Feasibility study of Implementing Circular Manufacturing Systemsin the Toy Industry : A multi method study of circular preference attributes and pricing methods

Sammanfattning: In today's world, sustainability presents a formidable challenge, prompting a heightened focus on the development of more environmentally responsible business models. Within this context, circular business models have emerged as a compelling solution to mitigate waste and optimize resource utilization. With the objective of generating positive value for all stakeholders, the startup Growing Up endeavours to explore the prospects of achieving both sustainability and profitability in the children's toy market by embracing a circular approach. However, there is vastly limited research on pricing strategies and willingness-to-pay in the context of circularity. To answer the research questions, six interviews were held with experts within the manufacturing industry regarding pricing strategies. Furthermore, a choice-based conjoint analysis was conducted on data gathered through a web questionnaire to discover the optimal circular service offering for Growing Up, and what amount customers are willing to pay. The findings revealed an increasing trend towards the adoption of value-based pricing methods, especially in combination with an increase of servitization. The conjoint analysis demonstrated that price emerged as the most influential attribute, closely followed by considerations related to the environmental footprint. A latent analysis further revealed variations in preference within the sample set based on choices and demographics. Five distinct customer segments were found, suggesting that companies seeking to offer circular toy services should provide different versions to accommodate varying consumer needs. This thesis makes a significant theoretical contribution by pioneering the exploration of customer’s willingness to pay for circular services, thereby filling a crucial research gap in the field. Future research should investigate pricing strategies used in circular companies, and further validate the use of conjoint analysis to investigate willingness-to-pay within a circular context.