Marketing for a Circular World

What does marketing look like as part of a circular economy?

March 23, 2021

Marketing for a Circular World

In 1968, the crew of Apollo 8 took the first colour photographs of the earth from space. They were images that famously shifted human beings’ perspective on the planet. The earth was not an infinite space with an endless horizon of possibilities. It was a fragile lifeboat floating in darkness. It was a closed system where everything was connected, every resource was limited – and every resource therefore had value.

It’s taken humanity far too long to turn this perspective into action – but recent events might just move us closer to a tipping point. We’re more aware than ever that our existence depends on natural systems and that there are serious consequences when those systems change. At the same time, the growing urgency over climate change has focused attention on new types of resource and demonstrated just how limited those resources are. It’s been estimated that a typical auto manufacturer will require up to 130,000 tonnes of cobalt to meet demand for its electric vehicles over the next five to ten years. The total annual market for cobalt is currently only 100,000 tonnes.

It doesn’t take a scientist or an economist to work out that these numbers don’t add up. And that leads to an unavoidable conclusion. Society can’t hope to keep innovating in the way that it needs to by only using resources once. Our concepts of production, value and ownership need updating – and fast.

Thomas Rau and closed-system thinking

At the end of January, LinkedIn’s Big Minds Collective of marketing agency leaders listened to a presentation from the award-winning architect Thomas Rau. It was an electrifying session. Thomas is one of the leading proponents of the circular economy: the principle of designing waste out of systems and keeping products and materials in constant use in a way that retains their value. He argued that our future depends not just on tackling issues like climate change but on a more fundamental mindset shift. And he explained how seeing the earth as a closed system, where every resource comes as a limited edition, changes every aspect of business and society. As such, it has huge implications for marketing.

Thomas has famously taken the lead in applying circular economy principles to his architecture projects. In doing so, he’s raised questions about the transactions at the heart of what marketers do: What are we really selling? What are buyers paying for? What do they really need to own?

When Thomas designed a new lounge at Schiphol airport in Amsterdam, he informed lighting companies that Schiphol wasn’t interested in buying light bulbs from them. Instead, Schiphol would pay a company to supply them with light. It was a change in terms with massive implications. When electric companies sell light bulbs as a product they have less incentive to invest in the long-term value and sustainability of that product. Demand and revenues depend on the bulb failing at some point in time. However, when an electricity company is paid to deliver light as a service, that company has every incentive to generate as much light as possible from one set of resources. It makes money the longer its lighting solution lasts.

The solution that Thomas developed with together with lighting company Philips shows what’s possible. They presented Schiphol with a proposal that cut electricity costs by 35% - and a lighting system that could last for at least 15 years without anything needing replacing.

That’s just one example of how closed system thinking can change both business models and marketing. It’s a change that goes far beyond simply putting more emphasis on sustainability in the content you share or the advertising campaigns that you run. With circular economy principles increasingly setting the agenda for governments, businesses and consumers, we’ll find ourselves redefining marketing propositions and changing the way that we innovate. Here are some of the opportunities that could create:

Innovating around outcomes

The Schiphol story is a great example of how the closed-system view of the world reframes innovation. It can train marketers to think far more deeply about the outcome that customers need their business to deliver – and look beyond the way that they’ve delivered it in the past.

This can lead to some spectacularly innovative thinking. In another design for the airline industry, Thomas addressed one of the key constraints for aircraft manufacturers. Demand for their products is limited, not by the number of planes that can fit in the sky but the number of planes that can fit on the ground. As an alternative to building ever-larger airports, Thomas developed the concept of a rotating, turnaround terminal enabling many more planes to share the same boarding gates and dramatically reducing space required, loading time and emissions. It’s the kind of thinking that comes about when businesses reframe the problems that they need to solve in order to grow.

