Economic Goods, Services & Utility

Marketing PrinciplesChapter 1

General Purposes of Marketing

• People have economic needs & wants• Producers create goods & services to satisfy

consumer’s needs & wants• Marketing adds usefulness to goods &

services by bringing sellers(producers) & buyers(consumers) together so exchange can occur.

Economic Goods & Services

• Things produced that satisfy consumer’s needs & wants

• Goods: Tangible (can touch)• Services: Intangible (can not touch)

Before Exchange Can Occur Goods & Services Need Utility

Utility(usefulness): The attributes of a product or service that make it capable of satisfying consumers’

wants & needs.

Utility is added through Marketing & the 7 Marketing Functions

• Distribution• Financing• Marketing-Information-Management• Pricing• Product/Service Management• Promotion• Selling

Goods & Services Must Have Utility(usefulness) – 5 Ways Utility is

Added to Goods & Services• Form• Place• Time• Possession• Information

Economic Utilities

Changing raw materials or putting parts together to make them useful to consumers.

1. Form Utility

Example: A tree is not useful to consumers until it is cut down and produced into a good like a chair or desk. Putting raw materials together so it satisfies consumers’ needs adds form utility.

Economic Utilities

Adding usefulness by having a product where customers can buy it.

Example: Selling winter coats in Alaska. Winter coats would not have utility in Florida.

Example: Selling products at stores that are located in cities where populations are large.

2. Place Utility

Economic Utilities

Adding usefulness by having a product available when it is convenient & needed by customers. Example: Retailers offer large supplies of backpacks in the late summer, near the beginning of the school year. Example: Selling candy @ Valentines

3. Time Utility

Economic Utilities

Adding usefulness by helping consumers take ownership of products. Example: Taking credit cards and checks rather than just cash enables customers to buy products. Offering 0% free financing.Offering free delivery with purchase of a product.

4. Possession Utility

Economic Utilities

Adding usefulness to goods & services by providing information so the customer is comfortable buying.

5. Information Utility

Example: Salespeople explain features of products.

Example: Packaging explains qualities and uses.

Example: Advertising informs consumers about products.

Goods & Services Must have Utility

All types of utility are added throughout the marketing process so products have value to consumers.