Economic Utility Usefulness the ability of a product

Economic Utility Usefulness; the ability of a product to satisfy human wants and needs

FORM UTILITY � Added when a business changes the form of something to make it more useful ◦ The main job of the production function of business is to add form utility. ◦ Examples: ◦ …an auto manufacturer takes steel, plastic, fabric, and glass and changes them into a car. ◦ In the service business, the production of the service itself provides the utility. ◦ Examples: ◦ …when you take your clothes to the dry cleaner, the service of cleaning provides the form utility.

PLACE UTILITY � Added when a business makes products available at convenient places. ◦ Examples: ◦ …few people live near an automobile manufacturing plant so when a car dealer locates a showroom near where people live, they are adding place utility ◦ …ATM machines provide place utility by making cash available at convenient places like a grocery store or airport.

TIME UTILITY � Added when a business makes products available at the times that customers need and want them ◦ Examples: banks used to close before 5: 00 pm. Many people who needed to use bank services could not get to the bank before it closed. To provide time utility, banks may stay open later, open on Saturdays, and allow for online banking.

INFORMATION UTILITY � Added when a business provides information about a product to a customer. � Telling the customer about products and where to buy them ◦ Examples: ◦ …advertising provides information utility by describing products and telling customers where to buy them ◦ Information about products includes telling customers how to use them ◦ The marketer for a new kitchen appliance might arrange for a demonstration ◦ A business might create a video that explains the services it offers or information about how to use a new product.

POSSESSION UTILITY � Added when a business makes it easier for a customer to acquire a product ◦ Examples: ◦ …offering various kinds of credit at a store; for example, if you need a car to get to work but don’t have the money to pay in full, the dealership provides possession utility be helping arrange for you to get a car loan. You can have possession of and use the car while you are still paying for it.

Economic Utility notes � Form utility is provided mainly by the production function of business. � Place, time, information, and possession utility are usually provided by the marketing function of business. � Marketers refer to the process of adding utility as adding value. � Adding value means adding a feature or service that makes a product meet more customer wants and needs.

FORM UTILITY � Imagine what life will be like in the year 2030. Create a new product or take an established product and predict what consumers in 2030 will want the product to do for them. � Describe a new product or the changes to an existing product to create the form utility needed in 2030.

PLACE UTILITY � Choose a product � List the places where the product could be sold � Think of a product you see in a store. � How has the store added place utility to that product?

TIME UTILITY � Describe an experience you know of when a business DID NOT provide time utility.

INFORMATION UTILITY � Describe how information utility was added to a product that you own.

POSSESSION UTILITY � Describe a situation in which a business provided possession utility.