers an estimated $32 billion in the USA and some $30 billion in Europe in 2001 (Hidaka, 2005). RFID is expected to have drastic effects in reducing the amount of shrinkage and claims/thefts occurring in the retail environment and other delivery processes.

Further, by automating data collection, businesses can eliminate the manual data entry and manual business process transactions. This can provide significant benefits in terms of labor efficiency and overall cost reduction. Since with RFID the data captured from the tags is sharable by the business partners and could be made available in real-time, closer connections with supply chain partners are possible.This could provide for realtime visibility into customer purchase decisions in value chains, which in turn can position businesses to react more quickly to market trends.

RFID technology is often cited as an alternative to and eventual replacement for bar codes, although it has been argued that there is a lack of empirical evidence to support this claim (White, Gardiner, Prabhakar, Razak, 2007). Some of the advantages of RFID technology over the use of bar codes include the fact that RFID does not require line of sight and it can potentially be read at large distances (Clampitt,2009). This would be an advantage in the packaging industry where the tags may not be visible. RFID has other advantages over bar coding, including the potential for a longer lifespan,the ability to withstand harsh environments, and the increased traceability capabilities. The main disadvantage compared to bar codes is the high cost of RFID technology, including the cost of tags, readers, and the necessary software. However it has been argued that the various benefits of RFID in the supply chain including reduced shrinkage, better visibility, and better protection against counterfeiting, improved stock management, and reduction in labor costs, must also be considered (Lewis, 2005). These and other potential cost savings should be considered when determining the ROI of an RFID implementation.

So where do packaging providers fit in with respect to the benefits in the overall supply chain? What is their role in contributing to the value proposition that RFID might have to offer in the supply chain? The Aberdeen Group (2004) research suggests that RFID benefits will vary depending on the type of enterprise. They suggest that one of the most promising areas of application will be for manufacturers of high value and low volume products (such as pharmaceutical distribution). Also, in cases where retailers create mixed pallets also may result in high value. On the other hand, distribution centers receiving many mixed pallets may not see much value in using RFID. So perhaps the packaging industry may or may not be able to make much of a contribution, depending on where in the process its services are required. Packaging provided to distribution centers receiving mixed pallets may be of no value, while packaging provided to manufacturers of high-value products may be of significant value.

Challenges of RFID technology

Despite potential benefits, many companies continue to implement RFID based on compliance rather than based on ROI (Warehousing Education and Research Council, 2006).This can be attributed to several reasons. Lack of demand from business customers has been one major reason. Since the technology demands large initial investments, little incentives exist for organizations that see no customer demand for RFID. Another challenge to RFID adoption is the lack of worldwide tag standards. The standards for RFID technology are still evolving. EPCglobal, a non-profit organization, is working with member organizations to establish standards for tags. Retailers such as Wal-Mart, Target, Tesco, etc. are requiring suppliers to use the EPC standards (Vijayaraman and Osyk, 2006). In the packaging industry itself, a number of operational and technical concerns have been raised regarding the limitation of RFID systems (Albright, 2006).

These concerns continue to represent a challenge to the packaging providers in deploying RFID technology.The placement of tags on the packages for readability is one such concern. According to Clarke, Twede, Tazelaar and Boyer (2006), even though tag orientation has little effect on readability for empty cases, when a product such as rice or bottled water is added, tag orientation has a great effect on readability.The overall cost of implementation is another major factor in determining the speed at which RFID technology is adopted. RFID system requires expenditures for tags, readers, hardware, software, and system maintenance.

Within the packaging industry, significant cost additions to packaging operations are seen as a concern.

Achieving a positive ROI on RFID implementations in the supply chain continues to be a challenge for many organizations. The cost of high technology is still the make or break issue for many packaging suppliers and their customers (Andel, 2005). A primary cost component of RFID technology is the repetitive cost of RFID tags. Additionally, companies considering RFID need to plan for additional network infrastructure, storage capacity, RFID printers and readers, and additional data generated by millions of new tags flowing in its supply chain (Asif and Mandviwalla, 2005). With regard to the cost, the recent focus within the supply chain industry has been on low cost RFID tags. Over 1.3 billion RFID tags were produced in 2005, and by 2010 that figure is expected to soar to 33 billion reports InStat (Mumford,2006). With the anticipated scale and scope of RFID deployments, tag costs are expected to continue their decline. However, even at low cost, they are a significant investment for packaging providers since they represent a recurring cost for them in an open supply chain. As discussed earlier, some feasible benefits which have the potential to improve ROI for packaging providers include an improved ability to track packages, greater efficiencies in shipping and receiving, claims/theft reduction, out of stock reductions, inventory reduction, labor efficiency and closer connection with supply chain partners.

