Towards circular economy: analysis on how enterprises influence consumers through electronic marketing communications - NGOC VU HONG
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
FACULTY OF ECONOMICS AND ADMINISTRATION
Towards circular
economy: analysis on
how enterprises influence
consumers through
electronic marketing
communications
Master Thesis
NGOC VU HONG
Supervisor: doc. Ing. Radoslav Škapa, Ph.D.
Business Management
Brno 2021
TOWARDS CIRCULAR ECONOMY: ANALYSIS ON HOW ENTERPRISES INFLUENCE CONSUMERS
THROUGH ELECTRONIC MARKETING COMMUNICATIONS
Bibliographic record
Author: Ngoc Vu Hong
Faculty of Economics and Administration
Masaryk University
Department of Economics Department of Economics
Title of Thesis: Towards circular economy: analysis on how enterprises influence
consumers through electronic marketing communications
Degree Programme: Master in Business Management
Field of Study: Business Management
Supervisor: doc. Ing. Radoslav Škapa, Ph.D.
Year: 2021
Number of Pages: 90
Keywords: circular economy, electronic communications, packaging, con-
sumer factors, Dimensions of Behavior Change, Design with Intent,
Instagram, website
TOWARDS CIRCULAR ECONOMY: ANALYSIS ON HOW ENTERPRISES INFLUENCE CONSUMERS
THROUGH ELECTRONIC MARKETING COMMUNICATIONS
Abstract
Studies have shown that circular economy (CE) can primarily change the way we create
and consume things, calling for actions and innovations, especially from businesses –
which are the primary factor in designing circular products and shaping consumption hab-
its. Although CE is heatedly discussed at academic, governmental, and business levels, CE
is relatively new to consumers.
This paper aimed at answering the theme (what) and formats (how) CE packaging
SMEs use marketing communications to influence consumers, focusing on online commu-
nications on websites and Instagram. Content analysis was used to explore this topic. Six
case studies of SMEs who entered the CE field and gained a certain level of popularity,
recognition, and awards in developed were chosen. Ten consumer factors (the “what”) and
Dimensions of Behavior Change and Design with Intent (the “How) were used to compare
and generalize. The communications on websites and Instagram were mapped between
the consumer factors and the design dimensions, then analyzed using a qualitative and
partial quantitative approach.
The results shed light on which design dimensions each SME used to address each
consumer factor, which is meaningful in solving the hinders toward CE. Not all factors were
tackled, depending on business models and industries, and some dimensions were used
more than others. Storytelling and emotional engagement are two examples of tactics that
can be effective and persuasive in communicating CE than facts, yet some SMEs still heavily
employ the latter. Interestingly, B2B SMEs were as active on Instagram as B2C SMEs. In-
stagram can complement website communications, boost customer engagement, provide
new leads even for B2B SMEs. Finally, the research summarized the recommended e-mar-
keting communication strategy that can be applied with SMEs even when short on re-
sources. The findings would be helpful for enterprises who want to build an empire based
on CE principles and would like to have a baseline for their e-marketing strategy.
TOWARDS CIRCULAR ECONOMY: ANALYSIS ON HOW ENTERPRISES INFLUENCE CONSUMERS
THROUGH ELECTRONIC MARKETING COMMUNICATIONS
Declaration
I certify that I have written the Master’s Thesis Towards circular economy: analysis on how
enterprises influence consumers through electronic marketing communications by myself
under the supervision of doc. Ing. Radoslav Škapa, Ph.D. and I have listed all the literature
and other sources in accordance with legal regulations, Masaryk University’s internal reg-
ulations, and the internal procedural deeds of Masaryk University and the Faculty of Eco-
nomics and Administration.
Brno, May 2021 .......................................
Ngoc Vu Hong
TOWARDS CIRCULAR ECONOMY: ANALYSIS ON HOW ENTERPRISES INFLUENCE CONSUMERS
THROUGH ELECTRONIC MARKETING COMMUNICATIONS
Acknowledgment
I would like to express my immense gratitude to doc. Ing. Radoslav Škapa, Ph.D. for his
continuous guidance and patience to lead me through the process of thesis writing. His
deep knowledge in the field, valuable advice, and feedback helped me navigate this chal-
lenging yet exciting journey.
My thanks also go out to Faculty of Economics and Administration to make this pro-
gram possible, for me to get access to knowledge and good friends that will stay with me
for life.
Finally, I extended my deepest thanks to my husband and beloved families, who en-
couraged and unconditionally supported me throughout this journey and in life.
