Let's say you need a haircut. Imagine you live in a town with two hair salons. One is only 10 minutes away, while the other is 30 minutes away.
You're more likely to go to the one that is closer to you. In general, the more convenient a product or service is for a customer, the more sales the business will make. This is the second video in Unit 1, Business Essentials. This is a bonus unit, meaning this topic isn't explicitly included on the official exam breakdown, but it is a foundational concept you should know for both exams and role plays.
Hello and welcome. This is Lesson 1.2 Business in Action. Now let's get to work team.
During this video, we'll focus on the idea of utility, which we'll explain in just a moment. First, we will discuss the five types of utility in business. Next, we will differentiate between the consumer market and the business market. Lastly, we will talk about consumers versus customers.
Utility, or more technically, economic utility, refers to how a product or service fulfills a consumer's need. When you add utility, you add usefulness or value so that a customer is more likely to choose that product or service. So how do you add utility?
Well, there are five major ways. They are form utility, place utility, time utility, information utility, and possession utility. Form utility refers to when a business makes something more useful for a consumer.
For example, raw iron has no use for the average person, but the production process can transform raw iron into steel, spoons, and forks, which the average person will buy at some point. In that case, the production process added form utility. Now with services, the service itself is usually what adds form utility. Place utility is added when products or services are made available in convenient locations. For example, Teaspoon is less than half a mile away from campus.
Now there are better boba shops in San Jose. But Teaspoon is the closest to campus, so it offers place utility to Harker students. Time utility is added when goods or services are made available at convenient times. For example, Starbucks opens at 7. But some people want coffee before 7. You could offer time utility by starting a coffee shop that opens at 6 a.m.
Information utility is added when a business makes information about a product or service available to a customer. This might be through marketing or informational manuals. For example, a commercial for the latest phone offers information utility because it teaches you the most important features of a product. of the phone.
By having more information about a product or service, a customer is more likely to make the purchase. Possession utility is added when it is easier for a customer to actually obtain a product or service. An example would be offering international shipping so that people in different countries can still acquire a product. Offering credit is another form of adding possession utility because it allows customers to more easily purchase an expensive product.
Those are the types of utility. Now, what that utility looks like depends on who you're selling to. And in general, you can market to consumers or you can market to businesses.
The business market refers to when customers buy products to use in their businesses. This is also called the B2B or business-to-business marketing. It's also sometimes called the industrial market, commercial market, or the organizational market.
Now, if you bought beads to make bracelets and then you sold the bracelets, you'd be engaging in the B2B market. On the other hand, the consumer market refers to when customers purchase products that they will use themselves. They are the end of the supply chain.
The consumer market is also known as B2C or business to consumer. When you buy an apple or get a haircut, you are engaging in the B2C market. Now, contrary to popular belief, consumer and customer do not actually mean the same thing.
A consumer is the person who uses the internet to make money. the product, while the customer is the person who purchases the product. If you buy something for yourself, you are both the consumer and the customer.
But if you buy something as a gift for your friend, for example, you are the customer and your friend is the consumer. Now that we've gone over all the content, it's time to test your knowledge with a real DECA question. Pause the video and try to answer.
The answer is D, because it describes how a product is changed to become more useful. And here are the sources we used for this video. Feel free to check them out if you still have any questions.
Alright, that pretty much sums up Lesson 1.2, Business in Action. Great work team, and we'll see you in the next video.