Marketing Utilities

Marketing transactions create utility, which refers to the sum of the benefits we receive when we use a good or a service. Utility is the use or satisfaction a person gets from a product. If you purchase a chain saw you anticipate that you will receive a certain amount of utility from it. You will be able to use the saw to cut fire wood, prune trees, and take care of a variety of jobs around your home.

Marketing makes life of people easier by ensuring people have the type of product they want, where and when they want it. Utility is what creates value. Marketing process creates different kind of utilities, let us look at them. There are four types of utility.

Form Utility

It is the benefit marketing provides by transforming raw materials into finished products. A product must be processed into a form that the customer wants or needs. For example, wheat is processed into bread, trees are processed into lumber, and potatoes are processed into French fries. If you ordered French fries with your lunch and the waiter brought you a raw potato, you probably wouldn’t be too happy.

Example – Baskin Robbins turns cream, sugar and milk into ice cream

Place Utility

Place utility involves transporting products to the location where consumers can buy them i.e. making it available where the demand is. If you live in Alaska, you certainly wouldn’t want to have to drive to California to buy oranges. Thanks to our modern transportation systems you don’t have to; you simply drive to the local grocery store and oranges are there ready to add to your shopping cart — place utility.

Example – Food truck at construction site

Possession Utility

Possession utility establishes legal ownership of a product. It ensures the consumers own the product use it and enjoy the benefits of it. When you purchase something you normally receive a receipt; this provides legal ownership and the right to use the product. Some products, computer software, for example, also provide a user license. A license of this kind gives you the right to use the product within certain guidelines.

Time Utility

This could be described as being in the right place at the right time when a customer is ready to purchase a product. Creating and keeping customers means having products available for when they want them, and often this requires some type of storage facility. Wheat is one example of a commodity that must be stored after it is harvested. It is stored in silos until processors are ready to convert it into food products such as bread or cereals.

Example – Noble Chemists, open 24 hours, 365 days a year, have time utility when compared to other chemists


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