Tuesday, November 10, 2009

Creating utility

The American Heritage Dictionary defines utility as "the quality or condition of being useful". Utility is further defined as any quality and/or status that provides a product with the capability to satisfy the consumer's wants and needs. Marketing is responsible for creating most of a product's inherent utility.
There are four basic types of utility:
1- Form utility: production of the good or service, driven by the marketing function. For example, Procter and Gamble turns raw ingredients and chemicals into toothpaste.
2- Place utility: making the product available where customers will buy the product. Procter and Gamble secures shelf space for the toothpaste at a wide variety of retailers including supermarkets and drugstores.
3- Time utility: making the product available when customers want to buy the product. The U.S. drugstore chain Walgreens has many locations open 24 hours a day, and since the 1990's has placed most of their newer stores at major intersections.
4- Possession utility: once you have purchased the product, you have rights to use the product as intended, or (in theory) for any use you would like.
A fifth type of utility is often defined along with the above four types:
5- Image utility: the satisfaction acquired from the emotional or psychological meaning attached to products. Some people pay more for a toothpaste perceived to be more effective at fighting cavities and whitening teeth.