An economic utility is the satisfaction that a consumer receives by deciding to purchase a particular good or service from a specific manufacturer or supplier. The actual amount of satisfaction that is achieved can be compared to the ability of similar goods or services to provide a similar level of satisfaction or possible provide even greater benefits. Considered somewhat subjective, economic utility will vary from one customer to the next, based on the individual circumstances of the buyer and the functionality of the item that is purchased.
Since economic utility has to do with how well a given product meets the needs and wants of the customer, it can be a very helpful tool for companies that seek to find ways to increase customer satisfaction and build brand loyalty. Often, not only identifying the level of economic utility that consumers associate with a given good or service but also seeking feedback on how the products can be enhanced to provide additional satisfaction will result in new and improved products that make ownership of the goods or services appeal to a broader range of consumers. The end result of this type of activity is that companies can sell more units of products and develop a wider client base, while consumers find they can meet more of their needs and wants by continuing to buy the products offered by those companies.
The process of assessing economic utility will typically involve understanding what motivates consumers to buy a given good or service. A number of factors may be involved in assessing the satisfaction that is gained from the purchase. At times, price may be important, especially if the consumer must make purchases on a tight budget. The overall quality of the product in comparison to similar products on the market may be very important, such as in the case of two vegetable stands that offer similar goods at similar prices. In this scenario, one stand may appeal to more consumers because they can buy fresher and tastier produce without having to spend any more money.
Economic utility may also be somewhat subjective, in that the personal tastes of the consumer will impact how much utility or satisfaction that is experienced by the customer. For example, one consumer may find the taste and quality of a store brand of peanut butter provides the same benefits that purchasing the higher-priced name brand offers. A second consumer may consider the taste and quality of the name brand to easily be superior to that of the store brand, which means that in order for that consumer to enjoy the maximum amount of satisfaction, purchasing the store brand is the only real option. Within this scenario, price may also influence the outcome, as the first consumer may choose to buy the name brand when it is on sale for less than the store brand, since the overall quality is considered the same. At the same time, the second consumer may also consider buying the store brand instead of the name brand if the cost savings is sufficient to create additional satisfaction that offsets the difference in taste.
