Marketing has historically been seen as akin to consumption. Our role has historically been to persuade people to buy more and want more. But the planet, the economy and society can no longer support the ‘take, make, waste’ model that has underpinned this approach.
Circular business models offer an alternative that shifts the focus from selling products to providing and preserving value, whether through traditional sales or innovative circular services and activities, such as repair or resale. They offer opportunities for consumers to access new products and services that fulfil their needs whilst reducing the environmental impact of purchasing behaviors, whether that is by finding ways to extend the life of products or offering access to products for shorter time periods at a lower cost.
Our new Playbook – Marketing Playbook for a Circular Economy – that we’ve developed in partnership with the Ellen MacArthur Foundation, explains how this creates a new opportunity for marketers to build brand differentiation, especially in mature markets where brand growth is currently fought for, often via small incremental additions to products.
How can marketing accelerate the adoption of the circular economy?
Traditionally sustainability marketing ends at the sale of a product with a reduced impact, but in a circular economy the marketing role expands well beyond the point of sale of a physical product as items are circulated multiple times via circular activities including reuse, repair, or rental. This opens a myriad of possibilities to create mutually beneficial, long-lasting relationships with consumers and users throughout a product’s lifecycle. This puts marketing and consumer relationships at the heart of scaling the circular economy, allowing marketers to take a leadership role in transforming organizations and facilitating shifts in consumer behavior.
Kantar has worked with The Ellen MacArthur Foundation, an international charity whose mission is to accelerate the transition to a circular economy in order to tackle some of the biggest challenges of our time, such as climate change, biodiversity loss, waste, and pollution, to identify best practice.
Marketing Playbook for a Circular Economy equips marketeers with the insights, examples, and recommendations they need to gain organizational buy-in and realize the circular economy opportunity. It’s based on interviews and workshops with more than 50 marketing and communications professionals across both agencies and businesses at the forefront of the circular economy transition, as well as Kantar and the Foundation’s existing research.
The consumer appeal of circular business models
Kantar’s 2022 Global Issues Barometer found that 64% of people believe businesses have a responsibility to solve climate and environmental problems. And they match that belief with action, spending more with brands that can find ways to eradicate waste and pollution while still offering the essentials of value and convenience.
A circular economy offers a clear pathway to deliver while also offering opportunity to build brand growth and business resilience. By embracing circular models, brands can tap into new revenue streams, reduce costs, and strengthen customer relationships.
The circular economy is not just for born-good brands, some of the world’s largest companies are already securing the benefits, including:
- New revenue streams: Renault created or preserved EUR 219.8 million in technical and economic value during the 2019 financial year, through the repair and second-life reuse of electric vehicle batteries, the recycling of materials, and the reuse of parts, an increase of EUR 45.7 million compared to 2016. In fashion, 67% of retail executives say resale will generate more than 10% of total revenue for their company within five years.
- New markets: Philips introduced a subscription service for hair removal devices that decreased the cost of access to high-end devices, allowing them to reach a consumer segment that might not be in the market to buy a product.
- Brand loyalty and differentiation: Coca-Cola’s reusable universal bottle, lower prices combined with the reward system for returned bottles have driven consumer loyalty in Latin America, resulting in a return rate above 90% and a 15% higher likelihood of repurchase.
- Convenience: This can range from free repair warranties embedded into subscription models like Swapfiets’ bicycles, to more everyday benefits such as SodaStream’s in-home appliance allowing customers to make fresh sparkling water on the spot in the desired quantity and flavor.
- Emotional benefits: Circular services like repair can help people keep their favorite items in use for longer. Selfridges’ repair revenue growth highlights this ripe circular business opportunity: from GBP 797,286 in 2022 to GBP 1,145,000 in 2023, a 44% year-on-year increase.
The future of marketing could well be circular; these business models will help build more resilient brands that are future-ready.
They not only help meet evolving consumer demands for products with a lower environmental impact but also build compliance with new regulations aimed keeping materials in circulation for longer.
To download Marketing Playbook for a Circular Economy or to talk to our sustainability experts click here