Ngoc Vu Hong
TABLE OF CONTENT
Table of Content
List of Figures 11
List of Tables 12
List of Terms and Abbreviations 13
Introduction 15
1 Literature review 17
1.1 Circular economy.................................................................................................................... 17
1.2 Companies’ electronic marketing communications about CE .......................... 25
1.3 Customer perception on CE marketing communications ................................... 31
1.4 Dimensions of Behavior Change, Design with Intent, and Persuasive
Communications ..................................................................................................................... 34
2 Methodology 39
3 Results 47
3.1 Consumer factors addressed in SMEs’ communications ..................................... 47
3.2 DBC dimensions and DwI patterns applied ............................................................... 49
3.3 Instagram tactics..................................................................................................................... 58
4 Discussion 64
Limitations and Future Research Direction 66
Conclusions 67
References 69
Appendix A: Code Book A 79
Appendix B: Code Book B - Instagram Coding 84
Appendix C: Instagram Word Cloud Data 86
Appendix D: Codes mapping 87
9LIST OF FIGURES
List of Figures
Figure 1. World population by region, 1950 to 2100 ................................................................................................ 15
Figure 2. Google trend on the search of "Circular Economy" worldwide in 10 years 2010 – 2020...................... 17
Figure 3. The 15 business sustainability movements................................................................................................. 18
Figure 4. List of CE benefits .......................................................................................................................................... 21
Figure 5. Focus of funding, by activities (in per cent)................................................................................................ 22
Figure 6. Typical communication tools (media) ........................................................................................................ 26
Figure 7. Eight lenses of Design with Intent toolkit................................................................................................... 36
Figure 8. A flowchart for content analysis research ................................................................................................. 40
Figure 9. Posts Count..................................................................................................................................................... 46
Figure 10. Consumer factors addressed in each platform ........................................................................................ 49
Figure 11. Frequency of DBC and DwI elements ........................................................................................................ 50
Figure 12. How Environmental Impact was addressed............................................................................................. 51
Figure 13. Communication frequency about Circular Economy .............................................................................. 52
Figure 14. How Quality was addressed ....................................................................................................................... 53
Figure 15. BH and LimeLoop Instagram account. Accessed on April 27, 2021 ...................................................... 54
Figure 16. How Branding was addressed ................................................................................................................... 55
Figure 17. Number of Instagram followers and followers per posts across the case studies................................ 59
Figure 18. Image theme................................................................................................................................................ 60
Figure 19. Word clouds of Instagram caption of each case study............................................................................ 61
Figure 20. Average caption length of each brand...................................................................................................... 61
Figure 21. Instagram communication mapping ........................................................................................................ 63
11LIST OF TABLES
List of Tables
Table 1. Four essential blocks of a CE ......................................................................................................................... 19
Table 2. Similarities and differences in CE approach of International context versus EU context ...................... 23
Table 3. Advantages and Disadvantages of Formal and Informal Communications............................................. 27
Table 4. Differences between B2B and B2C markets ................................................................................................. 28
Table 5. Consumers grouped according to their 'Circular Persona'........................................................................ 32
Table 6. The 9 Dimensions of Behavior Change ......................................................................................................... 35
Table 7. 25 Design with Intent patterns that can be applied in online communication research........................ 36
Table 8. Message persuasiveness in different aspects of website communications ............................................... 37
Table 9. Case studies profile summary........................................................................................................................ 43
Table 10. Variables list.................................................................................................................................................. 44
Table 11. Coding summary........................................................................................................................................... 45
Table 12. Heatmap about consumer factors .............................................................................................................. 47
Table 13. Proposal of the communication approach that can resolve consumers’ concerns in CE...................... 65
12LIST OF TERMS AND ABBREVIATIONS
List of Terms and Abbreviations
B2B Business-to-Business
B2B2C Business-to-Business-to-Consumer
B2C Business-to-Consumer
BRICS Brazil, Russia, India, China, South Africa
CAQDAS Computer-Aided Qualitative Data Analysis Software
CE Circular Economy
CSR Corporate Social Responsibility
CVP Customer Value Proposition
DBC Dimensions of Behavior Change
DfSB Design for Sustainable Behavior
FMCG Fast-Moving Consumer Goods
NGO Non-Governmental Organization
PR Public Relation
SME Small and Medium Enterprise
WOM Word-Of-Mouth
13Introduction
It is estimated that there would be almost 9 billion in 2030 (United Nations, 2019), in
which three billion new middle-class consumers are expected to join the market (Ellen
MacArthur Foundation, 2013). By 2050, there would be 10 billion people, most of them
will locate in Africa and Asia (see Figure 1). The linear economy, so-called make-take-
waste model, is thought to consume a significant number of resources faster than resource
recovery. This approach is becoming obsolete and creating increasing pressure on availa-
ble resources on earth, calling for changes and actions at macro and micro levels.
Figure 1. World population by region, 1950 to 2100
Source: Roser (2013)
In such a setting, circular economy (CE) concept emerged and gained popularity in the last
decade, advocating the transformation of how things are made. It is based on three princi-
ples, asking businesses and consumers to rethink their participation in the economy: ‘de-
signing out waste and pollution, keeping products and materials in use, and regenerating
natural systems’ (Ellen MacArthur Foundation, 2017). There has been a growing body of
research in this area, focusing on different aspects such as design, consumption, and
15communication. Camacho-Otero et al. (2018) observed that the weight of research leans
more towards specific solutions such as remanufactured products or sharing economy,
while less attention was paid to CE consumption. Most research focused on drivers of con-
sumption in CE within the CE consumption topic rather than consumer perception. Mean-
while, the consumer is one of the core drivers for businesses to transition to CE (Gue et al.,
2020; Bartels et al., 2020), implying that raising awareness of CE, especially the positive
and sustainable values that CE enterprises are pursuing, may be critical toward a more
resource resilient future. Therefore, it is suggested that marketing communication plays a
crucial role because it helps provide ‘information about the business and the products to
chosen customer groups’ (Varey, 2002).
In terms of marketing communications methods, it is expected that companies choose
CSR reports to communicate about CE. However, this is not always possible because CSR
report requires a significant amount of resource and done mainly by large enterprises
(CSE, 2015). Meanwhile, in the last decade, social media has become popular and dominant
in digital marketing because of their advantages in terms of prices and access to consumers
compared to traditional methods. It enables SMEs to access adequate and affordable op-
portunities to reach out and engage with customers. Although social media was popular in
B2C enterprises, there has been a rise in the use of social media of B2B enterprises
(Content Marketing Institute and MarketingProfs, 2020). The research on online market-
ing communications is still in its infancy, especially for social media platform which re-
cently gained popularity such as Instagram.
Therefore, this study aims to understand to what extent, and how, CE SMEs communi-
cate online to influence consumers. It applied content analysis technique, using Consumers
Factors mapping with Dimensions of Behavior Change and Design with Intent to contrast
and compare six case studies in developed countries operating with CE principles. The
countries where these case studies are based are also considered pioneers in CE promo-
tion. Findings from this research would help contribute to CE research in general and mar-
keting communication in particular. The framework would also be beneficial for SMEs
from other countries, especially those in developing countries where population growth
would be the fastest in upcoming years (Roser, 2013), to adapt to their industries and cul-
tures.
