They Know What You Eat
By Kayte VanScoy, Smart Business
P&G is betting the future on smart packaging that will change the way we buy products.
It is called "the Code" and it will change the way soap, cereal, and antiperspirants are manufactured, distributed, and marketed forever. The Code, says Frank Everett, president and CEO of Reach Marketing, a Westport, Connecticut, research firm, is "the new economy coming for packaged goods."
What Everett calls the Code is essentially what Steve David, Procter & Gamble’s chief information officer, refers to as "smart packaging." Superficially similar to the ubiquitous UPC bar codes, which contain general information about a product, the Code uses either an alphanumeric sequence or auto-identifier microchips to track specific information on every single good produced. This allows manufacturers, shippers, and retailers to follow a given package through their systems, but it also allows companies to monitor individuals' purchasing preferences by tracking exactly what goes into their shopping baskets—and into their homes.
"Most packaged-goods companies are working on the Code, but they have a ’no comment’ rule going," says Everett. Reach is currently working on the Code for five companies, which Everett declined to identify.
Kellogg's launched a Code campaign last summer that allows consumers to enter unique alphanumeric codes from cereal boxes into the Kelloggs.com Web site and earn loyalty points. Earn enough points, and you can exchange them for merchandise. General Mills, PepsiCo, and McDonald’s launched similar programs last year.
The Code will eventually go much deeper than coupons and contests. P&G cofounded the Auto-ID Center at MIT and aims to embed microchips in its packaging by spring 2002. P&G says the first iteration will focus on inventory management. It will later try to flow smart-packaging data through its entire supply chain. Only when these efforts are perfected, P&G says, will the consumer applications begin. The company begins test marketing smart packaging in February.
According to a video tour of the P&G–sponsored Home of the Future and Store of the Future at MIT, these applications could include shopping carts that automatically charge a bank account, refrigerators that tap into the Internet to automatically reorder items that are running low, and finally, interactive televisions linked to that refrigerator which will feed targeted commercials and special offers to consumers.
Kevin Ashton , executive director of the Auto-ID Center, concedes there's
a Brave New World feel to it all, but adds, "The dollar value of this opportunity,
well . . . there's so many zeros on the end of it that it's hard to make
people believe you.