Utility
DESCRIPTION
A satisfaction derived from acquisition and consumption of an offering.
A satisfaction derived from acquisition and consumption of an offering.
KEY INSIGHTS
In making choice decisions, consumers seek to achieve maximum utility. However, as this may involve higher sacrifices which they may not be able to afford, they may seek alternatives that are optimizing (choices that achieve the most out of available resources) or satisficing (choices that provide at least a satisfactory outcome—see satisficing). Different utility models, such as the Stochastic Utility model (Chapman and Staelin 1982), the Reference Price model (Winer 1986), and the Random Utility (RU) model (Baltas and Doyle 2001), have been proposed in the marketing literature to explain choice behavior based on utility.
In making choice decisions, consumers seek to achieve maximum utility. However, as this may involve higher sacrifices which they may not be able to afford, they may seek alternatives that are optimizing (choices that achieve the most out of available resources) or satisficing (choices that provide at least a satisfactory outcome—see satisficing). Different utility models, such as the Stochastic Utility model (Chapman and Staelin 1982), the Reference Price model (Winer 1986), and the Random Utility (RU) model (Baltas and Doyle 2001), have been proposed in the marketing literature to explain choice behavior based on utility.
KEYWORDS Satisfaction, acquisition, consumption
IMPLICATIONS
Increasing perceived utility for consumers is an important challenge for marketers. In evaluating alternatives and making choices among brands, consumers use a number of different heuristics to arrive at optimal, if not maximum, utility. A greater understanding of the utility concept and its link with offering complexity, price, and value may therefore be very beneficial in assisting the marketer’s efforts to provide attractive offerings (e.g. offerings providing possession utility as well as place and time utility) that fit the consumer’s choice criteria.
Increasing perceived utility for consumers is an important challenge for marketers. In evaluating alternatives and making choices among brands, consumers use a number of different heuristics to arrive at optimal, if not maximum, utility. A greater understanding of the utility concept and its link with offering complexity, price, and value may therefore be very beneficial in assisting the marketer’s efforts to provide attractive offerings (e.g. offerings providing possession utility as well as place and time utility) that fit the consumer’s choice criteria.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Vargo, S. L., and Lusch, R. F. (2004). ‘Evolving to a New Dominant Logic for Marketing,’ Journal of Marketing, 68(1), 1–17.
Vargo, S. L., and Lusch, R. F. (2004). ‘Evolving to a New Dominant Logic for Marketing,’ Journal of Marketing, 68(1), 1–17.
Dellaert, B. G. C., and Stremersch, S. (2005). ‘Marketing Mass Customized Products: Striking the Balance between Utility and Complexity,’ Journal of Marketing Research, 42(2), May, 219–227.
Wilkie, William L., and Moore, Elizabeth S. (1999). ‘Marketing’s Contributions to Society,’ Journal of Marketing, 63, Fundamental Issues and Directions for Marketing, 198–218.
Services Marketing
Pullman, M., and Moore,W. (1999). ‘Optimal Service Design: Integrating Marketing and Operations Perspectives,’ International Journal of Service Industry Management, 10(2), 239–260.
Pullman, M., and Moore,W. (1999). ‘Optimal Service Design: Integrating Marketing and Operations Perspectives,’ International Journal of Service Industry Management, 10(2), 239–260.
Online Marketing
Breitenbach, Craig S., and Van Doren, Doris C. (1998). ‘Value-Added Marketing in the Digital Domain: Enhancing the Utility of the Internet,’ Journal of Consumer Marketing, 15(6), 558–575.
Breitenbach, Craig S., and Van Doren, Doris C. (1998). ‘Value-Added Marketing in the Digital Domain: Enhancing the Utility of the Internet,’ Journal of Consumer Marketing, 15(6), 558–575.
BIBLIOGRAPHY
Chapman, Randall G., and Staelin, Richard (1982). ‘Exploiting Rank Ordered Choice Set Data within the Stochastic Utility Model,’ Journal of Marketing Research, 19(3), August, 288–301.
Chapman, Randall G., and Staelin, Richard (1982). ‘Exploiting Rank Ordered Choice Set Data within the Stochastic Utility Model,’ Journal of Marketing Research, 19(3), August, 288–301.
Winer, Russell S. (1986). ‘A Reference Price Model of Brand Choice for Frequently Purchased Products,’ Journal of Consumer Research, 13(2), September, 250–256.
Baltas, George, and Doyle, Peter, 2001. ‘Random Utility Models in Marketing Research: A Survey,’ Journal of Business Research, 51(2), February, 115–125.