According to Mahna (2005), the use of RFID will demand more flexible processing systems irrespective of whether the packaging is done at the production facility or at a co-packer. This will have a direct impact on the operational efficiency and profitability of the packaging company. For instance, if packaging suppliers were to consider adding tags to their boxes and displays, each tag would have to be individually identified and placed according to a specific product packaging level.This would require each batch of material to be specifically designed for the ultimate product packaging level and would require a certain placement precision (Andel, 2005). In addition, the presence of products or packaging containing metal components that block the RFID signal, or conveyor belts made up of static producing nylon, or glass fiber that produces radio noise may necessitate expensive changes in the physical infrastructure, thereby increasing costs (Margulius, 2004).

System integration has been another major concern for adopters.The challenge of RFID implementation comes from integrating RFID systems and the data they

generate with other functional databases and applications (Jones, Clark-Hill, Shears, Comfort, and Hillier, 2004). Presently, since a majority of the adopters are building their own RFID system from parts offered by different vendors, they are faced with the additional challenge of integrating these systems with their internal database and ERP systems. Given the vast amount of data involved, capturing and communicating the data among disparate systems is a major concern.A survey by Cap Gemini Ernst &Young of 275 respondents working in the packaging industry revealed that 46 percent of the respondents consider integration as the single biggest concern with RFID (Ferguson, 2004). Lack of standards is yet another concern for packaging converters.To derive benefits from their RFID investments,supply chain partners need to use similar tags, readers and operational frequencies. According to Whitaker, Mithas, & Krishnan (2007), the lack of RFID standards leads to a delay in realizing a return on investment of RFID technology. While standardization of information formats placed on the RFID consumables have gained wide support with the Electronic Product Code (EPC) in the retailing industry; standards dealing with RFID frequency and protocols for the communication of readers and consumables such as tags and labels are continuously evolving. The lack of technology uniformity and standards has kept the overall cost of implementation high and is a concern for the packaging suppliers.

Embedding of RFID tags in packages

The trend towards embedded RFID tags in the packaging material is gaining momentum within the packaging industry. A popular trend is smart packaging, which involves the use of chemical, electrical, electronic, or mechanical technology,adding numerous features and functions to packaging (NanoMarkets, 2006). Smart packaging is expected to consume $1.1 billion in printable and chip-based RFID tags by 201 I (RFid Gazette, 2006). For packaging suppliers, though, embedding these tags within their packages may pose challenges during the corrugating process. A bigger challenge could be the placement of tags, considering the chance the tag could be cut off or diecut out (Palmieri, 2006).

Despite the concerns and challenges, there is little doubt that tremendous market opportunity exists for packaging providers given their market customer relationships and expertise in product labeling. Even though the cost may outweigh the returns at this point, RFID provides an ideal platform for packaging providers to offer added value to their customers.With the advent of newer

printing technologies and RFID adoption by multiple participants in the supply chain, RFID embedded packaging may prove to be a very attractive option for the customers facing the mandates.

According to Roberti (2006), end users want to move toward embedding RFID in cartons for shipping cases rather than applying labels. Some packaging companies such as Georgia Pacific, Smurfit Stone, and Weyerhauser have begun to research how to embed RFID tags in corrugate but the vast majority of the industry is behind. According to O'Connor (2006),Tl and Smurfit-Stone Container Corporation have co developed a prototype consisting of corrugated cardboard case containing an integrated RFID inlay made with an antenna printed directly into the case with conductive ink. The companies predict that using packaging materials with integrated RFID tags could save labor and materials costs for consumer packaging goods companies since doing so would eliminate the need to purchase separate RFID labels and place them on cases. According to Smurfit-Stone Company, despite the low demand for RFID integrated packaging today, the demand will rise as tagging mandates and the number of goods that must be tagged continue to grow. Therefore, in order to be cost effective, consumer packaging companies are going to move to the embedded approach (O'Connor, 2006)

In an effort to determine the extent to which packaging companies are pursuing these potential benefits, a research study was undertaken. The rest of the paper discusses the analysis of the data collected from Paperboard Packaging companies in the US and Europe and highlights the benefits, challenges, future trends,and implications of RFID in the Paperboard Packaging industry.

