Consumer service innovation in a circular economy

the customer value perspective

Maria Antikainen (Corresponding Author), Minna Lammi, Taru Hakanen

Research output: Contribution to journalArticleProfessional

Abstract

We are already overusing non-renewable resources and exceeding the environmental capacity of our planet and consumption is constantly growing. There is an alarming need to replace the current linear economic model with a more sustainable and preserving model called the Circular Economy (CE). The idea of the CE is to keep products and materials in use as long as possible, preserving or even increasing their value. The transition towards a CE requires a fundamental redesign of business models and end-to-end value chains. Instead of selling products, companies should move to retain ownership and sell their use as a service, allowing them to optimize the use of resources. Thus, buying for a service creates value differently for consumers than buying and owning a product. Therefore, there is a need to understand how CE-based services create value for consumers. In this study, customer value is perceived as a trade-off between the benefits and sacrifices that a consumer perceives when purchasing a product or a service. Our data is derived from consumer group interviews that took place in February 2016 in Finland. In the group interviews we introduced potential CE services to consumers. The data show that consumers are gaining practical, economic and personal benefits from three potential CE rental services: a sofa, a washing machine and clothing. Moreover, the study revealed that the benefits elicited by the washing machine model related mainly to practical benefits, while the sofa model, in particular, offered personal benefits to consumers. It also seemed that the sofa and clothing CE models entailed more psychological sacrifices compared to the washing machine model. The results also indicate that when making a decision on renting or owning, the balance between the economic benefits and sacrifices is crucial. If buying is seen as economically favourable, it easily wins out over renting, since it is a more familiar way to act. With regards to some products, personal and emotional benefits tend to override other factors.
Original languageEnglish
Pages (from-to)1-8
Number of pages8
JournalJournal of Serviceology
Volume3
Issue number1
Publication statusPublished - 16 Sep 2018
MoE publication typeD1 Article in a trade journal

Fingerprint

Service innovation
Circular economy
Consumer services
Customer value
Washing
Service value
Economic benefits
Factors
Business model
Emotion
Purchasing
Value chain
Non-renewable resources
Redesign
Psychological
Ownership
Economics
Resources
Trade-offs
Finland

Keywords

  • Circular economy
  • customer value
  • services
  • value creation
  • innovation

Cite this

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abstract = "We are already overusing non-renewable resources and exceeding the environmental capacity of our planet and consumption is constantly growing. There is an alarming need to replace the current linear economic model with a more sustainable and preserving model called the Circular Economy (CE). The idea of the CE is to keep products and materials in use as long as possible, preserving or even increasing their value. The transition towards a CE requires a fundamental redesign of business models and end-to-end value chains. Instead of selling products, companies should move to retain ownership and sell their use as a service, allowing them to optimize the use of resources. Thus, buying for a service creates value differently for consumers than buying and owning a product. Therefore, there is a need to understand how CE-based services create value for consumers. In this study, customer value is perceived as a trade-off between the benefits and sacrifices that a consumer perceives when purchasing a product or a service. Our data is derived from consumer group interviews that took place in February 2016 in Finland. In the group interviews we introduced potential CE services to consumers. The data show that consumers are gaining practical, economic and personal benefits from three potential CE rental services: a sofa, a washing machine and clothing. Moreover, the study revealed that the benefits elicited by the washing machine model related mainly to practical benefits, while the sofa model, in particular, offered personal benefits to consumers. It also seemed that the sofa and clothing CE models entailed more psychological sacrifices compared to the washing machine model. The results also indicate that when making a decision on renting or owning, the balance between the economic benefits and sacrifices is crucial. If buying is seen as economically favourable, it easily wins out over renting, since it is a more familiar way to act. With regards to some products, personal and emotional benefits tend to override other factors.",
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Consumer service innovation in a circular economy : the customer value perspective. / Antikainen, Maria (Corresponding Author); Lammi, Minna ; Hakanen, Taru.

In: Journal of Serviceology, Vol. 3, No. 1, 16.09.2018, p. 1-8.

Research output: Contribution to journalArticleProfessional

TY - JOUR

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T2 - the customer value perspective

AU - Antikainen, Maria

AU - Lammi, Minna

AU - Hakanen, Taru

N1 - Lehdellä ei ole ISSN-numeroa -> D1 (ei voi olla A1 eikä B1)

PY - 2018/9/16

Y1 - 2018/9/16

N2 - We are already overusing non-renewable resources and exceeding the environmental capacity of our planet and consumption is constantly growing. There is an alarming need to replace the current linear economic model with a more sustainable and preserving model called the Circular Economy (CE). The idea of the CE is to keep products and materials in use as long as possible, preserving or even increasing their value. The transition towards a CE requires a fundamental redesign of business models and end-to-end value chains. Instead of selling products, companies should move to retain ownership and sell their use as a service, allowing them to optimize the use of resources. Thus, buying for a service creates value differently for consumers than buying and owning a product. Therefore, there is a need to understand how CE-based services create value for consumers. In this study, customer value is perceived as a trade-off between the benefits and sacrifices that a consumer perceives when purchasing a product or a service. Our data is derived from consumer group interviews that took place in February 2016 in Finland. In the group interviews we introduced potential CE services to consumers. The data show that consumers are gaining practical, economic and personal benefits from three potential CE rental services: a sofa, a washing machine and clothing. Moreover, the study revealed that the benefits elicited by the washing machine model related mainly to practical benefits, while the sofa model, in particular, offered personal benefits to consumers. It also seemed that the sofa and clothing CE models entailed more psychological sacrifices compared to the washing machine model. The results also indicate that when making a decision on renting or owning, the balance between the economic benefits and sacrifices is crucial. If buying is seen as economically favourable, it easily wins out over renting, since it is a more familiar way to act. With regards to some products, personal and emotional benefits tend to override other factors.

AB - We are already overusing non-renewable resources and exceeding the environmental capacity of our planet and consumption is constantly growing. There is an alarming need to replace the current linear economic model with a more sustainable and preserving model called the Circular Economy (CE). The idea of the CE is to keep products and materials in use as long as possible, preserving or even increasing their value. The transition towards a CE requires a fundamental redesign of business models and end-to-end value chains. Instead of selling products, companies should move to retain ownership and sell their use as a service, allowing them to optimize the use of resources. Thus, buying for a service creates value differently for consumers than buying and owning a product. Therefore, there is a need to understand how CE-based services create value for consumers. In this study, customer value is perceived as a trade-off between the benefits and sacrifices that a consumer perceives when purchasing a product or a service. Our data is derived from consumer group interviews that took place in February 2016 in Finland. In the group interviews we introduced potential CE services to consumers. The data show that consumers are gaining practical, economic and personal benefits from three potential CE rental services: a sofa, a washing machine and clothing. Moreover, the study revealed that the benefits elicited by the washing machine model related mainly to practical benefits, while the sofa model, in particular, offered personal benefits to consumers. It also seemed that the sofa and clothing CE models entailed more psychological sacrifices compared to the washing machine model. The results also indicate that when making a decision on renting or owning, the balance between the economic benefits and sacrifices is crucial. If buying is seen as economically favourable, it easily wins out over renting, since it is a more familiar way to act. With regards to some products, personal and emotional benefits tend to override other factors.

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