The thesis was divided into five main sessions. The first one – Literature review fo-
cused on existing theories related to CE concept, marketing communications about CE,
consumer perception on such communications, and design dimensions that could be used
to deliver content analysis. This session was followed by Methodology, where the methods
and research approach were explained. Results and Discussion provided further explana-
tion of the findings and application. Finally, Limitation and Future Research Direction, Con-
clusion summarized the significant discoveries and recommendations on future research.
161 Literature review
1.1 Circular economy
1.1.1 Definition and concept
Circular economy (CE) is a sustainable development concept that has gained growing pop-
ularity in the last decade, especially in recent five years, from only 679 articles in 2010 to
5,626 in the first 10 months of 2020 on Science Direct (Science Direct, 2020). The same
movement is observed in the Google trend, where the interest level was insignificant in
2010 before gaining strong attention since 2016 (see Figure 2). Similar increasing aware-
ness is seen in different areas, from policy making, consulting, academics to business
(Reike et al., 2018).
100
90
80
70
60
50
40
30
20
10
0
2010-05
2011-05
2012-01
2012-09
2013-09
2014-05
2015-05
2016-01
2016-09
2017-09
2018-05
2019-01
2020-01
2020-09
2010-01
2010-09
2011-01
2011-09
2012-05
2013-01
2013-05
2014-01
2014-09
2015-01
2015-09
2016-05
2017-01
2017-05
2018-01
2018-09
2019-05
2019-09
2020-05
Interest level
Figure 2. Google trend on the search of "Circular Economy" worldwide in 10 years 2010 – 2020
Source: Google (2020)
This exponential growth implies increased awareness of all economic actors regarding en-
vironmental problems and viable long-term solutions. It is essential to note that CE is not
the first, probably not the last sustainability concept. By comparing 15 ideas of sustaina-
bility movements (see Figure 3), Tóth (2019) highlighted that these concepts were created
interdependently, evolving from one to another; hence CE is no exception. Sharing the
17same idea, Weetman (2017) presented that CE became from other sustainable concepts,
including Performance economy, Blue economy, Nature capitalism, and Industrial ecology,
and Cradle-to-Cradle. These concepts also have overlapped principles, in which the most
commons are nature conservation, increased productivity of natural resources, system-
thinking approach, social ecology, and fairness.
Recycling
Waste Minimization
Cleaner Production (CP)
Zero Emission
Zero Growth, Decroissanse
Green Economy
Triple-bottom-lin (3P)
Life Cycle Assessment (LCA)
Sustainable Consumption
Corporate Social Responsibility (CSR)
Blue Economy
Creating Shared Value (CSV)
Industrial Ecology
Sharing Economy
Circular Economy
Figure 3. The 15 business sustainability movements
Source: Tóth (2019)
There have been several CE definitions in various expressions and word choices
(Kirchherr et al., 2017). Ellen MacArthur Foundation – a charity working with govern-
ments and businesses to accelerate the transition to CE, is currently the most active non-
profit organization in recognizing, systemizing, and contributing to CE implementation. Its
approach is thought to be easy to understand and applied in real life and has been referred
18to by reputable scholars and consultants (Kirchherr et al., 2017; McKinsey & Company,
2016; Schröder et al., 2020). In the first publication on CE, Ellen MacArthur Foundation
(2013) defined CE as follows:
CE refers to an industrial economy that is restorative by intention; aims
to rely on renewable energy; minimizes, tracks, and eliminates the use of
toxic chemicals; and eradicates waste through careful design.
In the same guideline, they also presented five principles for enterprises, later shortened
to three as stated on their website, and interpreted by Webster (2017):
1. “Design out waste and pollution”: if the biological and technical components of a
product are designed with the purpose to fit into the biological or technical materi-
als systems, waste will not exist. Biological nutrients should be designed to be com-
posted. In contrast, technical components should be designed to be fed back to the
production cycle with the highest quality retention using minimal energy.
2. “Keep products and materials in use”: products and materials must cycle in the
economy. The design of products for reuse, repair, and remanufacturing is one
thing; when it comes to products such as food or packaging, “we should be able to
get the materials back so that they don’t end up in the landfill.”
3. “Regenerate natural systems”: in nature, everything is food for something else.
Therefore, there is no concept of waste. We can improve and strengthen our natural
resources by returning valuable nutrients to the soils and ecosystem as a whole.
It should be noted that CE principles and approaches vary based on the organization. For
example, McKinsey (2016) used similar principles with different wording, while European
Commission introduced nine sustainability principles in its 2020 Circular Economy Action
Plan (European Commission, 2020).
Besides, Ellen MacArthur Foundation also identified “four essential building blocks” of CE
(see Table 1), which play a crucial role in the transition towards CE amongst businesses
(Ellen MacArthur Foundation, 2020). Each company may build its CE using one or all four
blocks.
Table 1. Four essential blocks of a CE
Circular - Circular design that facilitates product reuse, recycling, and cas-
economy de- cading
sign - Advanced material selection, standardized components, de-
signed-to-last products, design for easy end-of-life sorting, sep-
aration or reuse, possible use of by-products and wastes
New busi- - Innovative business models that either replace existing ones or
ness models seize new opportunities
19- Volume leaders with significant market share and capabilities of
linear value chain can play a crucial role as an inspiring partner
for other players
Reverse cy- - New skills are needed for cascades and final return of materials
cles to the soil
- Involves: delivery chain logistics, sorting, warehousing, risk
management, power generation, better-quality collection and
treatment systems
- Aim: decrease leakage of materials out of the system
Enablers and - Market mechanisms, supported by policymakers, educational
favorable institutions, and popular opinion leaders
system con- - Includes:
ditions o Collaboration
o Rethinking incentives
o Providing a suitable set of international environmental
rules
o Leading by example and driving up scale fast
o Access to financing
Source: Ellen MacArthur Foundation (2020)
The distinguishing factor is probably the “system-thinking” and “biological and technical
elements in product design” initiated in the Cradle-to-Cradle school of thought, which was
developed by McDonough & Braungart (2002). This concept also set foot for CE, to contrast
the linear economy model. The linear economy, the so-called make-take-waste model, takes
significant amounts of readily accessible energy and resources, exposing itself as unsuita-
ble in the current context where resources are scarce. At the same time, there will be three
billion new middle-class consumers expected to join the market by 2030 (Ellen MacArthur
Foundation, 2013). Previous environmental movements such as R imperatives (Reduce,
Reuse, Recycle, Recover, etc.) attempted to solve linear economy problems. However, Ellen
MacArthur Foundation (2013) pointed out that reducing resources and fossil fuel con-
sumption per unit of production output only slows down the drainage of natural resources
without altering the finite nature of their stock. On the contrary, “a change of the entire
operating system” may solve the root cause.
