Place Utility

The term “Place Utility” was first coined by Alfred Marshall in his book “Principles of Economics”. It is defined as the value that logistics creates in a product by changing the product’s location. Transportation creates place utility.

In other words, place utility is the value that is added to a product when it is transported from one location to another. This value can be measured in terms of time, money, or convenience. For example, if a product is transported from a manufacturing plant to a retail store, the place utility would be the value that is added to the product as a result of this transportation.

There are many factors that contribute to place utility, such as:

  • The mode of transportation is the most important factor, as it determines the speed and cost of transportation.
  • The distance traveled is also an important factor, as it determines the time required for transportation.
  • The type of product is also a significant factor, as some products are more delicate than others and require special care during transport.

Place utility is an important concept in logistics because it helps to determine the best way to transport goods from one location to another. By understanding place utility, logistics professionals can optimize the transportation of goods to create the greatest value for their clients.

Related Links

What is place utility?
Place Utility Definition – Marketing Dictionary