How do potential consumers spend their money? What does it matter 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 the sales and marketing teams in your organization: designing and implementing consumer campaigns to showcase the unique value proposition of your product or service so that you stand out from the competition.
The challenge? Is not easy. Customer preferences constantly evolve in response to both external market forces and internal financial constraints. As a result, the reasons for how, when and why consumers spend money are never static: Businesses must find ways to understand and articulate the value of service or product offerings in ways that engage and convince consumers. so that they become. Here, the concept of profit-based marketing comes in handy. In this article, we’ll explore the basics of marketing profit, why it’s important, and then dive into five common types of marketing profit.
What is profit in marketing?
In a nutshell? Value. While in a non-economic context the term “utility” usually means “utility,” the marketing-driven definition speaks of the specific value that consumers get when they spend on products or services. Understanding marketing utility can help companies better predict spending habits and design campaigns to engage consumers.
Why Marketing Utility Matters
Historically, marketing efforts have focused on making a good impression. It makes sense: If consumers notice and remember your print, email, or TV ad campaign, you’ll be 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 major concern. Even more worrying? As pointed out by a New York Times article, “People Hate Ads.” Overloaded and overwhelmed by ads on desktops, mobile devices, and in person, prospective buyers are now unplugging business efforts to impress. Instead, they seek utility. This is the goal of utility-driven marketing: to offer consumers functional and useful products or services that provide a specific benefit or that can be reused to serve multiple functions. When done right, utility marketing can create stronger ties between customers and businesses, and drive greater brand loyalty over time. It’s a slow-burning process rather than a fast-spending process and one that has a different purpose: connecting customers to brands based on value, not volume.
The five types of profit in marketing
Despite our definition, the notion of “utility” in marketing is still pretty nebulous. This is because trying to identify the exact value your products or services offer to a specific customer segment, and the best way to communicate this value effectively, is not an easy task. As a result, marketing utility is often divided into different types, each of which can help inform better ad creation and effective sales results. However, depending on how specific or pervasive your marketing approach is, it is possible to identify anything from a massive profit model to hundreds of smaller profit types for each consumer segment. To streamline the campaign creation and audience targeting process, we’ll dive into five common types of marketing utility.
1. Use of time
This is the “when” component of the utility: Is your product available when customers want it? Will it arrive quickly and without complications? Consumers want to spend as little time as possible waiting for products to arrive in stock or in their homes; As a result, time utility is critical to capturing consumer conversion on demand. The utility of time also explains seasonal changes in shopping habits; for example, sales of boots and gloves increase in winter, while ice cream experiences greater demand during summer. Some products are basic and therefore resistant to time, such as groceries, but must still be in stock and delivered on time. As a result, time-based marketing efforts are intrinsically tied to inventory and delivery systems to ensure that results meet consumer expectations.
2. Utility of the place
Utility of place refers to the ability of consumers to get what they want, where they want it. Often applied to brick and mortar stores, the utility of the location 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 advantage if companies can showcase their ability to stock specific items at all times. And because improved logistics chains shorten the time between order and delivery, it is possible e-commerce operators to harness the utility of the place as a market differentiator.
3. Utility of possession
Possession utility refers to the actual act of owning the product, such as when consumers drive a new car off the lot or receive the furniture at their home. It also highlights the connection between possession and purpose. Consider plastic containers for storage. While they can be sold in the “kitchen” section of an online or brick-and-mortar store, consumers are free to reuse the items as they see fit once they take possession, increasing their overall usefulness.
4. Usefulness of the form
While some companies offer lower prices by shifting the responsibility for assembly to the consumer (for example, the new dresser you bought and delivered, but still need to assemble on your own time), finished forms are often more valuable to customers. Consider complex products like vehicles or electronic devices: By highlighting the finished shape of these items, companies can reduce potential barriers to purchase by making it clear that consumers will receive full-featured products that do not add to the complexity of self-assembly.
5. Usefulness of the information
The usefulness of information is a new addition to this list, but in a world where competition even for commodities now occurs on a global scale, information can make the difference between successful sales and failed conversion efforts. The information utility talks about any data that helps consumers make purchasing decisions. This includes product details on e-commerce pages, targeted marketing campaigns, and a well-trained call center and in-store agents capable of answering customer questions. Simply put, the right information at the right time improves market utility and increases the chances of sales conversion.
Creating value for the customer
The ultimate goal of any marketing strategy is to create value for the customer. While not all campaigns require full implementation of all five types of public services to improve conversion and customer satisfaction, general knowledge paves the way for implementation to deliver value at scale.