Use It Economics LAP 13

Describe the types of utility. Objectives: Describe the types of utility. Explain the relationship between utility and marketing.

Describe the types of utility.

Marketers use utility to measure consumer satisfaction.

“A little off the sides is all I asked for!” Utility As Usefulness “A little off the sides is all I asked for!” Faulty products aren’t helpful to you. Useful products make your life better. A helpful product is a useful one. Cracked coffee mug Bad hair cut

Utility As Satisfaction To satisfy consumers’ wants and needs, marketers look at how consumers view the product. ?

Utility and Self-Interest Consumers buy products to benefit themselves. Businesses provide useful products to stay in business. A camera phone that shoots both stills and video Example:

Measuring Utility Marketers measure satisfaction in terms of low or high utility. Example: The higher the utility, the more satisfying the product. High utility Low utility

Creating Utility Marketers attempt to increase: The probability of purchases The level of consumer satisfaction

Making changes is called creating utility. By making changes to existing products How? By developing new products Now open 24 hours! New designs Shop at target.com Updates Better hours Online options

Types of Utility When marketers create utility, they usually adjust one or more of the four types of utility: Form/Task utility Time utility Place utility Possession utility

Types of Utility Form utility = Task utility = the usefulness created by changing the form of a good Businesses can change product styles, scents, flavors, or colors. the usefulness created by changing the characteristics of a service Businesses can do things in a new or improved way. Towel-dry service Fastest delivery in town!

Types of Utility Time utility = Businesses can make sure the product is available when you want to buy it. the usefulness created when products are made available at the time they are needed. How useful is holiday candy available after the holiday? How helpful is a tax service if offered after the deadline?

Types of Utility New! Place utility = the usefulness created by making sure products are available where they are needed Businesses can make sure the product is available where you want to buy it. New! A bus service could expand into your neighborhood. Your bank could set up online account management.

Types of Utility Possession utility = Businesses can make it easy for you to become the product’s owner. the usefulness created when ownership is transferred to the user As the owner, you can do what you want with your jeans.

Explain the relationship between utility and marketing.

Utility and Marketing Utility reveals what consumers prefer. Marketers cater to consumers’ preferences by making changes. These changes influence the degree of utility a product offers.

Utility tells marketers: Utility and Marketing Utility tells marketers: How satisfied a consumer is with a product How useful a particular product is to a particular consumer at a particular time Each gallon of milk is ranked individually—according to its usefulness. Spoiled milk—Low utility Fresh milk—High utility

Utility and Marketing Utility varies. One product vs. another product One consumer’s view vs. another consumer’s view Utility now vs. utility later

Role of Production For the system to work well, both marketing and production are needed. For a consumer to be satisfied, the four types of utility must be present. In fact, both are necessary for all four types of utility to be present. Form/Task utility Place utility Time utility Possession utility

Influencing Utility Marketing influences utility by: Providing information—which can make the product’s purchase (and usefulness) more likely Being involved in the four types of utility—which must be present for consumer satisfaction

Form Utility and Marketing Marketers affect form utility indirectly when they: Study which features bring the most satisfaction Recommend the changes producers should make

Time Utility and Marketing Marketers are directly involved in time utility when they: Find out when consumers need the product Plan how to get the product there on time Make the necessary changes to get it done

Place Utility and Marketing Marketers are directly involved in place utility when they: Figure out where the right location is Plan how to get the product there A snowsuit in Hawaii would have little place utility. Actually deliver the product to the right place

Possession Utility and Marketing Discount pricing Answer questions Marketers directly create possession utility when they: Address whatever holds consumers back from making a purchase Make the purchase as effortless as possible Discount pricing Answer questions If affordability stands in the way of a purchase, marketers can provide options: This allows a willing buyer to take ownership of a product as soon as possible. Layaway options Payment plans

Utility and the Marketing Concept Utility supports implementing the marketing concept. All about what the consumer thinks Utility also plays a role in the implementation. A measurement tool to research what consumers want

Think of something you bought recently. Consider how the four utilities were provided. What improvements—or increased utility— would you like to see?

John and Marcia Collect information from a local business Select the television they prefer Purchase it online

Lelia Ventling and Mary C. Hollaway, MarkED Acknowledgments Original Developers: Lelia Ventling and Mary C. Hollaway, MarkED Version 1.0 MarkED Resource Center Copyright ã 2006

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