Methodology

A research study was undertaken to determine the extent to which the Paperboard Packaging industry has adopted this technology to date and to determine what problems they have faced. In February and March of 2006, emails with links to a web-based RFID survey were sent to U.S. readers of Paperboard Packaging magazine and to members of the European Federation of Corrugated Board Manufacturers (FEFCO), requesting they fill out the survey. One follow up reminder was sent to each group approximately three weeks later. A web-based survey was chosen because it was an effective means of collecting data from the targeted group of Paperboard Packaging magazine readers. Other reasons for

using a web-based survey were lower cost, time savings, automated data capture for analysis, and the flexibility to ask only relevant questions in each of the adoption categories. The respondents included the following:

Geography

A total of 174 companies participated in this survey. Of the 174 companies that participated, 136 companies were from the US and the remaining 38 companies were from Europe.

Job Title/Function

A majority of the participants who responded (81%) were in the management category and the rest were in the supervisory or staff specialist category. The largest percentage of survey respondents were owners (13.8%), general managers (12.6%), presidents &vice presidents (12.6%),and sales managers (9.8%).

Industry

Fifty-two percent of the companies who participated in the survey were independent corrugated or folding carton converters, and 32% of the companies were integrated converters of corrugated and/or folding carton, or rigid box converters. A majority of these companies provide packaging products to consumer packaged goods and food products industry. Only a small number of companies provide packaging products to the apparel industry. Most of the companies surveyed have more regional sales and manufacturing presence and were evenly distributed between national and international sales and manufacturing.

Company Size

The size of the companies ranged from small to very large, in both annual revenue and number of employees. The largest percentage (55%) of these companies were small with annual revenue for 2005 of less than $50 million,followed by companies with annual revenue of 50 million to $100 million (13%) and $100 million to $500 million (12%). Only 14% of the companies surveyed reported annual sales of more than $1 billion. A majority of the responding companies

(69%) were small, with fewer than 500 employees, where 10% of the responding companies were very large, with more than 10,000 employees.

Table 1: Status of RFID Implementation (US versus Europe)

Implementing

Pilot Testing

Considering

Not Considering

Total

US 1 1 5 44 76 136Europe 0 5 19 14 33Total 1 1 10 63 90 174Percentage

6% 6% 36* 52% 100%

Data Analysis and Findings

Table 1 indicates the status of RFID implementation among the companies surveyed. A very small percentage of respondents (12%) are either pilot testing or implementing RFID. Fifty-two percent of the respondents are not considering implementing RFID technology in the near future whereas 36% of the companies are at least considering implementing RFID during the next couple of years. All the companies that are implementing RFID are in the US and the companies that are pilot testing are evenly split between the US and Europe.

Table 2: Status of RFID Implementation by Annual Revenue for 2005Revenue

Implementing

Pilot Testing

Considering

Not Considering

Total

Less than $50 Million

1 2 24 69 96

550 to 1 3 8 10 22

$100 Million$100 Million to $500 Million

3 1 10 6 20

$500 Million to $1 Billion

0 1 8 1 10

$1 Billion to $5 Billion

2 0 7 2 11

More than $5 Billion

4 3 5 1 13

Total 1 1 10 62 39 172

Table 2 indicates the breakdown of the status of RFID implementation among companies by their annual revenue. Over half of the companies who are implementing RFID have revenues of more than $ I billion. However, a majority of companies with revenues of $50 million or above are at least considering the implementation of RFID. Only in the smallest companies (less than $50 million) did a majority (69 out of 96) respond that they were not considering the technology. So it would appear that this technology is of interest to all but the smallest companies. This is consistent with the Information Week 500 survey analyzed by Whitaker, et. al. (2007). They found the company's revenue was positively correlated with RFID adoption, implying that large firms are more likely to adopt RFID.

Companies that are not considering RFID technology at present

Slightly over half (52%) of the companies surveyed are not considering RFID technology at present. A majority of these companies (70%) expects to implement RFID in 2008 or beyond, and 24% of these companies think they would never implement RFID technology in their organization for their internal supply chain or integrating with their packaging materials. A majority of survey respondents see RFID technology adoption over the next few years. Lack of customer demand was the most important reason for these companies for not considering RFID implementation. Lack of standards, cost, lack of foreseeable benefits, and lack of understanding were other reasons for not considering RFID technology. Major concerns for these companies with respect to RFID technology were cost related, including the cost of implementation, the cost of tags, and the cost of automated label applicators. Other concerns that were somewhat important were lack of foreseeable benefits and lack of implementation standards. Altering the package design due to RFID implementation and the placement of tags on the packages for recyclability and readability were of the least concern (see Figure I).

