What Is Economic Utility?
Economic utility is a term in economics that refers to the total satisfaction a person can derive from consuming a good or service.
Modern economic theory posits four main types of utility.
Types of Utility in Marketing
- Form utility refers to how well a product or service has been constructed to meet customers’ wants and needs.
- Time utility is when a company tries to match the availability of a good or service with the time-based increases in customer desire.
- Place utility refers to making goods or services physically available to potential customers.
- Possession utility is the amount of use or perceived value a consumer or owner gets from possessing a product.
Relating Consumer Wants and Functionality
Economic utility inheres not in the good or service itself but in the relationship between the consumer’s wants and needs and the functionality of the good or service.