1. Marketing Essentials
Economic Utilities

2. Economic Utilities The benefits of marketing
SECTION 1.2
Economic Utilities
What You'll Learn
The benefits of marketing
The meaning of economic utility
The five economic utilities and how to distinguish the four that are related to marketing

3. The Marketing Concept
Businesses must satisfy customers’ needs and wants in order to make a profit.

4. SECTION 1.2
Economic Utilities
Why It's Important
By understanding the benefits of marketing, you will see how the functions of marketing add value to products. You will also see how marketing activities lead to lower prices and new and improved products.

5. Economic Utilities utility form utility place utility time utility
SECTION 1.2
Economic Utilities
Key Terms
utility
form utility
place utility
time utility
possession utility
information utility

6. Economic Utilities SECTION 1.2 Economic Benefits of Marketing
Bridges the gap between you and the maker or seller of an item.
Makes buying easy for customers.
Creates new and improved products at lower prices.
Marketing plays an important role in the economy because it provides the means for competition to take place. In a competitive marketplace, businesses try to create new or improved products at lower prices than their competitors. Those efforts force them to be efficient and responsive to consumers. In addition, businesses look for ways to add value to a consumer’s shopping experience. Let’s look at the economic benefits of marketing to the economy and to consumers.

7. Economic Utilities Economic utility Economic utilities
SECTION 1.2
Economic Utilities
Economic Benefits of Marketing
Economic utility
the amount of satisfaction a person receives from the consumption of a particular product or service
Economic utilities
reflect the value that producers and marketers add to raw materials when they make them into products and offer them for sale to the public.

8. Economic Utilities Form utility (production) Place utility (marketing)
SECTION 1.2
Economic Utilities
Economic Utilities
Form utility (production)
Place utility (marketing)
Time utility (marketing)
Possession utility (marketing)
Information utility (marketing)
Attributes of a product or service that make it capable of satisfying consumers’ wants and needs.

9. Economic Utilities SECTION 1.2 Form Utility
Changing raw materials or putting parts together to make them more useful.
Example: The parts of a lounge chair— the wood frame, the fabric, the glue and nails, and the reclining mechanism—are less useful by themselves. Putting them together adds form utility.
Form utility involves changing raw materials or putting parts together to make them more useful. In other words, it deals with making or producing things.
Although form utility is not directly related to marketing, much of what goes into creating new products, such as marketing research and product design, makes it an integral part of the marketing process.

10. Sand into glass Wood into paper Silk into fabric
Form Utility
Changing raw materials into goods– making and producing things.
Sand into glass
Wood into paper
Silk into fabric

11. When Henry Ford first created the Model T, he was the only one mass producing cars. He didn’t have to think about “The Marketing Concept.” But, as more and more producers started making cars, they had to think about what customers need and want in order to stay in business.
Click on the Model T Ford to see Henry Ford’s thoughts about car color in the early 1900’s.

12. Imagine if, in today’s world, you could only buy black
Imagine if, in today’s world, you could only buy black. Many customers would not be very happy!

13. Today’s buyer wants a choice!

14. The Marketing Concept
If automobile manufactures do not give their consumers a choice (what they want), they will not stay in business.
That concept is true for all businesses.
Companies sell what Customers want.

15. Economic Utilities SECTION 1.2 Place Utility
Having a product where customers can buy it.
Example: Selling directly to the customer through catalogs.
It Includes:
Location –at a retailer (actual store) – or, Internet
Transporting the product to the location.
Place utility involves having a product where customers can buy it. Businesses study consumer shopping habits to determine the most convenient and efficient location to sell products.
Some businesses use a direct approach by selling their products through catalogs, and other businesses rely on retailers to sell their products. The Internet offers even more options to businesses that want to sell their products directly to their customers without the use of any intermediaries.

16. Economic Utilities SECTION 1.2 Place Utility
If you are selling products in a huge warehouse style store, like Home Depot of Costco, the utility of "place utility" can be as simple as having the product in boxes on pallets ready to be picked up and the customer can simply walk directly to the cashier to make payment.
Place utility involves having a product where customers can buy it. Businesses study consumer shopping habits to determine the most convenient and efficient location to sell products.
Some businesses use a direct approach by selling their products through catalogs, and other businesses rely on retailers to sell their products. The Internet offers even more options to businesses that want to sell their products directly to their customers without the use of any intermediaries.

17. Economic Utilities SECTION 1.2 Place Utility
When so many products are sold online, or in a marketing situation which may be partly online, and partly in a store, it is more and more important to make sure the "place utility" is as competitive as possible because sometimes the final decision about whether to buy, or not buy, is made by the customer based on how they can physically get their hands on the product as soon as possible.
For example, it is no good having a detailed YouTube video of how your low priced air-conditioner works, if the customer has to drive many miles to find a store with one actually in stock
Place utility involves having a product where customers can buy it. Businesses study consumer shopping habits to determine the most convenient and efficient location to sell products.
Some businesses use a direct approach by selling their products through catalogs, and other businesses rely on retailers to sell their products. The Internet offers even more options to businesses that want to sell their products directly to their customers without the use of any intermediaries.