Scaling through service

If lightbulbs can be re-imagined as a service, then what’s next? Mobility is one obvious answer. The concept of Mobility as a Service is generating serious momentum in the auto industry – not least through conversations on LinkedIn. What if the ability to move around were no longer something you bought in the form of a car, but something that your chosen auto brand provided you with where and when you needed it? What if, instead of buying a vehicle, you bought a promise to get you to where you need to be using the most suitable vehicle for the occasion? Manufacturers could translate a fleet of vehicles into a far larger number of paying customers. Customers could forget maintenance costs and have the exact type of vehicle they need for any given trip or driving conditions. They could stop worrying about parking as well.

That gets around the tricky conundrum of auto manufacturers running out of the materials that they need to keep building electric vehicles. It frees their ability to scale from the constraint of how much they can produce. And why stop there? When you reinvent ownership as a service, you can transform the scope of any industry from smartphones to luxury goods. Why own 20 pairs of shoes if you can get the exact pair that you need for each occasion and then return them so they don’t clog up space at the bottom of your wardrobe?

Reinventing products as services isn’t just about offering customers greater convenience. It’s also about a shift in responsibility that’s fundamental to circular economy thinking. In a product-ownership model, power and responsibility are separated. The manufacturer has all the power over the product, the materials it uses and the amount people pay for it. The paying customer has to take on the responsibility for maintaining it – and for the impact of disposing of it. This encourages an abdication of responsibility on the part of producers. If an innovation adds up in the short-term there’s no reason not to do it; the long-term consequences will be borne by someone else. The shift to a services model encourages businesses to take on full responsibility for their products throughout their life-cycles. This will enable them to market sustainability in a far more credible and meaningful way.

Giving meaning to materials

Up to now, marketing has focused people’s attention on products rather than components. We ignore the parts because we’re focusing on the added value that you buy when they are all put together. But that could be about to change. In a perfectly circular economy, there’s value in every element of every product – and there’s therefore value in cataloguing and communicating about each of those elements.

Thomas’s award-winning design for the new headquarters of Triodos Bank in The Netherlands doesn’t just stand out for its beautiful use of wood. It stands out as a fully transparent material bank. It’s the first building where every material used has been recorded – and so has value. At some point in the future, those materials can be reclaimed and re-used. Thomas estimates that, instead of depreciating to a value of zero, the Triodos Bank HQ’s materials will still be worth 20% of what they are today, even decades or centuries into the future. His vision is for every building to carry a, “materials passport” along these lines. In order to facilitate this Thomas Rau initiated and co-founded Madaster, the cadastre of Materials, a global online platform which generates and registers material passports of buildings including their degree of circularity and financial value.

But it’s not just buildings that this applies to. The metals and minerals in smartphones, vehicles, laptops, jewellery and more have an ongoing value that can be recognised, recovered – and marketed. Imagine the extra dimensions that this could bring to a category like luxury, where marketers already excel at calling out craftsman like details in their products. As materials take on greater meaning, there’s far more for marketing strategies to play with. It helps that quality will make increasing business sense in a circular economy. A luxury product with better components lasts longer and serves more customers than a cheaper one that deteriorates quickly.

New forms of demand – and new markets

New business models create new markets – and the business models of a circular economy are no exception. The most obvious area for this type of innovation is finance.

Take the example of a business buying a warehouse. If all of the materials in that warehouse have been catalogued and have an ongoing value, then it’s possible to exclude these from the price the business pays – and plan on them being reclaimed in the future. This could dramatically alter the pricing of property, not to mention aircraft, automobiles and anything else constructed of precious materials. However, it will only work if financial services businesses can construct new models that recognise this type of ongoing value. Once you start seeing products as one temporary iteration of raw materials, all kinds of business models and marketing propositions become possible.

A real creative renaissance

Perhaps the most exciting impact of a circular world is an opportunity to rejuvenate marketing creativity. It won’t be a case of simply executing this TV ad more emotively or telling that story more effectively. It’s an opportunity to drive growth by persuading people to think very, very differently about what they need, how they need it and how they transact and interact with others and the world. That’s the kind of business and societal transformation in which our industry has a key role to play.

It’s been a long time since we looked back from space and saw the earth and its marketing landscape in context. The time to do more about it could soon be arriving.

We’d love to hear your thoughts. Join the discussion at #CircularMarketing

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