Consumer preferences regarding product acquisition, repair, and discharge towards a circular economy
A segment-specific market simulation based on conjoint analysis
Ryu Koide (TU Delft - Energy and Industry, University of Tokyo, National Institute for Environmental Studies of Japan)
Haruhisa Yamamoto (National Institute for Environmental Studies of Japan)
Eri Amasawa (University of Tokyo, Research Center for Advanced Science and Technology, Waseda University)
Keisuke Nansai (National Institute for Environmental Studies of Japan)
Shinsuke Murakami (University of Tokyo)
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Abstract
Consumer preferences for a circular economy are known to be heterogeneous; however, most existing studies focus exclusively on the product acquisition phase and assume homogeneous utilities. This study aims to understand consumer segments for circular business models in terms of consumer preferences and market shares, and to investigate the commonalities across the three phases of consumer engagement in the circular economy: acquisition, repair, and discharge. We combined choice-based conjoint analysis, ensemble clustering, and market simulation, and applied them to three typical products (refrigerators, laptops, and children's goods) in the Japanese market. The analysis revealed the consistent existence of key consumer segments across the three phases. First, circular-oriented segments (12–33 % of the population, depending on the phase and product category) show a high willingness to adopt circular business models (e.g., 67–100 % within-segment share), making them a promising entry point for target-based marketing. Second, price-sensitive segments (13–30 %) could play a pivotal role in mainstreaming circular business models, highlighting the need for substantial price reductions of circular offers relative to linear offers. Third, balanced decision-makers (19–38 %), who tend to resist traditional circular options (e.g., reuse), are open to new circular business models (e.g., refurbish, subscription, functional upgrading, sharing), indicating the importance of designing attractive product service offers. Finally, linear-insistent segments (24–51 %) almost never choose circular products and repair options (e.g., 0–2 % segment-wise share). This results in a persistently high total market share of linear options, even under ambitious scenarios; e.g., 44–57 % of acquisitions are brand-new, and 51 % of broken products remain unrepaired. Although linear-insistent behaviour in any of these phases may act as a bottleneck, overlapping membership among consumer segments suggests the potential for positive spillover across phases. This study's approach enables more nuanced consumer segmentation, facilitating the identification of diffusion stages, the design of appealing product services, and the development of target-wise marketing strategies towards the circular economy.