18. Economic Utilities SECTION 1.2 Time Utility
Having a product available at a time convenient for customers.
Example: Retailers offer large supplies of backpacks in the late summer, near the beginning of the school year.
Planning and ordering
Time of day and week
Time of year: holidays and seasons
Time utility is having a product available at a certain time of year or a convenient time of day. For example, supermarkets and other food stores offer convenient shopping hours or they are open 24 hours a day. Retailers often have extended shopping hours during the busiest shopping season of the year, from Thanksgiving till Christmas.
Very few manufacturers do anything in real time. Fashion retailers buy at least six months to one year ahead of a season. Magazines are produced six months prior to publication, requiring editors to celebrate the Fourth of July in December. Textbooks are traditionally published to be available the spring before the fall of their intended use.

19. Economic Utilities SECTION 1.2 Time Utility
Challenge: The "social-cultural environment" of customers in the current marketing climate is one in which people often are quite impatient to take possession of the product once they have made the final decision to buy. It is important, in a competitive environment, to use every opportunity to streamline your supply chain and distribution channels to allow a customer to physically obtain the chosen product as quickly as possible.
Time utility is having a product available at a certain time of year or a convenient time of day. For example, supermarkets and other food stores offer convenient shopping hours or they are open 24 hours a day. Retailers often have extended shopping hours during the busiest shopping season of the year, from Thanksgiving till Christmas.
Very few manufacturers do anything in real time. Fashion retailers buy at least six months to one year ahead of a season. Magazines are produced six months prior to publication, requiring editors to celebrate the Fourth of July in December. Textbooks are traditionally published to be available the spring before the fall of their intended use.

20. Economic Utilities SECTION 1.2 Time Utility
In the case of food service items, you can't have the burger ready and have the customers wait many minutes for the fries, they just won't come to your drive-through next time.
Time utility is having a product available at a certain time of year or a convenient time of day. For example, supermarkets and other food stores offer convenient shopping hours or they are open 24 hours a day. Retailers often have extended shopping hours during the busiest shopping season of the year, from Thanksgiving till Christmas.
Very few manufacturers do anything in real time. Fashion retailers buy at least six months to one year ahead of a season. Magazines are produced six months prior to publication, requiring editors to celebrate the Fourth of July in December. Textbooks are traditionally published to be available the spring before the fall of their intended use.
This is one of the reasons why (say some fast food experts) that McDonald's fries are skinnier and smaller and are designed to cook faster so McDonald's can serve customers faster because the McDonald's focus is on the "Fast" in fastfood.

21. Economic Utilities SECTION 1.2 Possession Utility
Exchange of a product for some monetary value.
Example: Taking credit cards and checks rather than just cash enables customers to buy products.
How do you come into possession of the items that you want? You generally by them for a price. The exchange of a product for money is possession utility. Retailers may accept alternatives to cash, such a checks, debit or credit cards, in exchange for their merchandise. They may even offer installment or layaway plans. Everyone of these options adds value to the product being purchased.
Cash
Personal checks
Credit cards
Installments (layaway)

22. Economic Utilities SECTION 1.2 Possession Utility
The utility of Place and Possession are very much inter-related and depend on each other. When someone buys something from a vendor, essentially, it is a "transfer of ownership".
Part of being successful in the competitive world of "selling stuff" is to make it easy for the customer to pay, and take possession. 
Having a variety of easy payment methods, is part of facilitating possession as is the physical location of the product and how it is delivered to the customer.
How do you come into possession of the items that you want? You generally by them for a price. The exchange of a product for money is possession utility. Retailers may accept alternatives to cash, such a checks, debit or credit cards, in exchange for their merchandise. They may even offer installment or layaway plans. Everyone of these options adds value to the product being purchased.

23. Economic Utilities SECTION 1.2 Information Utility
Providing information so the customer is comfortable buying.
Example: Salespeople explain features of products.
Example: Packaging explains qualities and uses.
Example: Advertising informs consumers about products.
Ads
Packaging
Signs
Displays
Owner’s Manuals
Information utility involves communication with the consumer. Sales people provide information to customers by explaining the features and benefits of products. Displays communicate information too. Packaging and labeling inform consumers about qualities and uses of a product. The label on a frozen food entrée will tell you the ingredients, nutritional information, directions for preparation, and any safety precautions needed.
Advertising informs consumers about products, tells where to buy products, and sometimes tells how much products cost.

24. Economic Utilities SECTION 1.2 Lower Prices
When demand is high, manufacturers can make products in larger quantities, which reduces the unit cost of each product.
Example: When fixed costs are $20,000:
Quantity Produced Fixed Cost Per Unit
10, $2.00
200, ¢

25. Economic Utilities SECTION 1.2 New and Improved Products
As businesses continue to look for opportunities to better satisfy customers' wants and needs, the result is a larger variety of goods and services.
Example: Personal computers have become smaller, more powerful, and less expensive through competition between makers.

26. Which types of utility are related to marketing?
Form utility is a function of production, NOT marketing

27. These utilities ARE directly related to marketing:
Place
Time
Possession
Information

28. Reviewing Key Terms and Concepts
ASSESSMENT
1.2
Reviewing Key Terms and Concepts
1. What is meant by the economic concept of utility?
2. Which economic utility is not classified as a marketing utility? Why?
3. Besides added value, what are two other benefits of marketing?

29. ASSESSMENT Thinking Critically 1.2
How would you explain the following statement?
Marketing is more than just promotion.

30. Marketing Essentials
End of Section 1.2