Possession Utility - Definition, Importance & Example
What is Possession Utility?
Possession utility is the value derived from a product which comes with the complete ownership of the product with a choice to use the product immediately and for any purpose. Possession utility gives complete rights of the product to the customer by giving possession of the product immediately so that the customer can start using it.
Possession utility is a part of the various other utilities. Utility is usefulness of product or service. The other major types of utilities Form, Task, Place and Time.
Place and possession utilities are similar to each other. Buying and selling of anything involves transfer of ownership from one to another. So to be successful in competition one should strategize to make this transfer of possession easy.
So possession utility is what lets customer physically asses what they bought. Having multiple options for payment is one way to make possession easy for customers. Other methods can be how product is delivered, how fast it is delivered.
Importance of Possession Utility
Possession utility is a very important for marketers. A product is only useful when it is sold and used by the product. If a customer has a need but is unable to possess the product due to lack of finances or information or anything else then it is a loss to the company.
A customer should be able to use the product as soon as the need arises by possessing it quickly. This concept has helped with the rise of different payment options like credit where the product is delivered to the customer immediately. The ease of ownership is the important aspect of this utility. It also includes the method of delivery and the speed of delivery as well. If a customer buys a product but is unable to use it as there is a long lead time in the possession of the product then it can reduce the perceived value. The supply chain helps in that. The idea is that as soon as a customer makes a decision to buy a product, the process from there on should make sure that product is owned in minimum amount of time. There are some product categories where the customer may be willing to let go the ability to own a product immediately in return for a benefit. In real estate we see this as the apartments can be sold before they are ready to be used for living. The customers can get discounts because they would not be able to move in immediately. The ready to move apartments may be costly because of the same reason.
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Example of Possession Utility
Businesses engaging in selling on credit are actually facilitating customers in possession. Customers can come to them. Even if they do not have enough money they can pick up things they like and walk away with it with a promise to pay later. This facilitates possession and makes it easier for customer and lures them to come back.
Loans and financing options give the option to the customer to possess a house or a car quickly and start using it for the value. In case the loan was not available, the customer might have the need or the problem recognition for a car but would not be able to possess it and start deriving value from it.
Hence, this concludes the definition of Possession Utility along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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