What Is Place Utility? (With Examples of Ways To Use It)

Place utility is a marketing term that explains making products or services readily available to its customers. Place utility can be used to draw customers to a product or service as well because it associates a specific place to the product or service.

The term utility is frequently used in the field of behavioral economics (see also key insights from behavioral economics). In this context, utility refers to the perceived value (i. e. , value) that a person receives when they pay for a good or service. Form utility, Place utility, Time Utility, and Possession Utility are the four types of utility. Depending on the person, these utilities may or may not have an impact on buying decisions. However, it is safe to say that each of them has the potential to make a big difference. In order to increase the perceived utility of their products and thus draw in more customers and generate more revenue, businesses have an incentive to do so. So, below, we’ll go over the four different categories of economic utility in more detail.

The design of the product or service itself creates form utility. A product or service’s perceived added value increases the more precisely it is catered to the needs and preferences of the consumer (i e. , form utility) will be. In other words, the process of converting customer needs into goods or services results in the form utility. To do this, businesses research potential customers’ needs by analyzing their target markets and conducting surveys of them. Following that, this data can be utilized to match product features to actual customer needs. As a result, form utility can be produced using elements like premium materials, ergonomic design, or a large selection of options.

Consider a company that produces cars as a form of form utility. We’ll call it Super Cars. The parts for these cars could theoretically be sold separately by this company. Super Cars, however, adds significant value for their customers by assembling the components (and building cars), increasing form utility.

Making a product or service more accessible to potential customers is one way to achieve place utility. A product is more appealing the simpler it is to purchase. Therefore, distribution methods and the actual locations where goods or services are sold play a big role in place utility. In addition, some economists contend that factors like a product’s ability to be found online via search engine optimization affect place utility. After all, a variety of products and services can now be purchased online.

In our previous example, let’s assume Super Cars is an American corporation. Purchasing a Super Car is not all that appealing to Europeans if its cars are only sold in the US. If the business chooses to launch dealerships in Europe and market Super Cars abroad, the availability (i e. , place utility) of its cars for European customers increases.

By making a good or service easily accessible when customers need or want it, time utility is created. A product’s perceived time utility increases with how quickly and easily it can be purchased (and used) at that particular time. Additionally, in times of scarcity, time utility is always high. Consequently, the management of a company’s supply chain has a big impact on time utility. This includes, among other things, operations like delivery and logistics as well as storage. Supply chain management is constantly being improved by businesses, which has resulted in the development of services like same-day delivery and 24/7 accessibility.

Reduced delivery times would be one way to boost time utility in the case of Super Cars. Customers frequently need to wait weeks or even months to get a new car. Many of them, however, require access to their vehicles as soon as possible. Therefore, if Super Cars can shorten delivery times by even a few days, potential buyers will find its cars more appealing.

The advantages that can be obtained from owning and using a particular product are described as possession utility. In general, a product’s “usefulness” to a person will determine how valuable it is to possess. The term “possession utility” is occasionally used in the context of facilitating possession, particularly in marketing theory. e. using convenient payment options like credit cards or leasing agreements This is justified by the fact that a more straightforward acquisition process typically results in a higher estimation of the value of a good or service.

For instance, whenever a client receives the keys to their new Super Car, a possession utility can be created. simply because they will then be in control of the vehicle and can use it however they please. Super Cars can also make possession useful by providing leasing agreements, which make it simpler for potential customers to access a new vehicle.

The term utility in behavioral economics refers to the perceived value (i e. , value) that a person receives when they pay for a good or service. Form, place, time, and possession utility are the four types of utility. The design of the product or service itself creates form utility. Making a product or service more accessible to potential customers is one way to create place utility. By making a good or service easily accessible when customers need or want it, time utility is created. Last but not least, possession utility explains the advantages of owning and using a particular product.

Utility and its Types|Economics

Why is place utility important?

Place utility is crucial because it can assist in bringing in more clients for a business. It can aid in boosting sales, customer retention, and website traffic. Customers benefit as well because it makes it easier for them to locate businesses and gives them better access to goods and services. Giving customers easy access to a business increases the likelihood that they will make a purchase from it. Companies that develop place utility strategies can increase their customer base or attract new clients by letting them know what the company does.

What is place utility?

Making goods or services easily accessible to customers is referred to as “place utility” in marketing. Because it links a particular location to the product or service, place utility can be used to attract customers. For instance, a person from America might find French wine more appealing due to the city’s reputation for being foreign and thus more alluring Customers can more easily find a good or service thanks to place utility.

Examples of place utility

Here are a few instances of how companies frequently use place utility to attract customers:

Placing products close to the check-out counter

To encourage customers to pick up something to add to their purchase, a retailer may place tiny items like gum, mints, lip balms, or small lotions at or near their check-out counter. Frequently, these are small things that consumers might conveniently forget to include on a shopping list, like batteries or gift cards. To help customers remember to pick up a quick and easy gift for their loved ones as they leave the store, a retailer might, for instance, place gift cards at their check-out stand.

Making the location of origin part of the advertisement

Some businesses advertise their products’ manufacturing locations to increase sales. A foreign product may appeal to some customers more than a domestic one. For instance, an avocado-producing company might advertise on a billboard that their fruit is “California-grown.” This may appeal to people who believe that California’s climate is better suited to producing avocados with superior flavor than other states.

Using search engine optimization to draw customers to a website

To increase customer traffic, many companies hire professionals to implement search engine optimization. The process of using keywords and other marketing strategies to raise a website’s placement on a search engine’s results page is known as search engine optimization, or SEO for short. For instance, a consulting company may observe an increase in organic website traffic several months after hiring a group of marketing experts to implement SEO strategies for the company.

Moving a company to an area more central to its customers

Some companies may discover that their customers can’t physically get in touch with them, which is why they aren’t seeing any customers. For instance, a taxi company might discover that operating close to an airport generates more business than doing so in a neighborhood. Sometimes a business can already have a steady stream of customers, but it’s best to move there to maximize its potential It’s crucial for a company using place utility to guarantee that its customers can easily access it.

Placing related products near each other in a store

Marketing professionals can use this information to double sales because it occasionally helps one product sell another. As an illustration, consider how a department store might do this given that many of the toys for kids are electronic and require batteries. In this instance, the department store can turn a profit, as can the businesses that sell batteries and toys for kids. Another illustration would be a company selling tires placing them next to carjacks they also sell to encourage customers to buy from those brands rather than browsing the aisle to check out the others.

Advertising free products at an event

Many companies offer free samples to advertise a product and entice potential customers to make a purchase. As an illustration of how place utility can be used, an energy bar company might distribute free samples near the entrance or exit of a triathlon event so that participants can consume them after the race is over. This increases consumer awareness of their goods and may prompt them to search for their brand the next time they visit a grocery store.

Other types of utility marketing to consider

Place utility is one of four types of economic utility. The other three categories of economic utilities are listed below along with what they serve:


What is the place utility?

Making products or services accessible in places where customers can easily access them is referred to as place utility.

What is form and place utility?

The design of the product or service itself creates form utility. Making a product or service more accessible to potential customers is one way to create place utility. By making a good or service easily accessible when customers need or want it, time utility is created.

What are the 4 types of utility?

Form utility, place utility, time utility, and possession utility are the four main categories of utility.

What is place utility in supply chain?

Moving goods from production points to market locations where there is demand is how supply chains create place utility. Economic value is added to the goods by having them available in areas where interested customers can find them.

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *