The Power of Utility and The Future of Marketing


In the future, marketing will be driven neither by demographics, on- or off-line behavioral identifiers or psychographics, but by understanding and fulfilling the customer’s utility expectations.

Mitch Joel captures this view of future marketing by concluding, “If the past decade was about developing content and engagement strategies in social channels (in order to provide value, humanize the brand, be present in search engines and more), the next decade will be about the brands that can actually create a level of utility for the consumer.”

No one disputes that a persuasive marketing message or social media campaign drives web traffic. However, if your product or service does not deliver utility, it will not be purchased. Consumers do not love brands because of their brilliant ad campaigns or funny videos on Facebook. Consumers love brands that create utility; this is what creates an affinity between them and the brand.

Utility is the heart of behavioral economics. Every product or service is surrounded by a unique set of psychological and economic factors, which we use to determine whether the brand can fulfill our Utility Expectation — or specific needs we hope the product will satisfy. These factors further determine how much we are willing to pay for a brand, whether we remain loyal or switch away to a better option. Interestingly, we are learning that the economic and psychological factors that determine utility and purchase have little or nothing to with the buyer’s demographics or psychographics.

In none of our studies did demographic or psychographic segmentation explain why consumers switch or remain loyal to a brand. When consumers were typed by what they expected from individual brands (utility), however, our clients were able to predict with extreme accuracy whether the consumer would stay or switch away from their brand, and more importantly, understand why this was happening.

Knowing the expectation of utility explains why Instacart — an app that lets shoppers buy all their groceries online from any grocery store and have them delivered to their doorstep — became an instant hit for a small, but significant, percentage of US shoppers.

Traditional marketers assumed that a certain percentage of US shoppers with relatively high household income and education, who were environmentally savvy and attracted to organic produce would remain loyal Whole Foods or Trader Joe’s shoppers. What they didn’t understand was that those customers demographics or psychographics identifiers did not drive the utility for those shoppers. What prompted them to purchase was — convenience, ease of shopping and minimal shopping time which could not be fulfilled by either Whole Foods or Trader Joe’s.

What is next for marketing?

Marketers must deliver utility. It's that simple. Understand what factors govern choice and deliver on them, promote them, tailor your strategy around them. Here are three simple but effective steps to take:

One: Deeply understanding what drives customers' choice. What need is your product or service satisfying? Focus on the psychological and economic decision factors your customer uses to define utility.

Two: Creating products and services that address consumers’ psychological and economic needs — Understand how the buyer defines utility, and then center your offering around those dimensions. Just imagine how much higher the likelihood of purchase will be if you design a product that delivers on shoppers' expectations.

Three: If you can't design your merchandise from scratch type buyers by specific needs — Group consumers by similar utility expectation, this allows you to be more cost-efficient and effective in your messaging and product offerings because you will address particular needs of your buyer.

In the future, effective marketing will put the buyers' product and service expectation at the core of one's business. Start today with an understanding of how your consumers arrive at their utility expectation to stay ahead of the game.

Photo by Nikita Kachanovsky on Unsplash

Christian Goy