In this relation, Rs movement can be considered as the “how-to” for CE (Kirchherr et al.,
2017), while CE takes one step further, down to the design stage – where 80% of the envi-
ronmental impact takes place (European Commission, 2014). The design stage needs to
consider the whole product life cycle and ensure that the materials stay in the loop, em-
phasizing genuine circular innovations, which mean moving us away from the waste-based
model (Lemille, 2019). By taking into account the product cycle in its connection with
20people, planet, and profit, enterprises can make better decisions with less cost and less
harm to the earth. In other words, it requires systematic changes at corporate level, not
ad-hoc marketing campaigns when public attention is needed. In this context, CE seems to
be the perfect replacement for the current defected linear economy model. CE benefits are
captured by different organizations (see Figure 4), including economic, environmental,
and social positive impacts. As a result, it is a long journey that may take several years to
achieve. If implemented correctly and in uniform, CE can be promising for the future of
resource sustainability.
3% Europe's resource
increase productivity by 2030
€600
Cost annually billion
saved
€1.8 More in other
trillion economic benefits
Material cost saving $700
in FMCG industry million
48% CO2 emission by
reduced 2030
Health care cost $500
related to food billion
reduced
€3,000 Disposable yearly
increase income for EU
householdes
For businesses and CNY 70
households in China trillion
by 2040 saved
47% Traffic congestion in
reduced China's cities
Figure 4. List of CE benefits
Source: McKinsey & Company (2017), Ellen MacArthur Foundation (2017), European Commission (2020),
People's Republic of China (2008)
211.1.2 CE legal framework among countries
The application of CE varies geographically. In EU, due to clear CE objectives, most of EU
countries have a certain type of funding in place, such as ETA program in Czech Republic,
“Fit4Circularity” program in Luxemburg or “FALCON” program in Poland, Circular Econ-
omy Investment Fund in Scotland/UK (Bahn-Walkowiak et al., 2019). Among program ac-
tivities, Technology and process optimization (e.g., D&I projects, transfers), Science and
basic research, and Business models and start-up support (e.g., coaching, consultancy) are
the most popular funding activities (see Figure 5).
70
62
60
50
40
30
20 17 17
9
10 5
4 3
0
Technology Science and Business Policy support Social and Education, Coordination
and process basic research model, start-up behavior training,
optimization support qualification
Percent of program
Figure 5. Focus of funding, by activities (in per cent)
Source: Bahn-Walkowiak et al. (2019)
Worldwide, there have been several funding schemes on CE, in some cases with different
wording, such as Green growth, Green economy, or Resource efficiency. There are some
similarities and differences among EU and non-EU countries (see Table 2). In the same EU-
funded CICERONE program as Bahn-Walkowiak et al. (2019), Renault et al. (2019) found
out that the level of alignment with European CE is highest in Japan, Taiwan, and China –
all Asian countries. Developing countries have the lowest level of alignment. In contrast,
most countries in the research (including industrial, BRICS, and developing countries)
share a large spectrum of similarity in CE definition with EU. Moreover, BRICS and
22industrial countries tend to focus on technology development, while developing countries
concentrate on water and waste management.
Table 2. Similarities and differences in CE approach of International context versus EU context
Similarities Differences
- National funding programmes” are
predominating
- “Waste” is the most common
- The budget per project is lower
resource addressed
- The project duration is longer
- The “End-of-life phase” is the most
- “Water” and “chemicals” are also
common one
addressed very often
- The major type of funding is
- Other product life cycle phases are
“Technology and process
well addressed: “Manufacture” and
optimisation”
“Second life”
- The most frequently beneficiary
- “Non-profit organisations” are
are ”Companies” from
much more often beneficiaries
“Manufacturing”, “Water” and
- The most common Technology
“Waste” sectors
Readiness Level is much higher:
- The Technology Readiness Levels
Scaling (TRL 9)
“Fields pilots” (TRL 5-6) and
- “Societal” targets are more
“Market introduction” (TRL 7-8)
common.
are commonly addressed
- “Ecologic” and “Economic” targets
are very common
Source: Renault et al. (2019)
1.1.3 Critics
Despite increasing interest and appraisal by academics and practitioners, there have been
controversies around the CE concept and implementation. It is essential to point out the
contradicts featuring this phenomenal idea so that it can be understood thoroughly.
First, CE borrows the idea of zero-waste like how the natural world works, as opposed
to the linear economy. This school of thought implies that Earth is a closed system, like an
air-tight spaceship, as illustrated by Boulding (1966). However, it is not actually how na-
ture works. The Earth is an open system, where waste happens at all levels of life (Reike et
al., 2018; Skene, 2018). In other words, nature is a waste-generating object, and cycling
and re-energizing should happen within natural limits (Skene, 2018). Furthermore, CE
promotes recycling, always requires energy, and will always create waste and side-
23products according to thermodynamics law (Skene, 2018; Korhonen et al., 2018). There-
fore, zero-waste is merely an illusion that companies use to persuade their environment-
wary customers.
