The Power of Utility in the Future of Marketing

Guest post by Christian Goy, Co-founder and Managing Director of Behavioral Science Lab

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

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 brand 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 or true value for themselves; this is what creates affinity between the consumer and the brand, not just the brand attributes. Utility is what consumers believe they cannot live without.

Utility is the heart of behavioral economics. The utility of each product or service is determined by a very specific set of psychological and economic elements, which determine how the consumer determines the expected value (utility) of each brand. Relative differences in expected utility associated with each choice option determines how much consumers will pay, what they purchase and how loyal they expect to be. 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. However, when consumers were typed by their utility expectation for individual brands, our clients were able to predict with extreme accuracy whether the consumer would stay loyal, switch away from their brand, and more importantly, why.

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 important, percentage of US shoppers.

Old line 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 the utility for those shoppers was not driven by their demographics or psychographics, but by what they were looking for — 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?

To remain effective, marketing must move beyond traditional segmentation, psychographics, and message development strategies. Marketers should first understand what drives true utility for their consumers — what consumers value, what they can or cannot live without. As some are already doing, marketers will create personalized messages that maximize individual utility expectations requirements by:

Deeply understanding what drives the expectation of the utility of their products — These are the psychological and economic decision elements used by the buyer to define utility.

Defining buyers by their utility expectation — Group buyers on the basis of a similar utility expectation. This allows marketers to be more cost-efficient and effective in their messaging and product offerings because the specific needs of their customers will be met.

Creating products and services that address consumers’ psychological and economic needs — Do not just focus on the product. Understand how the consumer defines utility, and then deliver on it. In our studies, we have found that by only addressing and fulfilling the primary driver in consumers’ utility “equation,” the likelihood of purchase is very high. Just imagine how much greater the likelihood of purchase could be if the second and third drivers were addressed as well.

Product and service utility are the future of effective marketing. Start today with an understanding how your consumers arrive at their utility expectation to stay ahead of the game. 

Learn more about in my session at the Consumer Identity World from November 27-29, 2017 in Paris.


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