UoB Business School - Operations and Marketing Management

Paul King guest lecture - Sustainability & Innovation at Start-ups

19 February 2024
INTRO
MY BACKGROUND

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INTRO
MY BACKGROUND

better for people • better for the planet • better for the bottom line

towardsbetter.org
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INTRO
PENTATONIC VIDEO

https://www.youtube.com/watch?v=wql9rl2czNg

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INTRO
WHAT IS THE CIRCULAR ECONOMY?

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CIRCULAR ECONOMY
SUPPORTING A NET ZERO ECONOMY

• The circular economy will play a key role in achieving net zero.
• A report by PACE (Platform for Accelerating the Circular Economy) shows that circularity can help us address 45% of
global greenhouse gas emissions.

• The World Economic Forum states that the circular economy “can yield up to $4.5 trillion in economic benefits to
2030” — this was pre-pandemic; the opportunity has since increased in size and urgency.

• The circular economy is essentially a different approach to operations - closing the loop on inputs and outputs.
• But marketing is especially important in its early stages, helping companies to bring new technologies to market and
communicate value propositions that strengthen margins whilst costs remain comparatively high.

• The circular economy is still in its infancy. In such a dynamic new field, forming under significant macro-economic
turbulence, marketing and operations are as important as ever — it is crucial they are aligned with and support one
another.

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CIRCULAR ECONOMY
OPERATIONS & MARKETING

• Marketing and operations play a crucial role in the success

MARKETING
of any company, and are especially important as the
circular economy develops.
Revenue 100
• In simple terms, successful marketing helps to grow
revenue, whilst efficient operations reduces costs. Cost of sales (60)

• A new product or a change in strategy will often be led by Gross profit 40

either an operational factor (such as the development of a
Gross profit margin 40%
powerful new technology) or a change in market dynamics
(such as a sudden shift in demand or consumer behaviour). Overheads (25)

• If a change is driven by operations, marketing must also Net profit 15

adapt, and vice versa; the two must go hand-in-hand so Net profit margin 15%
that the company as a whole is aligned and positioned for
success.
OPERATIONS

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CIRCULAR ECONOMY
MACRO-ECONOMIC DYNAMICS

• Many macro-economic forces are accelerating the adoption of the circular economy, even more so post-covid.
• Public awareness of climate change and urge for action are shaping political and corporate agendas.
• Investors increasingly want social and environmental impact alongside financial returns.
• ‘Peak globalisation’ – fragility of global supply chains emphasised by the pandemic, shift to localisation aided by
adoption of new technologies – and now being encouraged by political policy, especially in the US.

• BUT: this is associated with cost increases in the short/medium term; companies will therefore be forced to reassess
their value proposition – can they justify higher prices, or will cuts need to be made elsewhere?

• Regardless of where a brand lies on the spectrum of perceived value (some brands are able to command a premium
for their goods, whilst others compete primarily on price) there will be an increased focus on cost control, and
material flows will come under greater scrutiny.

• This demonstrates the importance and interrelation of Operations and Marketing.

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CASE STUDY
PENTATONIC X BURGER KING

https://www.youtube.com/watch?v=c7lmk-V6p6Q

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CASE STUDY
PENTATONIC X BURGER KING

• In 2019, schoolgirls Ella and Caitlin McEwan’s petition for quick

serve restaurants to "think of the environment and stop giving
plastic toys with their kids meals” created a media storm that forced
Burger King into action, appointing Pentatonic to help the chain
transition away from single-use plastic toys.

• Pentatonic was briefed to recycle inventory of the now obsolete

toys - in addition to others handed in by the public as part of an
amnesty programme - into new, reusable ways to play.

• This required a detailed analysis of the inventory and planning

recycling routes with the lowest environmental impact.

• The plastic toys ranged from polyester stuffed Emojis to battery-

powered Batmobiles to polypropylene Pikachus. Fun for the kids; a
challenge to recycle.

