Deconstructing Customer Value Propositions for the Circular Product-as-a-Service Business Model: A Case Study from the Textile Industry

Abstract

Offering products as a service is a way to implement circular economy principles in business models and promote sustainability. However, in many markets, the model is still in its infancy in terms of market maturity and lacks customer acceptance. More understanding is needed of how product-as-a-service companies can enhance and reconfigure their competitive position by proposing meaningful customer value. For this purpose, this study focuses on customer value propositions (CVPs) as a strategic management concept in the circular economy. The aim of the study is to outline a deconstruction framework for systematically identifying the strategically manageable components of CVPs in circular product-as-a-service business models. The framework establishes a link between the elements of circular product-as-a-service business models and competitive CVPs. The framework is developed and validated with seven product-as-a-service business cases in the textile and clothing industry context. The results of the study provide insights into how product-as-a-service companies in the textile field aim to differentiate, how they structure customer value by identifying customer benefits and sacrifices, and what kind of resources and capabilities are needed for competing in the circular economy context.