Marketing Plan For Mattress Recycling Business

Types of mattresses

Discuss about the Marketing Plan for Soft landing Business.

Types of mattresses

The style and type of mattresses have a very crucial impact on the possibility of any re use and recoverability of material. Every style of mattress comes with its own set of challenges associated with its handling and if possible at all, the recovery. While evaluating the possibility of any kind of re-use certain types of mattresses have better scope in this regard than the others (Chang, & Yang, n.d.).

Supply and the source of discarded mattresses

As the global demand for mattresses continues to grow with an increasing demand for luxury mattresses and the doctor recommended mattresses, there is an almost equal rate of growth in the disposal of mattresses. With growing environmental concerns about the threat to the natural environment and the ecological balance because of the landfills, the mattress recycling industry has been growing steadily over the last few years. The domestic market accounts for almost 95% percent of the market share of the mattress sales. The waste mattresses collected account for approximately 50 million tonnes for landfill every year.

The potential market for this segment is very wide and includes not just the general public but is the need of the other industries like healthcare and hospitality industries that are among the biggest consumers of the mattress industry. These industries are always faced with the problem of disposing of a large number of used mattresses every year and form one of the biggest supplier and consumer market of the mattress recycling industry.

The Domestic market

In Australia, approximately 1.6 to 1.8 million mattresses are discarded or reach end-of-life every year. The domestic market accounts for almost 95 percent of the discarded mattress market while the institutional market is almost 5 percent. Out of the total market size, almost 40 percent of the mattresses are illegally dumped or have an uncertain fate.

Hospitals and the other healthcare facilities

The hospital mattress manufacturers are generally specialists and the hospital mattresses are made of latex foam or a polythene foam core with a protective layer of the PVC cover. The mattresses designed for the hospital use have different sitting and laying positions as they are bent to adjust to the bed frames. Therefore, the life of hospital mattress is only for a period of 9 to 18 months depending on the intensity of usage. Therefore, the hospitals and the healthcare facilities have a much higher turnover rate as compared to the domestic sector with almost 15 to 20 percent of the mattresses being replaced every year.

Supply and the source of discarded mattresses

However, the mattresses that are contaminated with bodily fluid have to be incinerated and cannot be recycled. The clean mattresses are being sent for recycling and many facilities send their discarded mattresses for landfill. A tie up with the local authorities and private healthcare and nursing care facilities could boost the supply by a large margin (Crowdfunding social ventures: a model and research agenda, n.d.).

Prisons

The prisons also use foam mattresses like the hospitals for functional reasons. These are also purchased in bulk and have a shorter life span than the domestic markets because of rough use and constant wear and tear. These mattresses are also made of a foam core and a layer of PVC coating but they have to conform to the regulations of flammability and fire safety. Approximately 49 percent of the mattresses are disposed off every year.

Army accommodations

Unlike the other sectors, it is very difficult to calculate the number or percentage of mattresses being purchased for army accommodations as the army accommodation has many bifurcations. The army personnel making use of the single living accommodation can be taken as the source market, but many of the mattresses purchased are used by SLA located in different locations and even overseas. Therefore, an exact estimate of the waste mattresses arising from this sector is difficult to calculate.

Commercial and hospitality industry

Out of the total number of mattresses used by the institutional sectors, the hospitality industry which includes the hostels, hotels, beds & breakfast businesses, youth hostels, and caravan parks, accounts for 20 percent of the consumption. The number of mattresses being used in the sector amounts to roughly two times the number of rooms in the industry. The average life span of the mattresses in the hotel industry varies from a period of 4 years to 7 years. The hostels, caravan parks, youth hostels use less premium mattresses and therefore more frequent replacement is required. Roughly one-third of the mattresses in the commercial and hospitality sectors are being replaced every year creating a huge potential market for the recycling industry.

Strengths:

• Waste and discarded mattresses would always be available all the year round and having a tie up with the local authorities and industries will ensure a regular supply at reasonable prices (Z, n.d.).
• The consistency of the constituent material in the mattresses is more or less constant and the reclaimed materials have a market value.
• The business does not require any kind of specialized and expensive equipment so overhead costs can be kept low (End of Life Mattress Report 2016, n.d.).
• The process of reclaiming the material maintains the quality and market value of the reclaimed material as compared to the quality of the material in the other processes like shredding.
• The business and the marketing model can be easily replicated at different branches and sites provided the market and supplier capacity exists (Z, n.d.).

Weaknesses:

• The mattress recycling process and reclaiming of materials is a more costly option than the other cheaper alternative like landfill
• The business depends a lot on the gate fee charges to recover the business costs and lower gate fees could reduce the economic viability of the operations.
• There needs to be a market available for the end use of the reclaimed materials especially the mixed textiles (James, 2015).
• The mattress supply is dependent on a number of distributed sources of supply which are sometimes spread over a geographical area.
• Scaling up the sites at some locations becomes difficult due to supply chain a logistics difficulties and diminished economies of scale for processing manually (Z, n.d.).
• In some regions, there is a limited scope for automated processing facilities at a large scale.
• The economies of scale are generally poor for the processing operations.
• The insurance costs are high due to the hazardous risks to life by fire (Z, n.d.).

Opportunities

• There are a very few companies dealing with the mattress recycling business in Australia and there is a lot of scope for expansion of the business in untapped cities.
• There is a growing awareness among the people and the governments to look for alternative and more environment-friendly methods of disposing the waste mattresses instead of the widely prevalent landfill option (Lehmann, n.d.).
• The operation is very simple and it is easy to set up in a new location.
• The business can work with the retailers and develop retail take-back schemes to augment the income generated and could source better quality mattresses as a result (Strategic marketing for social entrepreneurs, n.d.).
• The business has the opportunity to enter into collaboration with the local authorities in a new location and existing sites to improve the collection methods and services. This would also improve the quality and quantity of the waste mattresses being collected. The tie up with the local authorities would also improve the funding requirements for the project (Mattress recycling – mwrrg.vic.gov.au, n.d.).
• The company could work with the local authorities and social organizations to improve awareness about the benefits of recycling as compared to landfill and in the long run eliminate the option of waste mattresses being sent to landfill reducing the ecological burden on the environment (Nelles, 2013).

Threats

• The industry is still in the nascent stages of development and cannot cover all locations especially the areas with low density of population.
• There is no actual quality control that can be exercised on the quality of the waste mattresses being supplied and picked up. The soiled and wet mattresses are much lower in quality and affect the profitability of the organization.
• The competition from cheaper options available to people like shredding and landfill.
• To set up operations in a new location, the company requires the co-operation from the local authorities (Oxfordshire, n.d.).
• Any kind of design and material change in the manufacturing of the mattresses in the future may have a huge impact on the recycling operations especially on the materials which are extracted for the purpose of recovery (Small Business Secrets: Social enterprises springing up, 2016).
• The drop in the market price of steel can affect the market for steel springs which constitute almost 50 percent of the mattress components.
• Market Demand for recycled materials from the mattresses
• The materials from the mattresses which can be obtained for recycling purpose form the major revenue generators for this industry. The mattresses are made of a number of materials; the reclaimed portion of these materials is sold to another end user market where they are reused into the manufacturing of fresh products. Some of the reclaimed material can also be sold for energy generation from waste materials or as a landfill cover in certain cases where there is no other option (State of Waste 2016 – current and future Australian trends, 2016).
• Steel, PUR foam, cotton, felt, plastic, and other mixed textiles form the main constituent materials of a mattress. The mixed textile accounts for almost 35 percent of the weight of a mattress and the other natural fibres like jute, hemp, coconut fibers, sisal form approximately 7 percent of the weight of a mattress. The natural fibres are also grouped into mixed textiles since they are difficult to segregate and separate during the reclaiming process.
• Steel is the metal which is widely used in the mattresses as springs and the scrap steel reclaimed from the mattresses forms the other major material sold to the end users. But the value of the steel springs reclaimed from the mattresses is much lower in the market because of the distorted shape of the springs. Spring contractors are available but are very expensive. Purchase of a spring contractor may lead to a substantial increase in the overhead costs (The City of Cardiff Council, n.d.).
• The PUR foam which is reclaimed from the mattresses has three end user markets: generating energy from waste, recycling and used as the cover for landfill along with the mixed textiles. Out of the three options, recycling brings the maximum revenue as the market for this product is big. The value of the reclaimed PUR foam depends on its quality, source and the intended use. The energy generating market and the landfill cover market offers a very limited scope and generate much lower income (Whistler, J., et al., n.d.).
• PUR foam segregated from the discarded mattresses is very widely used for re-bonding purposes, where small pieces of the foam are bonded under high pressure and these pieces are used for products like gym mats and carpet underlay. However, the market for PUR foam is dependent on the source of the discarded mattresses and the final consumers’ perceptions about the hygienic quality of the foam being recycled (Zysman, 2014).