Companies that are currently considering RFID technology

Thirty-six percent of the companies surveyed indicated that they are currently considering implementing RFID technology. Seventy-one percent of these respondents indicated the reason for considering RFID is to meet their customers' requirements and the rest (29%) indicated the reason is to improve their internal supply chain efficiencies. When they were asked to rate the reasons on a scale of I - 5, I being least applicable and 5 being most applicable, meeting their customer requirements ranked the highest (4.73) followed by a closer connection with business partners (3.56). Other reasons such as claims/theft reduction, out-of-stock reduction, inventory reduction were not rated very high. Reasons that improve internal supply chain efficiencies, such as improved ability to track goods and greater efficiency in shipping & receiving were considered somewhat important. A majority of companies (57%) that are considering RFID technology expect to implement RFID in less than 2 years (see Figure 2).

Many of these companies (75%) are still doing initial research and gathering information on RFID systems, another 16% of these companies are doing cost justification and budgeting, 7% are developing a project plan, and only one

company is at the stage of selecting a vendor. Five of these companies are expected to implement RFID technology is less than one year, 30 in one to two years, and the rest in more than two years. A majority of these companies expect that the RFID applications which help manage inventory services for customers would be the most beneficial reason for implementation, followed by package tracking. Other RFID applications such as raw material tracking, container tracking, component tracking, loss prevention, asset management and security are beneficial to a limited number of companies (see Figure 3). Many of these companies expect their RFID technology to be integrated with warehousing and supply chain applications and with IT infrastructure. The RFID solution will also be integrated with organization and IT strategy by many companies. Only a small number of companies expect their RFID application to be stand-alone.

When asked about the concerns they have with respect to issues related to RFID technology, several issues emerged as very important to these companies. Cost of implementation, cost of RFID tags, cost of automated label applicators, and lack of implementation standards all scored very high on the list of concerns (see Figure 4). Altering the package design and lack of foreseeable benefits were comparatively the least of their concerns. The placement of tags on the package for readability and integration with warehouse and inventory systems were concerns to some extent.These concerns were very similar to the concerns of responding companies that are not considering RFID technology at present. Cost seems to be one of the biggest barriers to RFID implementation for many companies. Cutting the cost of RFID tags and the cost of implementation would be critical to widespread adoption of RFID technology.

Companies that are pilot-testing/implementing RFID Technology

A very small percentage of companies (12%) that responded to the survey are either pilot testing or implementing RFID technology. When these companies

were asked for reasons for deploying RFID, meeting customer requirements was the overwhelming response. This is consistent with the findings of White, Johnson, and Wilson (2008), based on their survey of European supply chain managers. Seven companies also indicated "improvement to their supply chain efficiencies" as a reason for implementing RFID.

When asked to rate nine different reasons on a scale of I to 5 from least applicable to most applicable, meeting customer requirements was ranked the highest followed by closer connection with business partners (see Figure 5). The least important reasons were claims/theft reduction, out-of-stock reduction, inventory reduction, and cost reduction. Reasons such as improved ability to track goods, greater efficiency in shipping and receiving, and labor efficiency were somewhat applicable. The reason for RFID deployment for many companies surveyed is still driven by customer requirements and not very much on improving internal supply chain efficiencies.These results were very similar to companies that are considering RFID technology.

The companies that are pilot testing/implementing RFID are at different stages of implementation with a small number of the companies having already purchased and developed the RFID systems. A majority of these companies are offering packages with applied RFID labels. Some of the major concerns of these companies were cost: cost of tags, cost of implementation, and cost of label applicators. The other major concern was the placement of tags on the packages for readability. Minor concerns were integration with warehouse/inventory systems, lack of implementation standards, and lack of foreseeable benefit. Altering the package design was at the bottom of the list of concerns (see Figure 6).

When asked about the time it takes to implement RFID, companies that are pilot testing indicated anywhere from 3 months to 6 months. These companies were also asked to indicate the types of problems they are experiencing in their pilot testing. Some of the problems these companies indicated are licensing, cost and general availability of tags, combining generation II tags with standard laser-printable paper labels, strength and durability of generation II tags, cost of implementation and variety of choices of RFID tags, and damage to tags/antenna during the application process.