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CASE STUDY
PENTATONIC X BURGER KING

• Each toy consisted of multiple components, most of which made

from different materials - all of them needing to be separated from
one another prior to being recycled.

• This complexity means that such products are not usually recycled -
rather landfilled or incinerated - and shows the importance of
designing for circularity from the outset.

• Pentatonic was able to overcome this operational challenge by

leveraging its global network of sorting, separating, and
reprocessing partners.

• Ultimately, Pentatonic established a reverse logistics system with

material-specific supply chains to keep materials in use and design
out waste.

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CASE STUDY
PENTATONIC X BURGER KING

• After extensive R&D to ensure the recycled

materials met food safety standards, 10,000
polypropylene trays were produced for Burger
King’s UK restaurants, and launched in Glasgow to
coincide with COP26.

• The multidimensional trays feature a bark-rub

Meltdown emboss that allows kids to play with the
tray, using an accompanied liner and crayons.

• The new program diverted more than 40 tonnes

of plastic toys from landfills or incineration and
instead created products that kids can enjoy along
with their in-store meal.

• The award-winning campaign demonstrates the

impact of aligning Marketing and Operations.

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INNOVATION & SUSTAINABILITY
THE POWER OF START-UPS

• Innovation can improve sustainability even if it's not a company's primary objective.
• Designing a new product or creating a new technology provides the opportunity to incorporate sustainability as a
pre-requisite of that process.

• Start-ups have the added advantage of starting from scratch, rather than being limited to incremental change as is
usually the case for corporations.

• This can result in transformational gains capable of revolutionising entire industries.

• Emerging technologies can offer opportunities to break away from conventional manufacturing methods and
globalised supply chains, which are optimised for huge volumes and can result in prohibitive MOQs and set-up costs.

• This forces start-ups to find alternatives and can result in localised supply chains that are more efficient.
• Start-ups therefore have a unique ability to couple technological advancements with greater sustainability.

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CASE STUDY
NOURISHED INTRO

https://www.youtube.com/watch?v=pvbhoGnzTZ4

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CASE STUDY
NOURISHED VS TRADITIONAL

NOURISHED TRADITIONAL VITAMINS & SUPPLEMENTS

Plastic-free packaging Plastic packaging (mostly non-recyclable)

Made to order High MOQs and long lead time

Personalised Non-personalised

Localised supply chain (95% UK-based) International, long-distance supply chains

More sustainable High carbon footprint

Less waste High waste

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COMMUNICATING VALUE PROPOSITION
THE ROLE OF THE MARKETING FUNCTION

• Initially, new technologies are higher cost than traditional alternatives.

• Until such technologies and companies can scale-up and reduce costs, higher prices must be charged.
• The role of Marketing is to understand how the advantages offered by a new technology equate to tangible benefits
for the end consumer - and to communicate this effectively.

• The challenge is to make innovative new products understandable and relevant.

• Consumers must understand and buy-in to the value proposition:
• “It is worth paying more for this product because…”

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COMMUNICATING VALUE PROPOSITION
PERSONALISATION (NOURISHED)

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COMMUNICATING VALUE PROPOSITION
DESIRABILITY, DESIGN & TECHNICAL SUPERIORITY (PENTATONIC)

https://www.youtube.com/watch?v=Lj-TKY0Kwgk

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SUMMARY

• Operations and Marketing fulfil very different purposes, but for any company to be successful, they must be aligned.
• This is especially true for start-ups, which are capable of developing innovative new technologies and products,
which can also be much more sustainable - but to begin with they will be more expensive than existing alternatives.

• It is therefore the objective of Marketing to communicate the value proposition effectively to potential customers, to
explain why a higher price is justified.

• This allows the start-up to grow and to reduce costs through economies of scale.
• It is the objective of Operations to continually pursue innovation (increasing value) and efficiency (reducing costs).
• Effective Operations and Marketing allows start-ups to develop new products that are more technologically
advanced, and also more sustainable - this will play a key role in the transition to a net zero economy.

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QUESTIONS & DISCUSSION