Terra Cycle

Terra Cycle Company that has been founded by Betsy Cotton in the year 2001 and is located in New Jersey. The company employs business practices that generate profits and also reduce the impact of businesses on the environment. This environmentally friendly approach of the company makes it different from its competitors in the industry. The main product of the company was ‘All Purpose Plant Food’ that would stimulate the growth of plants (Clow & Baack, 2012).  The company wants to decide between the two formulae for the products that it shall produce in the future.

Terra Cycle has effectively utilized the phenomenon of eco-captalism according to which the company has made an effort to be concerned about the environment and adopt practices that reduce the impact of company production on the environment to a great extent. According to the concept of eco-capitalism, the company would choose the production of a product that is profitable and also has a minimum impact on the environment (Clow & Baack, 2012). The sustainability and corporate responsibility movement of the past decade has raised the question of whether sustainable businesses can be profitable and to what degree.  Several startup companies, such as TerraCycle, Ecoist, and Simple Shoes, are working to capitalize on this movement.  In addition, well-established firms are integrating sustainability into their end-to-end business practices, including GE, HP, Microsoft, and Procter & Gamble.  In all cases, good business practices are required for a company to remain viable.  These fundamental business practices include expense management, producing a product consumers will purchase, product focus and revenue generation.

Founded in 2001, TerraCycle is a start up company created by two Princeton students who designed and sold one of the first commercially-available products made entirely from garbage (Burlingham, 2006).  CEO Tom Szaky was 19 when he created TerraCycle while competing in a business plan contest.  His first TerraCycle product was a fertilizer made of worm poop packaged in used water bottles.  In the past decade, the company has expanded into a full-scale upcycling company selling a variety of products.  Upcycling is the process of converting garbage or other discarded items into products of higher value (Miller, 2010).  Today, TerraCycle sells 50 products, such as backpacks, messenger bags, kites and insulated coolers made from candy wrappers, drink pouches, and potato chip bags destined for a landfill.  Since its inception, TerraCycle has salvaged 10 million drink pouches, 50,000 energy bar wrappers, two million bottles, and one million cookie wrappers (National Geographic, 2010).  It recently began making clocks out of discarded computer circuit boards and vinyl records.  In the summer of 2010, TerraCycle plans to release its newest product: a 30-gallon garbage can made from discarded pens (TerraCycle, 2010)

Positioning is defined as the positioning of the product in the minds of the consumers (Leadley & Forsyth, 2004). It is very important for any organization to position the brand correctly in the mind of the consumers. The consumers develop an impression or perception of the brand in their minds depending on the product attributes and perceived benefits from the purchase of such products. The products that have a perfect product positioning in the minds of the customers are likely to click well with the consumers and will have a higher brand equity and brand strength. In contrast, the products or brands that are not positioned correctly in the minds of the consumers are likely to observe low brand value, brand recognition and product demand.

The product positioning for Terra Cycle in the minds of the customers is a brand that deals in the manufacture of immovative environmentally friendly products that help consumers to contribute in protecting the environment. The company has positioned itself as an environmentally friendly brand in the minds of the consumers and the company has been well-appreciated by the consumers for its innovative and eco-friendly products through press releases. The high popularity of the brand has contributed a great deal in positioning the brand in the minds of the consumers.

The target consumers for Terra Cycle products were not commercial consumers, but the end consumers that included the individual gardeners. Terra Cycle sold its products to the retailers so as to allow retailers to sell the Terra Cycle products to the end consumers. The target consumers for Terra Cycle Products are those individuals who are involved in the gardening activity and tend to use eco-friendly products for their plants instead of other plant products that have not been produced to safeguard the environment.. The company Terra Cylce has employed benefit segmentation to reach the target consumers as consumers see the benefit of environmentally friendly products that have been produced in conditions that do not cause any harm to the environment as an advantage over other company products. The brand also uses psychographic segmentation as it targets only those individual consumers who have the hobby of gardening and have interest in environment friendly products for their plants. The company does not target commercial consumers for its products. The company uses indirect distribution channels involving large retailers to reach the end consumer.

TerraCycle has achieved this progress in 10 years through the combination of a clear mission, outstanding community involvement, social marketing, big box partnerships, strong talent acquisition, and visionary leadership.  The company’s mission is simple: to eliminate landfill waste by finding innovative and unique uses for materials that others would deem as garbage, then sell it at a price at or below the competition.  “We want to be the Wal-Mart of garbage,” says Szaky (Feldman, 2009, para. 3).

One of the financial advantages on which TerraCycle capitalizes is extremely low raw material costs.  Groups called brigades formed at schools, churches, and non-profits collect the garbage, and are paid two cents for every item collected.  Corporate sponsors such as Kraft Foods, Kellogg’s, and Nabisco pay for this donation, plus shipping costs to transport the collected garbage to TerraCycle.  In 2010, over 30,000 schools participated in the program (Latchford, 2010).  This approach to material acquisition also promotes social marketing.  When a student collects garbage to send to TerraCycle, and then purchases a TerraCycle product, they are buying something they helped create.  (Roth, 2010).

TerraCycle has also demonstrated strong community ethics.  The TerraCycle website offers access to a free curriculum series developed by the Cloud Institute targeted to three grade ranges with lessons on material cycles, biomimicry, and the difference between recycling in Nature and human-created garbage (TerraCycle, 2010).  TerraCycle also placed its factory in inner city Trenton, NJ, to capitalize on abundant labor and inexpensive real estate, but with the added benefit of providing employment in a depressed community (Burlingham, 2006).

Szaky also followed a risky product placement strategy that may be paying off.  Instead of selling to small garden stores and local retailers, he relentlessly pitched his products to big box retailers, such as Home Depot, Wal-Mart, Target, and Petco.  In 2004, he landed his first major deal selling worm poop fertilizer to Home Depot (Castellitto, 2009).  Shortly thereafter, companies interested in a more sustainable image contacted TerraCycle to request to have their discarded materials turned into products.  “This is a test of how consumers’ environmental concerns might translate into sales of sustainable products” (Brat, 2010, para. 4).  TerraCycle’s unique business and success landing big name deals propelled it into the media spotlight.  TerraCycle received the cover of Inc. Magazine in 2006 and was named “The Coolest Little Startup in America” (Burlingham, 2006).  TerraCycle was also featured on The Tonight Show, Oprah, and became a National Geographic series called Garbage Moguls (TerraCycle, 2010).

Finally, Tom Szaky is a visionary leader who inspires others to join his quest.  Eric Smith, TerraCycle vice president of sales says, “There’s an aura almost when you met the guy.  He makes you believe” in the company’s mission (Barlyn, 2007, para. 18).  In fact, Szaky was able to convince 12 seasoned business leaders to join his executive team, usually at a significant salary reduction.  (Burlingham, 2006).  “The key is having [executive candidates] believe in the dream of what you want to accomplish,” Szaky says (Barlyn, 2007, para. 15).

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