CIRCULAR ECONOMY

SUBMIT TO: MA’AM AMBREEN BASHIR

SPRING 2022

Manahil Fatima (20201-27300)

Laiba Chhipa
Mubeena Akram (20201-27773)
Syed Muhammad Aun Razi (20201-27257)
Shamikh Pervez (20201-27693)
Bilal Kafil
PROBLEM STATEMENT
Concepts of the circular economy and sustainability are widely being understood all around the globe; with
industries, policymakers, etc. However, the relationship between these two terms remains ambiguous to many.
The circular economy is an economic model aimed at production of goods and services in a sustainable manner
by reducing resource consumption and waste (raw materials, water, and energy), as well as waste production.
With the assistance of several research and extensive study, it has been discovered that more than half of the
world's population believes that rapid climate change is the most serious global worry. It is having a major
influence on the health of our planet and is the cause of plenty of other issues, such as increased droughts,
floods, and other extreme phenomena. The good news is that most people are willing to alter their lifestyles in
order to correct the situation and save the ecosystem. Pakistan's ecology has suffered for many years as a result of
poor natural resource management and very high population growth. Agricultural and industrial runoff have
polluted water sources, while manufacturing and car emissions have worsened air quality in major cities, all of
which are caused by persistent deforestation. Pakistan, like other developing countries, has emphasized
achieving food self-sufficiency, fulfilling energy demands, and limiting its high pace of population increase above
reducing pollution and other environmental dangers. As a result, the Pakistan government's prime emphasis has
not been "green" considerations.

RESEARCH OBJECTIVE
In this report we are trying to research the trend in the upcoming generations about the concept of circular
economy. Here we have asked people and tried to gauge their perception on what do they think about
sustainable product and its related attributes.

LITERATURE REVIEW

Primary Research: Quantitative

PRIMARY RESEARCH METHODOLOGY
As per the requirement we surveyed 100+ people belonging from Generation Z & Generation Y which led us to
answer the following questions.

Q1. What is their perception on this issue?

On asking people that “I spend a lot of time thinking how much damage some products do to the environment
that surrounds us” we got know that 71.2% of the people care about that how the concept of circular economy is
affecting their lifestyles. Moreover, we also got to know that the 52.9% of the people are aware of the concept of
circular economy which also translates that the upcoming generation are more in favor of sustainability and
consider this as an issue that needs to be addressed.

Q2. Do they use any product/services?

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As consumers from Generation Z & Y moving towards sustainable consumption is very common and on asking
this question 67% of the people said that they use the products of brands that are focusing on green economy
concept primarily.

Q3. Are they aware of any companies that focus on this?

Yes, in connection to the previous question we our survey proved that the participants are well aware of this
concept of sustainability and also note brands that are taking actions to become one. Example of brands include
Zara, Saya, Levis & Molty Foam.

Q4. Does it influence their purchase decision?

Yes, it does because 84.6% of the respondents look towards that how sustainable the brand is which ultimately
effects their purchase decision. Earlier we observed that previous generations did not include this factor while
purchasing however, not this is very important as brands also need to position themselves in this manner.

Q5. Would they pay extra for sustainable consumption?

On asking this question we received varied responses from the participants. 37.5% of the people are neutral that
they are willing to pay a higher price however,18.3% of the people highly deny paying extra for this product. On
the contrary we get to see 3.8% of the people who are ready to pay more for a brand that works towards a
sustainable cause. Overall the circular economy concept is growing however, the pace of this is slow.

LINK TO THE FORM:

Responses:
CB FORM (RESPONSES)
https://docs.google.com/forms/d/1ycx8uFtbWdEznC5xgcEuuN-lx7B8WOE7ajwipjCuTG0/edit#responses

Explain How Consumer Will Make a Decision to Choose Your Product, Using:
THEORY OF MOTIVATION

Motivation is the driving force that impels people to act. It represents the reason why is one behaving in a
particular way. It drives consumers to take action by producing a psychological tension caused by unfulfilled
needs.

