Determinants of consumer demand for circular economy products. A case for reuse and remanufacturing for sustainable development

Abstract

We investigate determinants of consumer demand for circular (reused and remanufactured) products. Based on exploratory choice‐based conjoint experiments with a sample of 800 adults in the United Kingdom, we examine two types of premium segment electronic appliances: a mobile phone and a robot vacuum cleaner. We find that consumers prefer partly circulated products over fully or not at all circulated products and that circular products can likely successfully enter the existing market at the retail price of a new product. Interestingly, circular products compete for market share primarily with new products, leaving the market share of second‐hand options less affected. The results show a promising path for firms considering a transition to circular business models.

Consumer Demand for Circular Products: Identifying Customer Segments in the Circular Economy

“…Lighthouse Studio, a commercial software developed by Sawtooth Software, was used to design, test, host and statistically analyze the data. A detailed overview of the method, experimental design and the underlying multinomial logit model can be found in [43]. Additionally, the authors have published detailed results related to respondents' willingness to pay for products at different levels of circularity [44], which is conceptually and methodological distinct from the customer segmentation reported below.…”

Reviewing the applications of artificial intelligence in sustainable supply chains: Exploring research propositions for future directions

“…Remanufacturing is characterized as an industrial process in which used or worn-out products are remanufactured or restored to useful life (Östlin et al, 2008). Hunka et al (2021) P27. There is a need to compare remanufacturing strategies using AI techniques of different firms and different countries to identify their strengths and barriers.…”

“…Remanufacturing is characterized as an industrial process in which used or worn‐out products are remanufactured or restored to useful life (Östlin et al, 2008). Hunka et al (2021) highlighted the benefits of remanufacturing products such as ethical responsibility, maximizing profit, increased market share, legislation compliance and brand protection. Zhou et al (2021) developed a game‐theoretical model to investigate the direct effect of consumer education implications on willingness to pay for remanufactured products.…”

Designing a circular business strategy: 7 years of evolution at a large washing machine manufacturer

“…It is well known that consumers are less eager to pay for remanufactured products than for newly manufactured ones in a sales system (Abbey et al, 2015; Atasu et al, 2010; Guide & Li, 2010; Kleber et al, 2018; Souza, 2013), mainly due to the lower perceived quality of remanufactured products (Abbey et al, 2017; Abbey & Guide, 2016). Prices drive customer preferences to the greatest extent (Hunka et al, 2021). The willingness to pay for remanufactured products in a lease system, where consumers incur no risk for expensive repairs, might have a lower discount rate (Gulserliler et al, 2021).…”