RECYCLING MARKETS, MARKETING
AND MARKET DEVELOPMENT
The importance of markets and marketing to recycling cannot be overemphasized. To present a comprehensive review of the business of recycling markets, this is organized into three major parts: markets, marketing, and market development.
Market is a customer (or group of customers) who is willing and able to accept the product or commodity that is being offered. Recycling markets may be positive or negative. When the customer pays for the recyclables, it is called a positive market. When the collector of the recyclables pay the customer to accept them, it is called negative market.
There are three ways to look at recycling markets: activity/service performed, geographic location of market, and type of recyclable being marketed. We can classify markets by the specific types of recyclables or commodities collected. In most communities, the recyclables include waste paper, metals, glass, and plastics.
Marketing refers to the process of identifying intermediate and end-user markets and making arrangements for those markets to accept recyclables. The projected quantity of recyclables can be estimated by conducting a waste stream analysis and then calculating the generation and recovery rates for the different recyclables in the municipal waste stream. Recyclables must compete with virgin raw materials; therefore, they must be reliable, of adequate supply, and of high quality.
Some major factors that must be considered when developing a marketing plan are supply, demand, quality, substitutability, handling costs, transportation costs, and general economy.
There are certain specifications or quality standards that are generic for all recyclables and markets. The general specifications for each of the major recyclables as stipulated by both processors and end-users are: old newspaper, high-grade office paper, glass, aluminum cans, steel cans, and PET and HDPE (plastic resins).
The marketing process can be grouped into two major phases-the market analysis phase and the market implementation phase.
The market analysis phase is essentially a data and information gathering activity. The following information needs to be acquired and documented: supply, quality, demand, identity of markets, and assessment of marketing options.
When the market analysis is complete, the market implementation phase can begin. This phase involves the selection of one or more markets and the negotiation of marketing agreements. The keys to marketing recyclables are as follows:
- Identify reliable markets
- Collect materials with a market
- Use cooperative markets
- Well drafted market contracts
- Monitor markets regularly
- Consider privatization of marketing
- Track supply/demand for recyclables
- Minimize transportation distance of markets
- Maintain complete/efficient infrastructure
- Know availability of processing facilities
Market development is a process-the process of implementing various economic and legislative/regulatory incentives which will facilitate the strengthening and expanding of existing markets and of creating new markets for recyclables. The initial step in market development is to conduct a study of existing markets, and the present and future market trends.
A review of numerous published recycling market studies reveals that most are essentially similar in that they include at least the following basic information:
- geographic and demographic information about the study area
- waste stream, including recyclables, data
- description of the status of existing markets for recyclables including the current and near-future capacity or demand of each
- future market projections and their capacity to absorb recyclables
- economic incentives that are designed to stimulate the recycling markets
- summary of major findings and of recommended actions that might be implemented
Actions can be taken which help the economy in general or which can be targeted to assist specific businesses such as the recycling industry. The most common types of incentives used by states and municipalities to stimulate recycling markets are tax relief, grants and loans, job-training funds, enterprise zones, business incubators, and recycled product procurement. Legislative incentives consist of mandatory recycling laws and minimum content standards.
This primer summarizes the basic elements of recycling markets, marketing, and market development. Understanding these three aspects of recycling is essentially to anyone who is involved in establishing and operating recycling programs.
Market development is the task not only of state and local government recycling officials but of economic development professionals as well-for recycling is as much an economic issue as an environmental one.
For more information, you may contact the following:
Recyclers World at http://www.recycle.net/
Global Recycling Network at http://www.grn.com