What is Utility Marketing?
Utility is the economic term for the usefulness, enjoyment, or total satisfaction a consumer receives from a service or good. Economic theories based on rational choice usually assume that consumers maximize their utility.
- Your Econ 101 Professor from College
What is Utility Marketing?
Utility Marketing aims to increase sales, build stronger customer relationships, and guide repeat purchases by emphasizing the enhancements your product brings to customers' lifestyles.
It's not always clear how your product can satisfy the wants or needs of your potential customers. More so, your customer may not even know they want or need this product.
A practical utility marketing plan consists of the following elements:
Identify the type of customer that would get the most usefulness from your product.
Position your messaging around how your product integrates into the customer's lifestyle.
Target ideal customers with messaging across your advertising and marketing campaigns.
At this point, you probably think that all of this likely sounds very familiar. Establish my product positioning, check. Develop my target audience, check. Target consumers through online ads, check. What makes this any different than what I'm currently doing today?
eCommerce brands today face various challenges from increased competition, rising customer acquisition costs, and fleeting customer allegiances. Deploying an effective utility marketing strategy is no longer good enough to grow your brand.
At Create Utility, our focus is to build you a marketing program that drives value beyond the physical product you sell. We're taking Utility Marketing to the next level allowing your brand to develop value-based customer connections instead of volume-based connections.
To better understand our approach, we'll review the existing Utility marketing model, the expansion of the model that Create Utility deploys, and practical examples from subscription eCommerce brands.
Utility Marketing Model
The Utility marketing model helps brands understand what motivates consumers to buy a product. The model consists of five types of utility:
Place Utility - the ability for consumers to get what they want, where they want it. Amazon leveraged place utility to become the eCommerce Goliath by creating a logistics chain that quickly obtained products to customers within 24 hours.
Time Utility - the ability for consumers to get a product when they want it. If a customer orders snow boots in December, they don't want to wait until March to receive their product. Marketing around available inventory helps meet customer expectations.
Form Utility - the value of the physical state of a finished product. Consumers would never pay the same price for an IKEA sofa they need to assemble themselves compared to a sofa expertly built from CB2. Part of the value of a CB2 couch is that it's delivered into your living ready for immediate use.
Possession Utility - the ability for consumers to utilize a product in multiple ways, so simply owning, or having possession, of the product provides value. Our Place markets their Perfect Pot as "combining every single pot and then some." The value is having one pot in the kitchen instead of seven pots for a consumer.
Information Utility - the ability for consumers to make an educated decision. With all of the options available, brands that utilize information effectively will better convince consumers to purchase.
Create Utility Marketing Model
The Utility Marketing Model has traditionally focused on positioning the usefulness of a product to convince the customer to purchase. While we continue to use this approach, we've added two additional utility types that we believe better align with the changing times.
Principles Utility - the ability for consumers to align their beliefs and behaviors to a brand. To remove the burden of packaging waste from the consumer, MamaSezz provides each consumer a shipping label to return all packaging to be recycled responsibly. This Zero Waste Commitment helps MamaSezz align with consumers frustrated with the amount of garbage generated by other food delivery services.
Community Utility - the ability for consumers to gain access to a like-minded community by purchasing a product. BodyBuilding.com has created a Facebook community of over 3MM users who share workout tips and suggestions on different products to use. Participation in online communities has increased 64% since 2019, with many online users seeking out the opinions of their peers before making a purchase.
Examples of Utility Marketing for eCommerce Brands
Utility marketing is essential for subscription businesses, given the recurring nature of the relationship between the consumer and store. To retain a customer, brands must continuously provide value. Here are some examples of how subscription brands can create utility:
Vitamin Orders: a user purchases a 60 bottle of daily multi-vitamins from your store. If we know that it takes seven days from purchase to delivery, this store can create time utility by reaching out to the customer between 14 and 7 days before the 60 vitamin supply runs out. The customer will never miss a day of their vitamins and allow the brand to stay part of its daily routine.
Plant-Based Food Delivery: a user is interested in eating healthier and wants to try plant-based eating. Changing diets and routines are challenging, so this brand emails the user every week with tips from a licensed dietician on preparing different meals and creates a Facebook community of other users looking to change their eating habits. Providing an environment with accessible resources has made significant information utility, increasing the likelihood that the customer continues with this lifestyle.
Children's Clothing Box: a user subscribes to a children's clothing box after the birth of their first child. Every three months, a package arrives with clothing that fits the child for the same stage of development. Without having to give clothing purchases another thought, this brand has provided place utility as the consumer gets what they want and need without going shopping.