Secondly, CE primarily concentrates on economic benefits (Ellen MacArthur
Foundation, 2020; Kirchherr et al., 2017), which encourages that waste can generate busi-
ness opportunities and increased human consumptions will translate into more jobs. How-
ever, there is a large part of the social aspect ignored or barely mentioned: inequality and
poverty, human rights, the future generation, and international justice, especially in devel-
oping countries (Schröder et al., 2020; Kirchherr et al., 2017). McCarthy et al. (2018)
pointed out that one of the benefits of CE is to increase domestic secondary material pro-
duction, which can decrease imports and dependence on virgin material resources. This
could imply that developing countries may worse-off in CE transition, as their industries
and workers depend mainly on exports of primary resources (Skene, 2018; Schröder et al.,
2020). Furthermore, tightening environmental policies in Europe and developed countries
can cause an urge to transfer obsolete technologies to developing countries, where the le-
gal framework concerning waste management is not as strict. Some may even try to “ex-
port recyclables” from developed countries to developing countries in the name of CE. Con-
sequently, environmental quality and biosystems in low- and middle-income countries will
be severely affected, which affects the biosphere in high-income countries because, after
all, Earth is a complex system where elements intensively interact with each other. Never-
theless, if developing countries can grasp this opportunity to transform their resource ex-
ploitation approach, they may significantly be benefited from CE (McKinsey & Company,
2016).
Thirdly, CE is still a concept with a considerable range of alternations (Kirchherr et
al., 2017; McCarthy et al., 2018; Sousa-Zomer et al., 2018). BS 8001:2017 by British Stand-
ards Institution is the only standard published, while a technical committee formed by ISO
in 2019 to compose a standard on CE called ISO/TC 323. This lack of standardization can
be a crack for businesses to lend CE in their marketing campaign and distort the message
in a way that benefits their public image without necessarily following CE concept for the
good of society and the environment, so-called green washing. Recently in its 2020-pub-
lished Circular Economy Action Plan, European Commission likewise mentioned to “con-
sider further strengthening consumer protection against green washing and premature
obsolescence, setting minimum requirements for sustainability labels/logos and infor-
mation tools” (European Commission, 2020). This is a good sign in terms of enablers for
CE playground regulation and consumer protection. However, the effectiveness of actual
implementations still needs further assessment.
Fourthly, practitioners tend to ignore “reduce” in their CE definitions, which implying
“curbing consumption and economic growth,” as CE is considered a “young field,” with
hundreds of definitions (Kirchherr et al., 2017). For example, when companies get
24recognized with “circular,” consumers tend to shop or upgrade their products more guilt-
free, not necessarily because of malfunction, thus paradoxically, more waste is generated.
Besides, there has been evidence that the term “sustainability” was twisted in meaning by
leading-brand companies as “part of an integral strategic effort that goes beyond mere
greenwashing and reputation-saving initiatives” (Valenzuela & Böhm, 2017). Giant firms
like Apple, Samsung were fined by European countries concerning software updates that
said to “slow down older models of their phones” (Cissé et al., 2020), which in a result
secretly forced their users to eliminate old phones. A similar complaint was directed to T-
Mobile Austria when they used CE concept in a marketing campaign that misled consumers
and increased the replacement rate of mobile phones (Wieser, 2016). Therefore, it is cru-
cial to engage the public in educational and awareness programs about responsible pur-
chase and regulate the frequency rate of new products release, especially for mobile
phones and electronic devices, to reduce replacement speed (European Commission,
2020). In the next section, the author will further discuss how companies deliver their CE
values through electronic marketing communications.
1.2 Companies’ electronic marketing communications about CE
1.2.1 Marketing communications: Role and Tools
Marketing communications in sustainability can be categorized into formal and informal
groups (Reilly & Larya, 2018). The formal one includes CSR reports and related documents,
while the informal one uses social media such as Twitter, Instagram, Facebook, and blogs
that allow interaction with consumers. In marketing communications methodology, re-
ports are thought to belong to public relations (PR) category, while social media can be
grouped as viral marketing (see Figure 6).
Hollensen (2008) argued that PR is “the marketing communications function that car-
ries out programs designed to earn public understanding and acceptance.” Targeted PR
groups include an extensive array of audiences, from employees, customers to sharehold-
ers, distribution channel members. The more international the company is, the more com-
plicated the PR activity. PR activity interact with smaller group of “media influencers” such
as editors, journalists, and broadcasters in a more market-oriented sense. Managing rela-
tionships with these key stakeholders are crucial to PR success and corporate image en-
hancement. In such light, CSR reports serve the same purpose – to enhance corporate rep-
utation on environmental responsibility. Formal communications such as CSR reports and
press releases are crucial communication tools being increasingly used by public compa-
nies to reveal their non-financial impacts and performance (CSE, 2015). Hickman (2020,
p. 208) observed that there are specific differences between publicly traded firms and
25privately-held firms in terms of motivations. While publicly-traded enterprises tend to be
motivated by benefits and duty from stockholders and impact on share price, private firms
tend to be less motivated and spend minimum effort on publishing CSR reports because
the CSR activities are reported in other channels already. However, both need to report
CSR activities to notify non-investors such as potential employees, customers, community
members, and NGOs.
Figure 6. Typical communication tools (media)
Source: Hollensen (2008)
On the other hand, informal channels such as social networking sites are regarded as elec-
tronic word-of-mouth (e-WOM) advertising methods. Major social media at the moment
that are being widely used in digital marketing are Facebook, Twitter, LinkedIn, and Insta-
gram. Each platform serves different audiences and requires a different strategy. While
Facebook helps boost customer engagement and allows businesses to share different types
of content, Twitter will enable posts with a maximum of 280 characters per post which is
a great way to spread the news and build relationship. Suppose businesses are looking for
a potential partner. In that case, LinkedIn is a promising sales channel. Otherwise, if they
target a demographic under 35, Instagram is a perfect fit with 63% of users between 18-
34 years d, splitting evenly between females and males (Statista, 2021). WOM is said to be
not only low-cost but also very effective (Hollensen, 2008). With increasing Internet
26coverage worldwide, e-WOM is a powerful tool in addition to offline WOM, facilitating agile
reaction to product and customer issues (Bulearca & Bulearca, 2010).
