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Economics LAP 13Economics LAP 13
Describe the types of utility.
Explain the relationship between utility and marketing.
Objectives:
Describe the types of utility.
Marketers use utility to measure consumer
satisfaction.
Faulty products aren’t helpful to you.
Crackedcoffee
mug
Bad hair
cut
Utility As UsefulnessUtility As Usefulness
“A little off the sides is all I asked for!”
A helpful product is a useful one.
Useful products make your life
better.
Utility As SatisfactionUtility As Satisfaction
To satisfy consumers’ wants and needs, marketers look at how consumers view the
product.
?
Utility and Self-InterestUtility and Self-Interest
Consumers buy products to benefit themselves.
A camera phone that shoots both stills and video
Businesses provide useful products to stay in business.
Example:
Measuring UtilityMeasuring Utility
Marketers measure satisfaction in terms of low or high utility.
• Low utility
The higher the utility, the more satisfying the product.
Example:
• High utilityHigh utility
Creating Utility
Marketers attempt to increase:
• TheThe probability of purchases
• The level of consumer satisfaction
Creating Utility
• By making changes to existing products• By developing new products
Updates
New New designsdesigns
Making changes is called creating utility.
Now open 24 hours!
Betterhours
Shop at
target.com
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
Form utility =
the usefulness created
by changing the form of a good
Businesses can change product styles, scents,
flavors, or colors.
Task utility =
the usefulness created by changing the characteristics
of a service
Businesses can do things in a new or improved way.
Types of Utility
Towel-dry serviceTowel-dry service
Fastest delivery in town!
Time utility =
Types of Utility
the usefulness created when products are made available at the time they are needed.
Businesses can make sure the product is available when you want to buy it.
How useful is holiday candy available after the holiday?
How helpful is a tax service if offered after the deadline?
Place utility =
Types of 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.
A bus service could expand into your neighborhood.
Your bank could set up online account management.
New!New!
Possession utility =
the usefulness created when ownership is transferred to the user
Businesses can make it easy for you to become the product’s owner.
Types of Utility
As the owner, you can do what you want with your jeans.
Explain the relationship between
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.
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 tells marketers:
Utility varies.
One product vs. another product
One consumer’s view vs. another consumer’s view
Utility now vs. utility later
For the system to work well, both marketing and production are needed.
In fact, both are necessary for all four types of utility to be present.
Form/Task utility
Time utility
Place utility
Possession utility
For a consumer to be satisfied, the four types of utility must be present.
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
Marketers affect form utility indirectly when they:
Study which features bring the most satisfaction
Recommend the changes producers should makeRecommend the changes producers should make
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
A snowsuit in Hawaii would have little place utility.
A snowsuit in Hawaii would have little place utility.
Marketers are directly involved in place utility when they:
Figure out where the right location isFigure out where the right location is
Plan how to get the product there
Actually deliver the product to the right placeActually deliver the product to the right place
Address whatever holds consumers back from making a purchase
Make the purchase as effortless as possible
Marketers directly create possession utility when they:
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.
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
AcknowledgmentsAcknowledgments
Original Developers:Original Developers:
Lelia Ventling and Mary C. Hollaway, Lelia Ventling and Mary C. Hollaway, MarkED MarkED
Version 1.0Version 1.0
Copyright Copyright 2006 2006
MarkED Resource CenterMarkED Resource Center
LIQUID LIBRARYVarious images used in this presentation are ©2004 Liquid Library. All rights reserved http:www.liquidlibrary.com
DIGITAL VISION LTD.Consumers #267160B, 298Photos copyright Digital Vision Ltd., all rights reserved. 833 Fourth Ave. SW, Suite 800 Calgary, AB, Canada T2P 3T5
Digital-based photography sources:Digital-based photography sources:
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PHOTODISC, INC. Meetings and GroupsVolume 69#69213, 07106Photos PhotoDisc, Inc2013 Fourth Ave., Seattle, WA 98121
Copyright:
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