While marketers in many countries are worried about a recession, there is also optimism regarding the business climate and marketing budgets.
How circular take-back programmes can help address the climate crisis
By our News Team | 2023
US researchers discover that consumers exhibit a higher willingness to pay for products that are part of a circular take-back strategy.
Researchers from Boston University in the US have published a study in the American Marketing Association’s Journal of Marketing, which shows that tapping into consumers’ sense of ownership prompts them to place a higher value on products from a circular economy.
The study is titled ‘Affording Disposal Control: The Effect of Circular Take-Back Programs on Psychological Ownership and Valuation’ and is authored by Anna Tari and Remi Trudel.
Photo by Markus Winkler from Pexels
Various governments view a circular economy as part of the solution to the climate crisis and have implemented Extended Producer Responsibility (EPR) laws that hold manufacturers accountable for the entire lifecycle of their products, including disposal and repurposing.
However, policymakers grapple with prioritising these programmes when faced with limited consumer awareness and support, while manufacturers resist these programmes due to potential cost escalation, shrinking profit margins, and the perceived burden of passing costs onto consumers – potentially compromising their competitiveness in the market.
The researchers discovered that consumers exhibit a higher willingness to pay for products that are part of a circular take-back strategy.
“The driving force behind this willingness lies in a concept known as psychological ownership,” Tari explains.
“Circular products offer control over the disposal of the product, which taps into consumers’ sense of ownership, prompting them to place higher value on these items. This finding could alter how businesses and policymakers approach the implementation of circular programmes.”
Several companies have recognised the benefits of the circular economy. For example, clothing retailer H&M encourages consumers to participate in its circular take-back programme by returning their used clothes to the retailer.
Depending on the type of clothing and its condition, H&M donates the clothing to charity, recycles it, or reuses it to make new clothing to sell.
Similarly, Ikea, the company that designs and sells ready-to-assemble furniture, has committed to being 100% circular by 2030 and has implemented a take-back scheme promoted extensively in stores.
The Boston University researchers carried out eight experiments that study a variety of products, in order to demonstrate that consumers place higher value on circular programme products.
Lessons for marketers and policymakers
The study offers valuable lessons for CMOs and policymakers. Among them:
- Manufacturers need to reassess their concerns about cost implications. The study illuminates the potential for consumers to accept price adjustments associated with circular programmes.
- Companies can make take-back programmes product-specific and allow consumers to directly return products they no longer need to the manufacturer or retailer. This gives consumers more control over disposal, as opposed to relying on a broader curb-side recycling system.
- Implementation of a take-back programme does not seem to require product discounts or the need for companies to offer convenient pick-up services.
- Policymakers can foster awareness and understanding among consumers and boost political will for these programmes.
- Policymakers should focus on policies that can lead to increased investment in regulatory frameworks, infrastructure, and financial incentives to support such programmes.
- Policymakers should promote policies and encourage companies to participate in these programs by providing them with guidelines on how to do so.
The insights from this research hold important conclusions. “Businesses can align their strategies with consumer values; policymakers can foster support for sustainable initiatives; and consumers can make choices that resonate with their values,” Trudel says.
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