What are the 4 types of utility?

How do prospective consumers spend their money? What matters to them when they make decisions about how much to spend, where to spend it, and which company earns their business?

This is the role of sales and marketing teams in your organization: Designing and deploying consumer campaigns to showcase the unique value proposition of your product or service so you stand out from the competition.

The challenge? It’s not easy.

Customer preferences are constantly evolving in response to both external market forces and internal financial constraints. As a result, the reasons around how, when, and why consumers spend money are never static — companies must find ways to understand and articulate the value of service or product offerings in a way that both captures consumer interest and convinces them to convert.

Here, the concept of utility-based marketing is markedly useful. In this piece, we’ll explore the basics of utility in marketing, why it matters, and then dive into five common types of utility in marketing.

What is utility in marketing?

Put simply? Value.

While in a non-economic context the term “utility” typically means “usefulness”, the marketing-driven definition speaks to the specific value realized by consumers when they spend on products or services. Understanding utility in marketing can help companies both better-predict spending habits and design campaigns to capture consumer interest.

Why Marketing Utility Matters

Historically, marketing efforts have focused on making an impression. It makes sense — if consumers notice and remember your print, email, or television ad campaign, you’re better positioned to capture their spending when they see your brand again in-store or while shopping online.

The problem? With so many companies now competing for consumer interest both online and in-person, market saturation is a significant concern. Even more worrisome? As noted by a New York Times article, “people hate ads.” Oversaturated and overwhelmed by ads across desktops, mobile devices, and in-person, prospective buyers are now tuning out enterprise efforts to impress.

Instead, they’re looking for utility. This is the goal of utility-driven marketing: To offer consumers functional and useful products or services that provide a specific benefit or can be repurposed to serve multiple functions.

When done well, utility marketing can create stronger bonds between customers and companies, and drive increased brand loyalty over time. It’s a slow-burn process rather than a quick-spend process and one that serves a different purpose — connecting customers with brands based on value, not volume.

The Five Types of Utility in Marketing

Despite our definition, the notion of “utility” in marketing remains fairly nebulous. That’s because trying to identify the exact value offered by your products or services to a specific customer segment, and how best to communicate this value effectively, is no easy task.

As a result, utility in marketing is often broken down into different types, each of which can help inform better ad building and effective sales outcomes. Depending on how specific — or how generalized — your marketing approach, however, it’s possible to identify anything from one massive utility model to hundreds of smaller utility types for each consumer segment.

To streamline your audience targeting and campaign creation process, we’ll dig into five common types of utility in marketing.

1. Utility of Time

This is the “when” component of utility: Is your product available when customers want it? Will it arrive quickly and without complication? Consumers want to spend as little time as possible waiting for products to arrive in-stock or at their homes — as a result, utility of time is critical to capture consumer conversion on-demand.

Time utility also accounts for seasonal changes in purchasing habits; for example, sales of boots and gloves spike in the winter, while ice cream sees greater demand during the summer.

Some products are staples and are therefore time-resistant — such as groceries — but still need to be in-stock and delivered on-time. As a result, time-based marketing efforts are inherently tied to inventory and delivery systems to ensure outcomes meet consumer expectations.

2. Utility of Place

Place utility refers to the ability of consumers to get what they want, where they want it. Often applied to brick-and-mortar stores, utility of place is paramount for customers looking for familiar items that are easy to obtain.

In a world now driven by digital marketing efforts, place offers a competitive edge if companies can showcase their capacity to keep specific items in-stock at all times. And as improved logistics chains shorten the time between order and delivery, it’s possible for ecommerce operators to leverage place utility as a market differentiator.

3. Utility of Possession

Possession utility speaks to the actual act of product possession — such as consumers driving a new car off the lot or having furniture delivered to their home. It also highlights the connection between possession and purpose.

Consider plastic storage bins. While they might be sold in the “kitchen” section of an online or brick-and-mortar store, consumers are free to repurpose the items as they see fit once they take possession, increasing their overall utility.

4. Utility of Form

While some companies offer lower prices by shifting the responsibility of assembly to the consumer (e.g. that new dresser that you bought and had delivered, but still need to assemble on your own time), finished forms are often more valuable to customers.

Consider complex products such as vehicles or electronic devices — by highlighting the finished form of these items, companies can reduce potentially purchasing barriers by making it clear that consumers will receive feature-complete products that don’t add the complexity of self-assembly.

5. Utility of Information

Information utility is a new addition to this list, but in a world where competition for even basic goods now happens on a global scale, information can make the difference between successful sales and failed conversion efforts. Information utility speaks to any data that helps consumers make buying decisions. This includes product details on ecommerce pages, targeted marketing campaigns, and well-trained call center and in-store agents capable of answering customer questions.

Simply, the right information at the right time improves market utility and increases the chance of sales conversion.

Creating Customer Value

The ultimate goal of any marketing strategy is to create customer value. While not every campaign requires the complete implementation of all five utility types to improve conversion and customer satisfaction, general knowledge paves the way for implementation to deliver value at scale.