4 TYPES OF UTILITY (FORM, TIME, PLACE AND POSSESSION UTILITY)

Post a Comment

Utility can be defined as the quality of a product that enables it to fulfil the needs and wants of the customer.

There are four different kinds of utility: time utility, possession utility, form utility, and place utility.

1. Form utility: This is the utility created when a good is transformed into a different form.

Form utility is the perceived benefit a consumer receives from getting the goods in the manner he needs them.

It is the value produced when products are offered just as customers require them.

Form utility involves changing raw materials or putting parts together to make them more useful to the users.

A company might combine different resources to develop a new product with perceived value.

Form utility can be produced by the product's design.

For example, one cloth may be more expensive than another, not because both are not made from the same raw material, but because their design differs from each other.

A business can also change the product style or colour of a product to create form utility.

For instance, phone companies typically make phones in a variety of colours so that users can select the hue they prefer.

Another illustration is how a carpenter creates form utility by turning wood into items like chairs, benches, and tables that are extremely beneficial to the user

Companies create to improve the form utility of their product by:

A. Partaking in research about the aspects of products that satisfy( or do not satisfy) customers the most.

B. adapting their product designs to the needs of the market.

2. Time utility: This is the usefulness created when goods are available at the time the consumer needs them.

It is the perceived value produced when products are offered when customers require them.

Time utility involves having a product available at a convenient time of the day or at a certain time of year.

Companies create time utility by making goods readily available to consumers when they need them.

To illustrate, most shopping companies create time utility by delivering goods at the specified time promised in the order.

For example, Amazon provides customers with the opportunity to schedule their delivery, thus providing time utility to them.

Companies try to create time utility when:

A. They try to find out when customers need their product.

B. They plan on how to get their goods on time to consumers.

C. They keep products in their warehouse so that they can be delivered when the consumer needs them.

3. Place utility: This is the utility created by making goods available at the place where they are needed. 

Place utility involves having goods at a place where customers can easily buy them.

Companies create place utility by making goods available where the consumers need them.

For example, a bus service company can create place utility by expanding its service to location closest to its consumers

Companies try to create place utility by:

A. Delivering goods to the residence of the customer. Specifically, through offering home services.

B. Delivering goods to the consumer at any other place that may be convenient for him.

C. Having a store where people can walk in, place an order, and receive their items right away.

4. Possession utility: This is the utility created when goods are finally transferred to the consumer.

Possession utility refers to the ease with which a customer can acquire or own a product.

For example, Amazon creates utility by making it easy for customers to pay for goods and gain possession of the goods.

For instance, Amazon creates possession utility by making it simple for customers to make payments and obtain their purchased goods.

Companies can create possession utility by:

A. Taking steps to remove anything holding back consumers from making purchases.

B. Making the purchasing process as effortless as possible, such as by offering Point of Sale (P.O.S) services to customers who may not have cash at hand but have funds in their bank accounts to make a payment

C. Providing discount and credit facilities to customers. Also, the company can provide consumers with the ability of paying in instalments.

READ ALSO: DIFFERENCE BETWEEN A CUSTOMER AND A CONSUMER

There you have it. For a recap, we noted that there are four types of utility namely, form utility, place utility, possession utility and time utility.

Form utility, as we have discuss, is the usefulness created by making goods available in the form that customers require them.

Place utility is created by making goods available where customer require them the most.

Possession utility is the perceived value of a goods when goods are sold to the consumer.

Finally, time utility is created by making goods available as at when customers need them.

Help us grow our readership by sharing this post

Related Posts

Post a Comment

Subscribe Our Newsletter