Our product “Paste Bits” is a utilitarian need and further categorizes as part of psychological needs of the
consumers. While the generic goal is to have white and strong teeth, the aim is to make “Paste Bits” the choice of
majority consumers to get the teeth strong and white (product specific goal). Since consumers are aware of
dental issues, taking good care of their teeth has also become very important nowadays. Thus the motivation to
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use our product can be positive or negative. However, with the course of time people are realizing the rise in
global temperature and the global upset it’s approaching thus this situation has alarmed consumers, shifting
them towards using sustainably produced goods. So we can say that the motivation is to avoid the
adverse/harmful effects which can be caused through global warming.

The questionnaire helped us identify that around 70 to 80% of consumers agreed to buy sustainably produced
goods, and around 50 to 60% are aware about circular economy thus that means the consumers tend to consume
goods which contribute to sustainability since production to disposal (products that are environmental friendly).

PERCEPTION

Perception is the process by which individuals select, organize and interpret stimuli into a meaningful coherent
future of the world.

For the customers to know about the product the company is most likely to use ‘Ambush Marketing’ technique
by placing fake giant piece of the product in super marts like Imtiaz, Carrefour and etc., also by advertising on
various transport vehicles. Along with placing giant fake piece of the product at mall, the company would do
experiential marketing so that the consumers can experiment the product themselves. While the sustainable
production and disposable element is to be kept above the JND (Just noticeable difference) so that the customers
are encouraged to buy the product.

PERSONALITY

Personality consists of the psychological characteristics that both determine and reflect how a person responds
to his or her environment. Though personality tends to be consistent, it may change abruptly, as well as
gradually over time.

With the advent of time, consumer is moving towards and supporting more environment friendly products and
encouraging its use. Thus we aim to target this market of consumers who have a great concern for the
environment. While these consumers tend to be a potential market, consumers with high ethnocentrism is also
an important market since similar products like Paste Bits is currently not produced in Pakistan by any other
company.

As per the ‘Freudian Theory’ of personality consumers who are high on superego, are most likely to be attracted
to buy this product since the product is environmental friendly and is supporting the concept of sustainability in
the circular economy, and consumers with this personality tend to satisfy their needs in a socially acceptable
fashion.

Even the ‘Compliant Individuals’ of the Non-Freudian Theory might be willing to buy this product since they
admire love and appreciation which one would get for indirectly contributing towards a sustainable
environment.

Also as paste bits is a relatively new product, innovators and variety & novelty seeking customers would be
willing to try it, but also other-directed consumers (unlikely to be innovators) would also be attracted to buy
since it contributes towards a sustainable environment.

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The marketing strategy would be structured in a way that it caters to both visualizers and verbalizers, and also
attracts the customers to try paste bits to get shiny white teeth like there idea self-image and social ideal self-
image.

LEARNING

Consumer learning is a process that evolves and changes as consumers acquire knowledge from experience,
observation, and interactions with others and newly acquired knowledge affects future behavior.

Accidental learning will also be helpful since consumers will get to know about a product which is relatively
easier to use and environmental friendly as well. While on the other hand, with time consumers are becoming
more environmental conscious and doing proper research over the products they are consuming, and not just
consumers but the influencers, bloggers are also promoting consumption of such products and company moving
towards sustainability. Thus intentional learning is also there from the consumer’s side.

BIG IDEAL FRAMEWORK

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 CULTURAL TENTION BRANDS BEST SELF

Billions of years’ worth Sustainable alternative to

BIG
wastage in our world toothpaste tubes that are
IDEAL
ecofriendly and focuses
on sustainability

PasteBits believe that every

contribution counts towards a
sustainable world.