Among the RFID applications that the organization benefit from the most, inventory management services for customers was ranked highest followed by package tracking. A handful of companies are expected to benefit from applications such as container tracking, asset management, loss prevention, raw material tracking and security. Only two companies indicated component tracking to benefit from RFID application.

With respect to integration of the RFID application with other systems, the majority of these companies are integrating with their current IT infrastructure followed by warehouse applications. A third of these companies are deploying RFID applications as stand-alone systems. Several companies expect to integrate their RFID applications with warehousing and SCM applications. Responding companies also indicated that their RFID solution would be integrated with overall organizational and IT strategy.

Many of the companies that are pilot testing and implementing have a small budget for their RFID project. Five companies indicated that they are spending less than $100,000 and 5 other companies indicated $100,000 to $500,000. Only one company is spending up to one million dollars and another company is spending more than 10 million dollars. These companies expect their cost savings to come from improved ability to track packages, out of stock reduction, and minimized inventory losses (see figure 7). Cost savings from a better ability to identify the source of defectives was at the bottom of the list.

Of the companies that responded to the question on anticipated savings from their RFID projects in the year after implementation, forty percent expected no savings at all. Another 40% indicated I to 5% savings and 15% indicated 6 to 10% savings. Only one company indicated savings of I I to 15%. Although not many companies are satisfied with RFID technology at this time (overall satisfaction of 3

on a scale of I to 5 where I is not satisfied and 5 is extremely satisfied), companies are somewhat pleased that they do not have to alter the design of the package. Security and integration with warehouse and inventory systems were high on the average satisfaction rankings. Respondents were less satisfied with the cost of RFID tags, automated applicators and overall implementation. Standards and overall performance also had satisfaction scores under 3 (see Figure 8).

When the companies were asked about the status of embedding or applying RFID tags on the packaging materials, only 9% of these respondents indicated that they are implementing it whereas 21 % indicated that they are investigating it. Only 23% of the companies have been contacted by RFID vendors or printing companies with an offer to embed RFID tags/labels into their packaging materials, whereas 32% of the companies have been contacted by customers about the possibility of implementing RFID tags into packaging material at the case, pallet or item level. Twenty-four percent of the companies indicated that their customers require them to embed RFID tag into the packing materials and 29% said embedding tags was not currently a customer requirement.

All of the survey participants were asked about their opinions on the future of RFID. There was a strong agreement among all the respondents that RFID implementation will add significant cost to their packaging operations. Respondents were neutral when it comes to benefits outweighing the cost of RFID implementation (see Figure 9). There were no statistically significant differences between the two groups: adopters and non-adopters on any of the issues presented to them.When asked about their opinion on whether packaging converters should provide materials with RFID capabilities, 73% said "yes" and the remaining 27% said "no." A majority of them (85%) expect to share the cost of tag application with their business clients and only 15% would absorb the cost by providing RFID tag application as a value-added service.

In response to a question on how RFID will affect the packaging design in the future, the responses varied significantly all the way from little impact to substantial impact. Some of the responses were:

• Consumers will need to be able to "kill" the tags for privacy reasons, making their usefulness questionable.

• Folding Cartons will not change much. The basic design neither helps nor hinders the application of an RFID tag or any other external/adhesive-applied thing, for that matter.

• Greater awareness of creating space, air gaps, rather than minimizing the packaging.

• I would think that a standard would be implemented where the tag is required to be on a specific panel of the carton.

• Making sure that tags are readable anywhere within a pallet load.

• RFID will cause packaging design revolution in future, like bar code.

• Relatively little impact in corrugated.

• Strongly feel that packaging designs will change to allow for RFID uses. Retail outlets are driving this application. They will need to be able to read the tags. If they cannot read the tags, redesigning the packaging will be an option.

• There must be specific positioning for RFID on the box, to be able to read it in auto mode.

• Simply put, it will be a requirement.

• Seamless transactions in warehousing and store fronts.

• Consideration will have to be given as to the position of the RFID at the early stages of design. Will revolutionize designs to implement RFID.

• Eventually, RFID will be implemented, more and more--in the future.

• I believe that it will strongly benefit companies with high inventory facilities and the keeping track of items in transit is just an added bonus.

• I think it is the future in shipping containers.

