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Creating Customer Value in a Circular Economy

Albihn, Isak (2017) MVEM30 20161
Studies in Environmental Science
Abstract (Swedish)
Resource related challenges are becoming increasingly severe. The shift towards a circular economy is viewed as one prominent way to overcome the challenges. A shift towards a circular economy would partly require new business models, commonly referred to as circular business models. In order to enhance the development of circular business models, there is a need to understand how companies with circular business models can create customer value. Hence, a company need to create value for their customers in order to capture economic value within the organisation. Therefore this study is looking into how existing companies, and in particular those with service oriented circular business models, are creating customer value. The term service... (More)
Resource related challenges are becoming increasingly severe. The shift towards a circular economy is viewed as one prominent way to overcome the challenges. A shift towards a circular economy would partly require new business models, commonly referred to as circular business models. In order to enhance the development of circular business models, there is a need to understand how companies with circular business models can create customer value. Hence, a company need to create value for their customers in order to capture economic value within the organisation. Therefore this study is looking into how existing companies, and in particular those with service oriented circular business models, are creating customer value. The term service oriented circular business model is introduced in this study and can be seen as a sub-set of circular business models; with the common characteristic of providing access or usage of products rather than ownership. The study uses the value proposition canvas as a tool, showing how the three companies, Vigga, Enso and Repack, are creating customer value by enabling their customers to: save money, save time, use high quality products, use more convenient solutions, reduce their environmental impact and by creating an “early-adapter-feeling”. (Less)
Popular Abstract (Swedish)
Customer value – key to a market driven transition towards a circular economy?

“Most of the materials we use, we lose and the things we make are consistently under-utilised” - Ellen MacArthur Foundation, describing today’s hugely wasteful societies. In contrast, societies applying the alternative concept of a circular economy could eliminate waste and pollution, keep products in use and regenerate natural resources. But how do we get there?

A transition towards a circular economy needs to be empowered by a number of different forces - e.g. education, policy and market mechanisms. In order to make the market force stronger and to increase the chance for *circular businesses to stay on the market, their offers need to be more... (More)
Customer value – key to a market driven transition towards a circular economy?

“Most of the materials we use, we lose and the things we make are consistently under-utilised” - Ellen MacArthur Foundation, describing today’s hugely wasteful societies. In contrast, societies applying the alternative concept of a circular economy could eliminate waste and pollution, keep products in use and regenerate natural resources. But how do we get there?

A transition towards a circular economy needs to be empowered by a number of different forces - e.g. education, policy and market mechanisms. In order to make the market force stronger and to increase the chance for *circular businesses to stay on the market, their offers need to be more attractive than competing business-as-usual options. Therefore, it is crucial to understand how circular businesses can attract customers - i.e. how circular businesses create customer value.

There are a number of different types of circular businesses - a subset of them provide access or usage of products instead of ownership since it facilitates design for product maintenance, redistribution, reuse, refurbishing, remanufacturing and recycling. Three examples of such businesses, which all operate in different industries, are:

1. Vigga - provides access to reusable, refurbishable and recyclable children’s clothes
2. Enso Tires - provides access to remanufacturable and recyclable car tires
3. Repack - provides usage of reusable and recyclable packaging

Certain patterns can be identified when you look at how the three circular businesses create customer value - they provide offers, which in comparison to business-as-usual options, allow their customers to: save money, save time, use more convenient solutions, use higher quality products, and reduce their environmental impact. Two examples:

• Buying access to remanufactured tires allows customers to save money since the same raw material is used in multiple tires which enables reductions in material cost and therefore also in market price.
• A company providing access to clothes has an economic incentive to designed garments that last and have higher quality. This since, the provider’s revenue grows as the number of use cycles increase.

A deeper understanding of how circular businesses can attract customers would enable more circular business initiatives and accelerate the shift towards a circular economy. That’s why customer value has a central role in the market driven transition towards a circular economy.

*circular businesses are business with circular business models which is defined in the thesis (Less)
Please use this url to cite or link to this publication:
author
Albihn, Isak
supervisor
organization
course
MVEM30 20161
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Customer value, Value proposition canvas, Fit, Service oriented circular business model, Circular economy
language
English
id
8926698
date added to LUP
2017-10-09 11:55:06
date last changed
2017-10-09 11:55:06
@misc{8926698,
  abstract     = {Resource related challenges are becoming increasingly severe. The shift towards a circular economy is viewed as one prominent way to overcome the challenges. A shift towards a circular economy would partly require new business models, commonly referred to as circular business models. In order to enhance the development of circular business models, there is a need to understand how companies with circular business models can create customer value. Hence, a company need to create value for their customers in order to capture economic value within the organisation. Therefore this study is looking into how existing companies, and in particular those with service oriented circular business models, are creating customer value. The term service oriented circular business model is introduced in this study and can be seen as a sub-set of circular business models; with the common characteristic of providing access or usage of products rather than ownership. The study uses the value proposition canvas as a tool, showing how the three companies, Vigga, Enso and Repack, are creating customer value by enabling their customers to: save money, save time, use high quality products, use more convenient solutions, reduce their environmental impact and by creating an “early-adapter-feeling”.},
  author       = {Albihn, Isak},
  keyword      = {Customer value,Value proposition canvas,Fit,Service oriented circular business model,Circular economy},
  language     = {eng},
  note         = {Student Paper},
  title        = {Creating Customer Value in a Circular Economy},
  year         = {2017},
}