LITERATURE REVIEWS
Manahil Fatima:

The air pollution levels in Pakistan's two main cities, Karachi and Lahore, are believed to be 20 times higher than
WHO limits, and are continuing to grow. The capital, Islamabad, is engulfed in heavy haze that obscures views of
the Margalla Hills, which loom over the city's tree-lined avenues. As industry has grown, industries have
discharged an increasing number of harmful effluents into the atmosphere. In December 2019, similar to other
developing nations, the number of licensed automobiles in Pakistan was reported to be 6,209,626 units. This is
an increase over the previous year's total of 5,923,280 units. In February 2022, the overall output of passenger
automobiles was 18,263 units, according to PAMA statistics. According to a report released by the Ministry of
Environment in January 2000, Pakistan spends about $17 million per year on pollution-related cleanup; however,
$84 million was needed to correct the country's environmental problems, and pollution-related causes cost $1.8
billion per year in additional health-care costs. Economic growth has mainly taken precedence over
environmental problems in Pakistan's endeavor to improve the living conditions of its population. Uncontrolled
use of hazardous chemicals, vehicle emissions, and industrial activity have all contributed to a variety of
environmental and health problems, the most serious of which is water pollution. Due to industrial waste and
agricultural runoff contaminating drinking water supplies, much of the nation lacks drinkable water.

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Mubeena Akram:

Circular Economy, Banks, and Other Financial Institutions: What’s in It for Them?

Circular economy focuses on 3 Rs of Reduce, Reuse and Recycle. It is a step towards limiting material waste,
decreasing environmental degradation, and mitigating climate change. Financial institutions being profit seeking
entities make investment and lending decisions based on rigorous cost-benefit and risk analyses. The article
focused to comprehend what financial institutions stand to gain by actively participating in the circular
economy. The methodology used in the paper is the discourse analysis methodology. The author has highlighted
that:

 Why the Circular Economy Model Is Preferred to the Linear Economy Model
 Criticism of the Circular Economy
 Arguments Against Financial Institutions Supporting the Circular Economy
 Benefits of the circular economy for banks

A linear economy is an economic system that promotes the use of raw materials for production and
consumption, with the resulting waste being thrown away, disposed of, or destroyed, it takes a take-make-
dispose approach and the model require the use of more resources to produce new goods. Whereas a circular
economy promotes efficiency through waste elimination and continuous resource use. In circular economy
model value is created by focusing on resource preservation, uses 3Rs which demand less resources and energy to
produce new goods.

The circular economy concept has gained popularity, but there have been some criticisms: not all waste is
recyclable; the cost of waste recovery may exceed the cost of recycled waste products; a circular economy will
discourage the production of new resources and the consumption of new goods, lowering GDP; and, finally,
circular economy has hidden risk and low return on investment. The ability of circular businesses is adversely
affected by lack of proper waste infrastructure and poor recycling technology which affect their ability to repay
loans to financial institutions. It may appear that Banks are confronting serious strain to provide funding to
existing circular businesses and the businesses who are making transition from linear to circular economy model.
Funding circular economy will provide benefits to banks it will provide diversified opportunity for banks to
extend their loan portfolio and reduce their overall risk profile. Circular economy protects the environment,
creates jobs by closing the loop in the production value chain, and leads to a better society, so it leads to
responsible and sustainable banking. As more businesses seek to transition to a circular economy, proactive
banks will be able to attract new circular clients and gain a larger market share of circular economy customers,
resulting in increased profits for proactive banks. Other financial institutions like insurance companies can
create special insurance policies for reused products. Large banks can provide more funding to microfinance
institutions and be able to identify and assist small businesses and entrepreneurs engaged in circular business
activities.
The implication of the findings is that financing the circular economy creates a new opportunity for financial
institutions. A group of financial institutions could pool their resources to fund huge circular projects. Financial
institutions that are slow to adapt to the demands of firms in the circular economy may become less competitive
and lose market share, than those that respond fast. Financial institutions and other observers have concerns
about the sustainability of a circular economy, as a result few will be interested in funding it. A limitation of the
study is that no data was used to evaluate the perceived benefits of the circular economy to banks and other
financial institutions. This was due to financial institutions' lack of access to circular economy data. When such
data becomes available, future studies can use it to assess the perceived benefits of the circular economy to banks
and other financial institutions.
Link: https://link.springer.com/content/pdf/10.1007/s43615-021-00043-y.pdf

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