Furthermore, they could enhance the interaction between consumers and companies. Ac-
cording to Ros-Diego & Castelló-Martínez (2012), such informal communication instru-
ments are becoming crucial for brands because of quick access to target audiences, novel
possibility to improve brand recognition with reduced costs, ability to segment the audi-
ences and deploy real-time measurements. Social media also help significantly in
networking. Bulearca & Bulearca (2010) found out from their interviews with
marketing/PR specialists that Twitter helps the firm widen their network, sometimes
“turn into new business or free help,” and create kudos for the companies. Despite common
belief, social media is not free of charge when being used as a marketing tool. Despite being
much cheaper compared to traditional marketing tools (Nobre & Silva, 2014), certain costs
are associating with social media marketing, including variable costs (e.g., pay-per-click,
cost-per-mille1 ) and fixed costs (social media or digital marketing specialist). However, the
level of spending is still affordable for SMEs compared to the traditional approach. The
pros and cons of formal and informal communications are summarized in Table 3.
Table 3. Advantages and Disadvantages of Formal and Informal Communications
Formal communication Informal communication
Advantages - Yearly communications, - Low cost
less effort to maintain - Highly interactive
- Complete control of how - Instant response to an
the corporates interpret event/crisis
their image - Networking
- Strengthen the firm’s - Rapid feedback loop
reputation
Disadvantages - One-way communica- - Long time to build rela-
tion, no interaction with tionship with consumers
the public - Negative counter impact
- Enormous human and fi- - Difficult to measure ROI
nancial resources to
cover and report CSR ac-
tivities
Source: Summarized by author
Besides the advantage of being fast and effective, social media or e-WOM can also “make
or break” a brand when negative e-WOM became mishandled and spread at alarming rates.
1 The rate one pays for one thousand ad views
27The social media specialist or employees who engage in social media activities need to be
highly skilled and trained to respond to questions and complaints from customers,
especially the negative ones, before they are seen by thousands of people (Rugova &
Prenaj, 2016). Another obstacle when onboarding social media as a marketing strategy is
Return on Investment (ROI). As social media is considered as “more people-oriented than
financial ones” or “relationship-marketing” (Bulearca & Bulearca, 2010), the outcome from
social media is regarded as intangible, hence hard to measure. As a result, management,
especially in SMEs, hesitates to engage social media in their strategy.
1.2.2 Marketing communications in different types of businesses
Whether a company operates in B2B or B2C also plays a crucial role in defining social me-
dia marketing strategy. It was observed by Hollensen (2008) and Reklaitis & Pileliene
(2019) that there is a different perception between B2B and B2C markets (see Table 4).
Some examples are as below:
- fewer and larger buyers, often geographically concentrated;
- a derived, fluctuating, and relatively inelastic demand;
- many participants in the buying process;
- professional buyers;
- a closer relationship;
- absence of intermediaries;
- technological links.
Table 4. Differences between B2B and B2C markets
Criterion B2C B2B
Target End User Enterprise
Market size Large Smaller
Sales volume Low High
Decision making Individually By committee
Risk Low High
Purchasing process Short Longer
Payment Often instant Instant payment may not be
required
Transaction Cash, card Requires more complex
system
Consumer decision Emotional Rational
Demand Based on wish Based on need
Usage of mass media Essential Avoidable
Source: Reklaitis & Pileliene (2019)
28While B2B and B2C businesses are linear, with the rapid development of e-commerce and
technology, the border between the two sales channels has blurred, resulting in the emer-
gence of a new framework: B2B2C businesses. The first B sells the product or service to
the second B to gain customers and the data that the first B can keep and use (Rampell,
2018). RePack in the case studies of this research are the two examples of B2B2C. They sell
service to apparel businesses but involve consumers as end-user of the service and require
them to participate in the loop. Another example is OpenTable for restaurant booking.
Eventually, consumers would realize that the first B is the product that they use.
In consumer markets, it is easier to switch between firms and products because the
number of enterprises offering the same products is usually high (Hollensen, 2008). Mean-
while, with B2B enterprises, the bond between buyers and sellers is stronger. The exit bar-
riers (i.e., finding different suppliers) are higher due to complicated processes and invest-
ment in commitments and relationships. The decision-making process involves various
departments in the companies, from procurement to finance, sometimes even the board of
directors, depending on the risk level and volume of the purchase (EDUCBA, 2020;
Reklaitis & Pileliene, 2019). Furthermore, unlike in B2C where looks and packaging play a
crucial role in buying decisions (emotional), B2B enterprises depend mainly on cost/ben-
efit analyses and partnership (rational). This fundamental difference results in different
communication strategies. In B2C sector, enterprises focus on triggering emotion from
consumers before making decision. Whereas in B2B, buying is a planned activity, hence
B2B sellers must showcase the advantages of products and its features, pricing, payment
terms, volume discounts, easiness of applying in their current manufacturing and opera-
tion process (Reklaitis & Pileliene, 2019).
Due to different market characteristics, the marketing approach is not similar either.