• Whether printed or applied designers will need to take RFID into account. It isn't necessarily bad for design to have an RFID requirement

Even though currently not many packaging companies are embedding RFID tags in their packaging, this will become increasingly important as retail companies start item level tracking and inventorying with smart displays. Many experts say that embedding RFID tags in the packaging, known as source tagging, will be the next revolution. Some big packaging manufacturers are conducting research in terms of the best way to integrate RFID tags in the packaging itself. NEC seems to have succeeded in embedding RFID tag in bottle cap and several banks are considering embedding RFID tags in banknotes. Our sample indicated a small percentage of respondents (9%) are embedding RFID tags in the packaging whereas 21 % indicated that they are investigating it and 32% of the companies have been contacted by customers about the possibility of implementing RFID tags into packaging material itself. This trend will increase as the cost of RFID tags drop in the future and retail companies start demanding manufacturers to tag at the item level. The major issue for embedding RFID tags in the package at the item level will be privacy concerns. This concern could be a big hindrance to widespread adoption of RFID tags at the item level.

The supply chain and packaging literature has suggested that technical and operational challenges will continue to exist and the current study confirms those concerns. RFID continues to hold much promise in a number of different packaging applications, including apparel, consumer goods, and produce (Singh, McCartney, Singh, and Clarke, 2008.) It has been suggested that it may be between two and five years before this industry sees significant demand from their customers for this technology (Albright, 2006). And it appears that packaging companies are investigating the likely benefits of RFID within their own facilities although not all are willing to share their "success stories."

Implications and Conclusions

Paperboard packaging converters that are either considering or implementing RFID are primarily doing so to meet customer requirements rather than to reduce cost or achieve supply chain efficiencies (see Figure 10). This is consistent with the results from other studies that surveyed retail, manufacturing, and warehouse industries (Bhattacharya, Chu,and Mullen, 2008; Vijayaraman and Osyk, 2006; White et. al. 2008) When RFID concerns were compared amongst all three groups (companies not considering, companies considering, and companies implementing), companies that are implementing were very concerned about the cost of RFID tags and the placement of tags on the packages for readability. For companies that are considering RFID, the overall cost of implementation, cost of automated label applicators, and lack of RFID implementation standards were of more concern. For companies that are not considering RFID, lack of foreseeable benefits was of more concern (see Figure 11).

In conclusion, RFID continues to show much promise as a technology with many potential benefits across the supply chain. Previous research found that manufacturers are frequently piloting and adopting RFID initiatives in response to the mandates from their customers, especially those of Wal-Mart and other retailers (Whitaker, et. al. 2007). The current study confirms that this momentum is continuing to move back through the supply chain. The Paperboard Packaging industry is beginning to implement this technology at the request of their customers, the manufacturers. Companies will be looking beyond meeting customer demand and will try to use RFID technology to improve their own operational efficiencies and reduce costs. In addition, RFID continues to show the promise as an integration tool to aid collaboration with others in the supply chain in an effort to reduce costs throughout the network (Fosso Wamba, et. al., 2007).

At present a number of concerns still exist that are limiting the widespread implementation of RFID in the Paperboard Packaging industry. Many in this industry are not yet ready to jump on the bandwagon and it appears that few expect a positive ROI any time soon. However, those in this industry that are implementing this technology (mostly very large companies) appear to be generally satisfied with their efforts thus far. Radio frequency identification is still

viewed as an emerging technology, but one that will continue to have an increasing impact on the supply chain.The results of this study support the results of the earlier study conducted byVijayaraman and Osyk (2006) and are consistent with the largely anecdotal case studies that have been reported in the literature. Even though RFID adoption rate is not increasing at a rate predicted by researchers several years ago, our research shows that RFID is growing at a steady rate. Rising interest in item level tagging coupled with cheaper tags and embedding of RFID tags in packaging will accelerate the adoption of RFID in the future.

Limitations and Future Research

This study had several limitations and there are many opportunities for future research. The survey was emailed to readers of a well-known packaging trade publication. However, not all paperboard packaging companies may have been represented in the distribution list. Also, the respondents represented a limited geographic area (U.S. based companies and a limited sample from Europe.) In addition, early adopters of RFID may consider this technology to be a competitive advantage and may be hesitant to share their experiences. At the time of the survey there were relatively few adopters of RFID technology in the packaging industry. As other researchers (White et. al., 2008;Whitaker et. al., 2007) have stated, this is a rapidly growing and fast moving field of research. The current study is largely based on respondent expectations of the benefits of RFID (including"expected" ROI) and not on actual results. In the future, as more organizations adopt RFID, researchers should be able to collect more data on the actual benefits realized by this technology.