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What is Total Utility?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 29 October 2016
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    2003-2016
    Conjecture Corporation
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Total utility is the cumulative degree of satisfaction that a consumer receives through consumption of a specified product. Since this type of utility is all-encompassing, it includes both the initial and direct satisfaction the consumer enjoys as well as the marginal utility, or additional satisfaction that is realized from the purchase. Typically, consumers tend to focus their attention on goods and services that provide the highest degree of total utility, rather than similar products that may offer less in the way of personal satisfaction.

It is important to note that total utility is a subjective phenomenon. Two consumers who purchase the same product will not necessarily receive the same level of satisfaction from the consumption of that product. For this reason, measuring total utility can be somewhat difficult, making it necessary for producers to rely heavily on feedback from consumers on which benefits were derived and whether that total utility is likely to generate additional purchases.

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Understanding total utility involves understanding what is sometimes known as the law of diminishing marginal utility. Essentially, this concept states that each time a consumer utilizes a product repeatedly, the degree of satisfaction that is derived will decrease slightly. For example, an individual who is very thirsty may receive immense satisfaction from drinking a glass of water. A second glass of water is still likely to generate some satisfaction, but not as much as the first glass. At some point, the individual is no longer thirsty and thus does not receive any additional satisfaction from subsequent glasses of water.

The idea of total utility has sometimes been presented as a means of taking into consideration customer satisfaction from the first moment of purchase all the way through to the last round of consumption. This approach often motivates businesses to develop marketing campaigns that educate consumers on the many different ways their products may be used, thus increasing their value to customers and hopefully increasing satisfaction or utility. Food producers tend to use this strategy by developing meal plans and recipes containing their products, demonstrating the versatility of their goods and providing consumers with inspiration on how to get the most from the product, above and beyond the originally intended function.

In like manner, pharmaceutical companies will sometimes conduct ongoing research as a means of discovering additional health situations where a given medication may be used to effectively treat multiple conditions. One example is the drug bupropion, which is helpful not only in helping people to overcome tobacco addiction, but can also be effective when used as an anti-depressant. In like manner, alprazolam has been found to be helpful in not only treating anxiety disorders, but also as a treatment for agoraphobia and various other social phobias that often accompany anxiety. By providing information regarding the total utility of these medications, the manufacturers increase profits by providing products that are helpful to a greater number of people.

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