Utility Study

1.0: INTRODUCTION (UTILITY) Coca-Cola is an international brand that are consumed everyday all around the world. Statistic has shown that each day, more than 8 million can of Coca-Cola is being sold worldwide. However today we are not going to discuss about the secret behind Coca-Cola success. On the other hand we are going to move from production to consumer where discussion will be about the utility of Coca-Cola. Every customer has their own satisfaction level, and it is different with each other. Each item that we purchase, regardless if it is food, equipments, clothes, house, cars and phones has their own level of consumer satisfaction. This explains why some consumers are willing to purchase stuff that have almost the same value, but with different prices. The terms used to describe such phenomenon is Utility. Utility is defined as the “satisfaction gained by consumers from consumption of goods and services” or it can also be defined as the “ability of a good to provide satisfaction to its customers.” From the definition, we can declare that before a customer purchase a good or services, they used satisfaction level as the guideline to assist them in making decision of purchasing. After purchasing, the evaluation level is also based on the satisfaction level when they are enjoying the product or services. Back to the Coca-cola. Consumers are willing to pay RM 2 for a can of Coca-Cola. The main reason for a consumer to purchase Coca-cola is because they are thirsty and they like the taste that the Coca-cola can provide them with. Thus, we can conclude that the consuming Coca-Cola provide high utility as everyone seems to keep coming back for more Coca-cola regardless of the ages of the consumers. There are 2 method that can be used to calculate utility. Cardinal utility and Ordinal utility will be discussed further in the next section.
2.0: CARDINAL AND ORDINAL UTILITY THEORIES The 2 basic method in measuring utility are Cardinal utility