As sustainability concerns take center stage, prominent companies like Apple, H&M, and Zara have rolled out circular take-back programs to address environmental concerns and evolving consumer expectations.
Remi Trudel is Associate Professor of Marketing, Boston University, USA.
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Anna Tari is a doctoral candidate in marketing, Boston University, USA.
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. It is time to embrace the circular economy not just as a theoretical concept but as a tangible force for positive transformation in our society.
Governments worldwide view a circular economy as part of the solution to the climate crisis. In the U.S., several states such as California, Connecticut, Maine, Oregon, and Vermont have implemented Extended Producer Responsibility (EPR) laws that hold manufacturers accountable for the entire life cycle of their products, including disposal and repurposing. However, implementing circular take-back programs under EPR regulations faces challenges as policymakers grapple with prioritizing these programs when faced with limited consumer awareness and support. Manufacturers resist these programs due to potential cost escalation, shrinking profit margins, and the perceived burden of passing costs onto consumers, potentially compromising their competitiveness in the market.
We also emphasize lessons for policymakers:
We discover that consumers exhibit a higher willingness to pay for products that are part of a circular take-back program in comparison to when they are not. The driving force behind this willingness lies in a concept known as psychological ownership. 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 programs.
Several companies have recognized the benefits of the circular economy. For example, clothing retailer H&M encourages consumers to participate in its circular take-back program 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. IKEA has committed to being 100% circular by 2030 and has implemented a take-back scheme promoted extensively in stores. Zara has expanded its “Closing the Loop” initiative to include home collection services.
Across eight experiments in which we study a variety of products and use externally valid take-back program promotional materials, we find that people ascribe more valuation to circular program products. The increase in valuation is due to a factor unique to circular program products: disposal control. This control does not in itself increase valuation; rather, it increases the capacity for a circular economy product to evoke psychological ownership.
From: Anna Tari and Remi Trudel, “Affording Disposal Control: The Effect of Circular Take-Back Programs on Psychological Ownership and Valuation,” Journal of Marketing.
A circular economy can decrease supply chain risk by increasing the security and price stability of a company’s supply chain through the use of recovered materials. Circular programs may also allow firms to develop new markets, gain new customers, and build their brands and reputations as environmentally friendly and innovative organizations.
Our study offers valuable lessons for chief marketing officers: