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MARKET REPORT: Mobile phone recycling. For a while now, many companies have been exploiting the environmentally-friendly angle in an attempt to increase sales.

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Introduction

MARKET REPORT: MOBILE PHONE RECYCLING For a while now, many companies have been exploiting the 'environmentally-friendly' angle in an attempt to increase sales. A prominent example of this is Japanese car giant Toyota's Prius hybrid car, which quickly became a fashion item for celebrities and Americans despite its apparent lack of effectiveness. The market for 'green' products and services has grown to such an extent that entire markets have been formed as a result of it, one of which is the market for mobile phone recycling. Factors which have contributed to the rise of this market include rapid technology change (meaning consumers upgrade with great speed), low initial cost and even planned obsolescence, which entails companies planning and designing products with a limited useful lifespan. Mobile phone recycling companies will purchase people's old and unwanted phones and recycle their small components, including metals like copper, palladium, gold, silver and platinum, plastics and ceramics. The collective value of these precious metals is substantial: the values of copper, palladium, gold, silver and platinum in unused mobile phones in storage annually are $17 million, $63 million, $199 million, $31 million and $3.9 million respectively (without accounting for recovery costs). ...read more.

Middle

This competitiveness is a result of the fact that the well-known firms will spend large sums on advertising and presentation, thereby only able to give lower sums to consumers, while firms who do not advertise have more money to offer for phones. And, as the start-up costs of such a business are very low and there is no control over access to recycling facilities, there is further evidence that the barriers to entry are near non-existent. Additionally, all the services are relatively homogenous, all offering the same basic service. There is the occasional extra offered by some firms (Mazuma Mobile, for example, the UK's best rated Mobile Phone Recycling Website, offer a Data Delete Tool which is rather unique), but this shouldn't be too large a factor when compared to price In terms of price, the firms compete in terms of negative price, so to speak, or how much is offered for mobile phones. The prices offered by firms in the market often vary slightly (as aforementioned, it seems that firms which do not spend on marketing and advertising have more money to give for phones), but they tend to be around the same mark. ...read more.

Conclusion

So, although the market appears contestable (as there is perfect information, freedom to advertise and enter the market, and the absence of mandatory sunk costs), the reality is that without the sunk cost of advertising being provided, there is very little chance that new firms will be able to break into the market and form serious competition. The reputable brand of a few firms, then, could be said to be a barrier to success in the industry, even if there are no technical barriers to entry. The market would appear, then, to be highly incontestable, and be most in line with the oligopoly market model. This is because competition in terms of advertising and quality of service has overrun the slight differences in price which can be observed through price comparison sites. For the most part, the market follows the kinked demand curve (as can be seen in the diagram above), and the main firms compete in terms of non-price competition (i.e. quality of service, advertising). Interdependence, a key component of oligopolistic markets, can be observed in the relative price rigidity and the recent decision by Cash4Phones to unfurl a nationwide marketing campaign as a result of the advertisement-based success of Mazuma and Envirofone. This market, then, is an incontestable oligopoly. ?? ?? ?? ?? ...read more.

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