Economic Utility

1. Economic Utility High School of Business Principles of Business

2. What is Utility? • Useful products make our lives better. They provide us with something worthwhile. They have utility – usefulness. • Utility is about satisfying wants and needs. • If customers are satisfied with what a product offers because it fulfills a desire, the product has utility. • If not the product lacks utility.

3. Self-interest fuels Utility • Consumers and Businesses buy products that benefit them – the products with the most utility. • The first products consumers buy are the ones that benefit them most – the products with the most utility.

4. What to Make? • Businesses work to satisfy consumers demand for products and services. • Marketing tries to: • Improve existing products and services • Develop better products and services • Change how products and services are delivered • These changes are called “Creating Utility”

5. Form & Task Utility • A Product’s Form is tangible – whatever can be noticed by the senses. • Marketers change the tangible parts of goods to Create Utility • Form Utility is created when the physical characteristics of a product are changed to make it more useful • Task Utility is created when the characteristics of a service are changed to make it more useful. • Styles • Scents • Flavors • Textures • Sounds • Colors

6. Time utility • Getting the timing right to make a product available to consumers • Requires looking ahead and anticipating what will be needed in the future. • Marketers make changes to avoid or correct problems with timing. • Time Utility is created when products are made available at the time they are needed or wanted by consumers.

7. Place Utility • Place is the right location for products and services – on a shelf, in the showroom, at the fair, in the warehouse, at the office… • Making changes to a product or service’s location can create Place Utility • The usefulness created by making goods and services available at the place they are needed or wanted by consumers.

8. Possession Utility • Possession involves selling the product or transferring the product’s ownership. • The exchange of money for a product or service shifts possession • Possession Utility is the usefulness created when ownership of a product is transferred from the seller to the buyer or when a service is performed by the provider for the buyer. • Marketers make changes that affect the purchasing process by making it easier to buy a product or service.

9. How does Marketing influence utility? • Marketing is about making a connection between a product or service and the consumer • To do this they share information on product benefits with consumers and encourage them to buy. • Marketing tools: • Displays • Advertising • Mailings • Personal Selling • Social Media

10. How does Marketing influence utility? • Form Utility: Product changes are made in production – Marketing recommends changes to the product form after analyzing what consumers want. • Time Utility: Marketing works to understand when consumers want a product and work to plan and schedule all of the steps in the product development cycle. • Place Utility: Marketing determines the best location to place the product where it will meet consumer’s needs. • Possession Utility: Marketing analyzes what barriers prevent consumers from buying the product or service and design ways to remove them.

11. Utility Activity • In groups of 3-4 students, you will pick a product or service. Your teacher can help you with ideas. • You will have 15 minutes for your team to come up with an example of a Time, Place, Possession, and Form Utility change for your product or service that will increase sales and customer satisfaction. • You will need to present your ideas to your classmates using a drawing, demonstration, or model. • As each team presents the changes to the product or service, the other student teams will guess which utility is used in each example.