Social media is considered essential for B2C, while B2B enterprises are generally skeptical
about such a channel. However, recently, there has been a significant increase in the use of
social media in B2B enterprises as this is an excellent tool for building relationship and
brand equity. Content Marketing Institute & MarketingProfs (2020), in one survey with
B2B marketers, found out that nearly all B2B marketers (95%) incorporated LinkedIn for
organic content marketing, followed by Twitter and Facebook (86% and 83% respec-
tively). Interestingly, almost half of them (46%) experienced organic Instagram in the past
12 months. Their content shared on social media is indeed different from those B2C enter-
prises. Swani et al. (2014) examined Twitter communications of 500 Fortune companies,
finding out that B2B tweets have more percentage of functional appeals, while B2C tweets
involved a higher proportion of emotional appeals. This feature is in line with the charac-
teristics of the markets. However, the research also recommended B2B to integrate emo-
tional appeals into their tweets to gain sustainable, differential advantages over their com-
petitors. B2B tweets also have infrequency of hard sell (i.e., direct call to purchase) as
29opposed to B2C. Instead, their tweets are more about cues and links for information search,
and the frequent use of hashtags is popular. Social media platforms are more applicable
for building customer relationship than direct selling tools (Rapp et al., 2013). The use of
social media in B2B has been growing exponentially in recent years, yet the research on its
application is still in infancy.
1.2.3 Marketing communications on CE activities
Numerous research shed light on how businesses communicate their CE strategy; most of
them have focused on CSR reports (Stewart & Niero, 2018; Fortunati et al., 2020) and press
releases (Bocken et al., 2017). However, such communications are usually conducted by
large and multinational enterprises (CSE, 2015) because they have adequate financial and
human resources to support CSR activities. Meanwhile, SMEs, defined as enterprises em-
ploying less than 250 employees (OECD, 2017), is thought to have limited commitment to
corporate social responsibility communication tools. This is claimed because of lack of staff
with specific expertise, capital to fund such activities (Borga et al., 2006). Therefore, alt-
hough analyzing CE strategies through CSR reports is a practical approach, it tends to ig-
nore the majority of businesses (SMEs), which represent 90% of enterprises and half of
the employment worldwide (World Bank, 2020). On the other hand, there has been limited
research on how companies use e-WOM and online communications about CE, except
some research using design framework to interpret how four CE retailers persuade con-
sumers on websites (Chamberlin & Boks, 2018).
To overcome the barriers toward CE, those retailers tend to employ storytelling,
personalization, metaphor, playfulness, and lifetime guarantee to change consumers’
assumption of used clothing. This is in line with B2C communication strategies discovered
above that emphasize emotional rather than rational aspects. There is a gap to investigate
CE enterprises in other domains to understand how they enable consumers toward CE
practices through social networking platforms, especially in B2B context.
When investigating other sustainability concepts that gained popularity before CE,
such as CSR, it is noticeable that there has been some research on the influence of social
networks and blogs (Reilly & Larya, 2018; Rim & Song, 2013; Ros-Diego & Castelló-
Martínez, 2012; Colleoni, 2013). In a study on public expectation of CSR communication,
Kim & Ferguson (2014) advised that CSR practitioners should make sure their message:
1. Is low-key and less promotional, based on factual information
2. Contains transparent information without intentional omission of
any negative information
3. Shares specific CSR information such as CSR beneficiaries and pre-
vious outcomes of companies’ CSR
30Furthermore, they also suggest actively involving third-party endorsements such as coop-
eration with NGOs, non-profit organizations, and CSR participants instead of corporate
sources like CEOs or spokespersons. Such corporate personnel may increase public skep-
ticism. Besides, if adequately applying affective attributes (i.e., emotional tone) in online
communication tools such as blogs, firms can significantly affect the relationship
outcomes, especially on perceived trust and authenticity (Kim et al., 2015). Although the
above findings are applicable for CSR, it is helpful to apply for CE because both concepts
have many in common.
1.3 Customer perception on CE marketing communications
Unlike in linear economy, consumers play a crucial role in the transition to CE (Ellen
MacArthur Foundation, 2013). Gue et al. (2020), in a study with Fillipino industry
representatives, concluded that “consumer demand” was one of the core drivers for
businesses in the shift to CE. Consumers represent the micro-level (products, companies,
or consumers) of CE nature, as oppose to meso (industrial parks, ecosystem and value co-
creation) and macro (global trends, activities in city, region, nation, and beyond) levels.
Therefore, to successfully transform into CE, it is crucial to gain consensus from consum-
ers.
In a systematic literature review on the consumption in CE, Camacho-Otero et al.
(2018) noted that there was insufficient literature investigating the consumption in CE
compared to specific solutions such as sharing economy or remanufactured products.
Among these, most of the research focused on the drivers of consumption for circular so-
lutions (i.e., the barriers and motivators towards CE adoption). At the same time, there
were only a few on consumer perception (i.e., consumers’ attitude towards circular solu-
tions). The team also pointed out seven significant themes that substantially impact on
driving or hindering acceptance by consumers. For example, materialistic individuals who
prefer material possessions considered obstacles to access-based consumption or product
quality were the main reasons people decided to purchase refurbished products. In terms
of CE business models, as observed by Antikainen et al. (2015), consumers tend to be will-
ing to rent (instead of owning) if they are familiar with the business model or use it occa-
sionally (for instant car rental or hobby equipment). A car is also an expensive product;
hence it might increase the attraction to renting over owning.
Nevertheless, their research also revealed reluctance from consumers over renting a
washing machine. The friction is thought that the service is an example of a new type of
business model where washing machine is a utility that consumers do not usually lease.
However, consumers would consider trying the service because of environmental con-
cerns. It is also noted that CE businesses partially recognize the hindrances in their
31business model. Overall, consumer factors that might be addressed in CE online marketing
communication have been summarized by Chamberlin & Boks (2018) as below. It should
be noted that some elements may blend into each other. For instance, Convenience and
availability can be part of Quality/performance, or Environmental impact can be part of
Brand image. These factors also form the foundation of the investigation into six case
studies in this research.
