The four types of economic utility are form, time, place and possession. "Utility" in this context refers to the value, or usefulness, that a purchaser receives in return for exchanging his money for a company's goods or services. Companies seek to provide maximum customer satisfaction through addressing as many of the four types of utility as possible.
The concept of economic utility falls under the area of study known as behavioral economics. It is designed to assist companies in operating a business and marketing the company in a way that is likely to attract the maximum amount of customers and sales revenues.
The utility of form refers to the specific product or service that a company offers. For example, a manufacturing firm might offer the raw material of rubber in the form of automobile tires.
A company engages in research to pinpoint exactly what products or services consumers desire and then attempts to offer what the company's management believes is the best possible form of the specific product or service that is needed or desired by potential customers.
This aspect of form utility includes offering consumers lower costs, greater convenience or a wider selection of products. All of these efforts by a company are aimed at maximizing the perception of the added value the company offers.
The utility of time refers to easy availability of products or services at the time when customers need or want to purchase them. Addressing the utility of time involves a company's business plan and the logistical planning of manufacturing and delivery issues.
For service providers, time utility is addressed by seeking to make services available at the times that they are most necessary or desirable for consumers. It includes considering the hours and days of the week a company chooses to make its services available. The goal is to offer potential customers an added value. A time element such as 24-hour availability might be a value that a company chooses to offer.
The utility of place refers primarily to making goods or services readily and conveniently available to potential customers. Examples of place utility range from a retail store's location to how easy a company's website or services are to find on the Internet.
Increasing convenience for customers can be a key element in attracting business. A company that offers easy access to technical assistance, for example, offers an added value in comparison to a similar company that does not offer similar ease of access. Making a product available in a wide variety of stores and locations is considered an added value addressing the issue of consumer convenience.
The utility of possession refers to the benefit customers derive from ownership of a company's product once they have purchased it. For example, if a company sells headphones, then it offers customers an added value in listening to music available through using the headphones to improve the functionality of a stereo system. Offering favorable financing terms toward ownership is another way a company might choose to improve the value of possessing its products.