Circular Return Strategies for the Indian Dairy Market

Abstract: Background Companies producing premium products with high quality and long product life can experience challenges when trying to penetrate price-sensitive customer segments on emerging markets due to a high product price. One way to achieve growth in these segments is to introduce new innovative business models. From the theory of circular economy, a concept combining sustainable and economical growth, innovative circular business models exist. The question has been raised if these business models can be used to help durable premium products to reach price-sensitive customers on emerging markets. Purpose The purpose of the project is to develop a business model aiming to increase the case company’s market share of dairy processing components on the Indian market while maintaining their position as a high quality brand. Methodology The project is performed as a case study in collaboration with a case company and therefore the research approach is qualitative and the research purpose is exploratory. However a market analysis of the Indian market is conducted and for this reason the purpose is also descriptive. Secondary data regarding the theory behind circular economy and the Indian market is collected through an extensive literature review. Primary data is mostly gathered through a number of interviews with the case company’s employees providing insights to the case company’s operations on the Indian market and knowledge about their customer base. Conclusion The recommended circular return strategy for the case company includes the product return models leasing, trade-ins and products repurchase and product recovery by either refurbishing or remanufacturing are most suitable for the case company. Indications show that this business model is a possible way for the case company to take market shares on the Indian market. In particular, private Indian companies with medium to high capacity can be receptive for circular return strategies. Furthermore, it could give the case company a competitive advantage since no similar business models are currently used on the Indian dairy market. The availability of CIP components to recover is currently the largest obstacle from the customers’ point of view. However, before implementing of circular return strategies their suitability need to be evaluated from the company’s perspective and factors such as reversed logistics, organizational mindset and costs need to be taken into consideration.