Barriers to Business

There are several barriers to the development of mattress recycling business. Some of the critical barriers are:

• Obtaining a sufficient gate fee to sustain the economic viability of the business and make it an attractive opportunity for investment and development.
• A substantive gate fee is important for the economic viability of the business because of the low quality of materials arising from the discarded mattresses because of the poor collection methods (Boone, n.d.).
• The overhead and costs cannot be reduced further due to very tight margins.
• Operational barriers arise due to the unavailability of clean and dry mattresses.
• The business is dependent on procurement from the local authorities like the government aided hospitals and the healthcare facilities which form one of the biggest supply markets for this business.
• The Landfill is a cheaper method of disposing of the old mattresses, therefore, tougher laws and regulations, more incentives and educational initiatives from the government are required to promote mattress recycling among the general public (Collection of non-clothing textiles case study: Mattress … n.d.).
• The government would need to incentivize the mattress recycling operations to make them more attractive for investment and commercial mattress recycling would receive a boost.

Competition and Risks

• The main risk associated with this business is the obtaining the dry and unsoiled mattresses for recycling and generating the right amount of gate fee to support the cost of the business
• The main competition of this business is from the other waste processes which send the discarded mattresses either for landfill or the mattresses are shredded in the general waste management processes. Shredding is an option which is a low-cost alternative to landfill and helps in the recovery of the metallic parts from the mattresses. But this process significantly lowers the quality of the constituent material obtained for use by the relevant end markets.

Risks and Hazards in the Mattress Recycling Methods

• Inconsistent disclosure and application of sterilization and the health standards of the re-furbished and re-used mattresses.
• Worker safety is a big concern in the lifting, dismantling, and the recycling process.
• The danger of fire and vermin infestation due to poor storage facilities has been observed at many places.
• The dust and the fibers surrounding the mattress recycling unit sites can trigger an asthmatic attack or any other respiratory allergic reaction in the people. Workers should be provided with gas masks (Cubby, 2012).
• Mattresses are heavy and the manual collection services cause a lot of stress on the joints and the back of the collection staff.
• Bed bugs, mites, parasites, and infectious diseases contaminating the mattresses create a serious health risk for the mattress collectors and recycling unit workers.

Marketing and Business Development Opportunities for the coming year

The company is able to convert 95 percent of the mattress material into some form of recyclable materials and proceeding in this manner the company will divert almost 70 percent of the waste from landfill in the coming few years.

Sector wise distribution of the source market

The mattress recycling firm can offer its recycled material to different manufacturers that need the raw material at cheap rates. For example, the cotton from the mattresses can be sold to the rag manufacturers for whose brand the environmental commitment forms an important aspect. The felt and cotton recovered from the mattresses can also be sold for the purpose of insulation and make new felt (Guilfoil, n.d.).

Another good potential market for the recycled and reclaimed material is the mattress manufacturers. The firm can supply the mattress manufacturers with a steady stream of reclaimed and recycled material. Keeping in mind the growing environmental consciousness among the public, the mattress manufacturers that use the recycled material will gain an edge over their competitors (LeBlanc, n.d.).

The company should contact and consider a business arrangement with the mulch businesses in the region. But the company will have to disclose the fact that the wood that the company is selling to the mulch businesses comes out of a used mattress that has been discarded and recycled. The wood can also be sold to the bio-fuel manufacturers (Mattress recycling faces market challenges, report warns, 2016).

Financials

The largest operating costs of the mattress recycling business are the property costs, training, and salary expenses which account for almost 60 to 70 percent of the operating expenditure. The revenues that are generated are derived mainly from the approximate gate fees $ 15 per mattress and the sales revenue from the material sent for recycling. The gate fee was determined from the information collected from the other mattress recycling operations from European and American industries.

The market of collecting and processing the end-of-life mattresses is very competitive and the whole process operates at a very little margin. The scrap material recovered has an approximate value of around $2.40 each. The steel scrap is valued at almost $85 to $ 120 each tonne, foam measures at $ 650 per tonne. The recovered mixed textiles and the recycled timber have very little monetary value. This significantly impacts the cost of dismantling a mattress. The dismantling process requires a critical disassembly and can lead to a lot of environmental pollution if the process is handled in an irresponsible manner. The financial aspect of the mattress recycling is highly dependent on the collection charges and the gate fee (West, & Lazzaro, n.d.).

In the mattress recycling business the relationship between the gate fees which is approximately $15 to $20 for each mattress accounts for almost 90 percent of the income of the business, and the recovered and reclaimed material which sells for approximately $2.20 each, is very low. As compared to mattress recycling, in the other mature recycling sectors the value of the recovered and recycled material accounts for almost 55 percent of the business revenue and the gate fees accounts for approximately 45 percent of the revenue. Even in recessive sectors like tires, the scrap material accounts for almost 20 percent of the business earnings.

SWOT Analysis of the Mattress Recycling Business

The company also has to work at reducing the overhead costs in which the transportation costs are the most significant elements. The company can work with the municipal waste collection workstations to significantly lower the transport costs.

The company has to make an investment in purchasing second-hand balers and contractors for the business operations in the current year as these can significantly raise the value of the scrap. The balers can compress the mixed textiles into smaller bales which are easy to transport and store and have a higher market value. Similarly, the contractors can take the air out of the mattress springs increasing the market value of the recycled springs to almost the double. These factors will improve the profitability of the business and reduce the dependency on the gate fees as the main income generator in the coming years.

Conclusions

The waste generation in Australia has grown to almost 50 million tonnes a year and approximately each individual contributes a waste of 2 tonnes each year. However, the growing concern and awareness about the environment and ecology have given a boost to the recycling industry and the mattress recycling has grown significantly in the last few years since 2005. The waste being sent to landfill has drastically reduced as recycling facilities have been established at different places and according to a survey report almost 58 percent of the waste is being sent for recycling now instead of a landfill and the percentage will continue to grow in the coming years.

The dismantling process of a mattress is driven by manual labour in Australia and this has provided a lot of employment opportunities to the unskilled labourers. But the recovery of the constituent components for recycling and reclaiming purposes is reduced greatly by the manual labour processes (Method of recycling visco-elastic foam and compressible cushion product formed thereby, n.d.). To improve the profitability of the business and to make it a self sustainable operation, the company needs to invest in purchasing certain automated equipment like balers and contractors. These would not just reduce the overhead storage and transportation costs but also improve the market value of the scrap improving the profitability of the company significantly (O’Kane, 2016).

The company should also work to encourage the retail sector, mattress manufacturers and mattress retailers to make a contribution for the cost of disposal, recycling, and the illegal dumping of mattresses. The company should focus on collaborating with the overall retail sector to encourage take-back schemes and the drop-off collection points by including the disposal fees in the cost price of the mattress. This will go a long way in reducing the collection costs and illegal dumping of the waste mattresses (Rapoport, n.d.).

Financials

To generate greater support for its business activity and the social initiative of recycling and reusing the scrap materials from the waste mattresses, the company should hold educational and informational drives and hold a workshop for the people who re-use the reclaimed material from the mattresses, to discuss the acceptable quality standards for the material quality and identify the specific characteristics of the end-user market to improve the quality of scrap produced (Social Return on Investment (SROI) and Performance Measurement, n.d.).

While looking at improving the processes of the business the company should also work to reduce the occupational hazards associated with the recycling process. The workers and the labourers are subject to a lot of safety, health and occupational problems which are associated with the handling of cumbersome and heavy mattresses, and many times potentially infectious and soiled mattresses (The afterlife of mattresses, n.d.)

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