1. Contamination/disgust/newness
2. Convenience/availability
3. Ownership
4. Cost/financial incentive/tangible value
5. Environmental impact
6. Brand image/design/intangible value
7. Quality/performance
8. Customer service/supportive relationships
9. Warranty
10. Peer testimonials/reviews
Sijtsema et al. (2020) suggested that making CE more concrete is valuable to increasing
consumer involvement, i.e., showing which CE practice cases that fit their everyday life
routines. Achieving this would make it easier to head toward circular behavior. In a survey
engaging 15,000 participants from developed countries regarding their attitude towards
circular economy across the fashion, food, and electronics industries, ING (2019) identified
three consumer groups: Non-engager, Circular Sympathizers, and Circular Champions
(comprising 42%, 30%, and 28% respectively) (see Table 5).
Table 5. Consumers grouped according to their 'Circular Persona'
Non-engager Circular Circular
Sympathizers Champions
Income Less wealthy Slightly wealthier N/A
39% have below-aver- 33% have above-aver-
age incomes age incomes
Age N/A Younger Slightly older
64% are under 44 40% are 55+ years-old
years-old
Gender N/A More male More female
52% males vs. 48% fe- 56% female vs 44%
male male
Nationality Multi-regional More Asian More European
Over-represented in Ja- Over-represented in Over-represented in It-
pan, US, Australia India, China, and Singa- aly, France, and the UK
pore
32Attitude toward Unempowered Accept responsibility Take ownership
sustainability Only 10% think their 27% think they can 34% think they can
actions could have a have a significant im- have a significant posi-
significant positive im- pact in addressing en- tive impact in address-
pact on the environ- vironmental challenges ing environmental chal-
ment lenges
Dwelling Rural/Suburban More urban N/A
Source: ING (2019)
Non-engager accounts for the majority of respondents. They leave out the sustainability
factor when making buying decisions. As a result, they are not willing to pay a higher price
and skeptical about individual responsibility. On the other hand, Circular advocates em-
phasized the importance of circular practice adoption by the companies they buy from,
sometimes even more than price. They are willing to pay more to support change. Circular
Sympathizers claimed that they would not recycle and repair products if it requires more
effort from them. In contrast, Circular Champions are “willing to go extra mile for sustain-
ability” even if it means they will need to spend more time and effort. Hence they are the
most open to circular business models.
Overall, companies that overlook the sustainability demands face a considerable
threat to profitability. More than one-third of consumers claimed that they “have actively
stopped buying a company’s food or drink products after discovering that the company is
not environmentally responsible.” The proportion is remarkably higher in young people
(18-34 years old). Another quantitative research (Borrello et al., 2020) also found out that
many respondents would be willing to participate in innovative circular food provisioning
mechanisms. These findings imply that consumers are keen to participate in CE, given the
convenience and social pressure are the most influential factors toward purchasing/par-
ticipating decisions of the respondents.
As for B2B businesses, the challenges lie in demand for strategic alliances and
communications (Singer, 2017). When a CE initiative fails, the main reason is often the
broken communications that create misalignment among stakeholders about the shared
risks and values of the initiatives. Customer education and marketing campaigns play a
crucial role in promoting CE initiatives because of their infancy. The absence of third-party
indicators and transparency cause difficulty for the companies to distinguish themselves
from “greenwashing” cases. In terms of customer education, Muranko et al. (2019) found
out that using persuasive communications can help change the attitude of B2B customers
in purchasing remanufactured refrigerated display cabinets. By applying visual persuasion
using graphics like illustrations and before-after remanufactured photos, the researchers
could persuade most participants to buy refurbished cabinets. As a result, effective
marketing campaigns can help level the gap between CE theory and practices.
331.4 Dimensions of Behavior Change, Design with Intent, and
Persuasive Communications
When it comes to behavior change, CE behavior was made up of multiple dimensions, from
buying, using, to disposal, with great awareness and involvement to avoid waste. In other
words, when a consumer visits CE enterprise’s website, they may not only see during the
‘purchase’ stage but also at the ‘use’ and ‘disposal’ stage. Designing CE products or services
considers this factor in winning customers, and more importantly, educate and change
their behavior to the desired one.
To fulfill the above challenges and direct consumers to sustainable behavior, the has
been different frameworks in the field of Design for Sustainable Behavior (DfSB). Daae &
Boks (2017) explained that DfSB ‘aims to investigate, at various levels, how to influence
the sustainability impact of consumers’ activities’. There have been different frameworks
target at assisting designers in seeking for solutions towards sustainable behavior in this
area. The very first theory developed was from Jelsma (1997), proposing a script of
direction, force (how difficult), scale (which part of the interaction), and
distribution/control dimensions. Lilley et al. (2005) expanded this theory and introduced
Behavior Steering and Ecofeedback. The latter refers to whether the users are in complete
control (e.g., dual flush button on a toilet), or they are forced to behave in the desired way
because of intelligent products or systems (e.g., hotel card holder which ‘force’ users to
turn off the electricity after going out). Bhamra et al. (2011) elaborated a framework
Design Intervention using Eco-Information, Eco-Choice, Eco-feedback, Eco-spur, Eco-
technical intervention, and Clever design. Later in 2017, Daae & Boks identified 9
Dimensions of Behavior Change (see Table 6), which indicate different types of behavioral
influencers. This framework was built from an empirical study involving interviews and
creative workshops with professional designers. This method allowed them to investigate
the most relevant dimensions in design through a practical lens. Apart from dimensions
found from other studies such as Control, Obtrusiveness, Empathy, and Direction, they also
discovered five dimension categories new to DfSB arena: Encouragement, Meaning,
Importance, Timing, and Exposure. Therefore, this framework can provide a multi-
dimensional overview of DfSB. In online communications, some dimensions might be more
applicable than others. For example, it might be easier to portray empathy or meaning,
while it is relatively challenging to control user/consumer behavior through websites only
(Chamberlin & Boks, 2018).
Dimensions Behavior Change (DBC) has been used in the design research area to explore
how to mitigate the environmental impact of consumers’ activities. DBC, unlike the binary
frameworks traditional green marketing, can offer a broader set of dimensions.
34You can also read
