Economics: Product Utility
Jason Gracia, Frida Cervantes, Teddy Daniel
1. What is meant by product utility?
by: Frida Cervantes
Product utility is an economic term that refers to the total satisfaction received from consuming a good or service. In other words, the capacity of a good or a service to satisfy some human want.
What are the types of utilities? What do they have in common?
by: Frida Cervantes
There are five different types of utilities:
1) Form - when someone makes something, they assemble a product from parts and you can use it*
2) Task - when someone does something for you, like put ice cream in a cone, or change the oil in your car*
3) Time - making sure the product is available when people need it, not out of stock.
4)Place - making sure the product is accessible, bring it to the customer, or have it in convenient place.
5)Possession - letting the customer have the product, usually after they pay, they can "possess" it, do as they please with the newly purchased product.
*Some marketing teachers teach merging "form" and "task" together, or discussing it as "promotion." What they all have in common is common is customer satisfaction.
Which utility is not classified as a marketing utility? Why not?
Jason: Form utility is not directly related to marketing. When form utility involves changing putting parts together to make them useful, individual parts are not marketed as the final product. Much of what goes into creating products, such as marketing research and product design, makes it an an integral part of the marketing process.
Why is product utility an important factor in marketing?
Jason: Product utility is important because if a good satisfies customers the good will be sold more than a good that does not satisfy customers.
Which type (or types) of utility is being used when products/services are sold through the Internet?
Shopping online provides unique aspects of place, time, possession, and information utility.
- Place: Shopping on the internet provides extremely convenient place utility: anywhere with internet. This allows the consumer to shop conveniently virtually anywhere.
- Information: Online, much product information is available to the consumer through links, text boxes, and videos. Information is limited, however, by lack of physical interaction with the product.
- Time: On the internet, time utility is demonstrated by websites being open at all times. This gives consumers access to shop at whatever time they have available.
- Possession: Possession utility is available through secure sites to pay with credit, debit, and gift cards on the internet. However, the inability to pay through cash or check and security risks limit payment options and therefore possession utility.
How do the seasons and holidays affect utility?
Utility increases with demand and quantity of items bought.
Because demand and products sold increases greatly in the weeks leading up to major holidays, utility also increases.
Farese, Lois, Grady Kimbrell, and Carl Woloszyk. Marketing Essentials. N.p.: Glencoe, 2012. Print.