ENHANCING ECONOMIC UTILITY

1. ENHANCINGECONOMIC UTILITY Marketing

2. Utility Means Satisfaction Although consumers rarely analyze precisely how they decide to buy products or services, they unconsciously make buying decisions based on the satisfaction they expect to derive from them. To analyze how people make choices among competing products, economists use a concept called Economic Utility.

3. Economic Utility • Economic Utility is the amount of satisfaction a consumer receives from the consumption of a particular product or service. • Products that provide great satisfaction have a higher economic utility, while those providing less satisfaction have a lower utility. • When people buy a product, they want to be satisfied. When selecting between your product and another company's product, they will choose the one that gives them the most utility. • It is important to send a message to the consumer about the amount of utility that your product will provide.

4. Economic Utility and the Marketing Concept • Business people who use the marketing concept try to identify customer needs and develop marketing mixes to satisfy those needs. • Economic Utility supports the marketing concept. • It identifies ways to improve customer satisfaction through changes in form, time, place, and possession. • Marketers need to determine what changes customers would like to have in products and services in order to develop an effective marketing mix. • There are many possible ways to improve products.

5. change in Form, Time, Place, Possession. The four primary ways businesses can increase the Economic Utility of a product or service are

6. Form Utility • The physical product provided or the service offered is the primary way that consumer needs are satisfied. • Form Utility results from changes in the tangible parts of a product or service. • Some products and service are in a more usable form than others. • They may be constructed of better or more durable materials. • The product may also come with features that more consumers want.

7. Time Utility • Even though a product is in the form a consumer wants, it may not be available when the customer wants it. • Time Utility results from making the product or service available when the customer wants it. • Examples include a bank that stays open in the evening and an auto dealership that opens its service department on the weekends.

8. Place Utility • Just as some consumers are concerned about when a product is available, others may want to purchase or consume the product at a particular place. • Making products and services available where the consumer wants them is Place Utility.

9. Place Utility Examples • Convenience stores are successful because they are located in the neighborhoods close to where consumers live. • Businesses that provide mailing, photo-copying, and facsimile services are becoming very popular, but they must be located conveniently to small businessess and individual consumers who need them. • This is very important to people with busy lives.

10. Possession Utility • A product may be in the form a consumer wants and be available at the right time in the right place, yet the consumer still may not be able to purchase the product because of a lack of resources. • Possession Utility results from the affordability of the product or service. • It is usually not possible for a business to decrease the price just so a product can be sold. • Yet there are other ways besides cutting the price to make a product more affordable.

11. Possession Utility Examples • Using credit allows people to purchase things for which they do not have enough cash at the time. • Auto dealerships are making it possible for customers to drive new cars without having to make a huge down payment. • You will probably rent your cap and gown for your graduation. • Finding ways to finance, rent or lease products has become an important business activity today. • Some retail stores offer layaway (payment plan). It is a valuable way to offer possession utility to customers.