Difference between industrial & consumer goods

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Difference between industrial & consumer goods
Factories produce both industrial and consumer goods, while relying on a steady supply of industrial goods. (Jupiterimages/Creatas/Getty Images)

In business, tangible physical products sold by companies are often divided into industrial and consumer goods. Although they may be produced in similar ways, these types of products have different intended markets and are sold differently. There are also further subdivisions within the two categories, as well as some products which cross the boundary between them.

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Consumer goods

Consumer goods include all products that are sold at retail to individuals. A consumer good might be as small as a packet of chewing gum or as large as a refrigerator or car; the key point is that the intended customer is an individual consumer rather than a manufacturer. The term "consumer good" can also sometimes be used to distinguish a finished product, one that is ready for the consumer, from intermediary products created during the production process.

Types of consumer good

The consumer goods sector is further subdivided into many different types of goods. For example, the category of fast-moving consumer goods (FMCGs) includes small items which customers purchase, consume relatively quickly and then replace. Examples of fast-moving consumer goods include products such as soft drinks, razor blades, batteries, cosmetics and most food products. By contrast, durable consumer goods are expected to have a longer lifespan in the home. Durable consumer goods include home appliances such as dishwashers, as well as furniture, electronics, automobiles and other major purchases.

Industrial goods

Unlike consumer goods, industrial goods are sold not to individual customers but to manufacturers, which then use them to produce other items. Like consumer goods, industrial goods can be further subdivided into smaller sectors. For example, capital goods are assets that a company uses to create its product. These assets might include factory machinery, or might be other business equipment such as computers. Raw materials are the supplies used to create a final product, such as timber or brick used to create a building or plastic and metal used to build a piece of electrical equipment.

Differences

Consumer and industrial goods play different roles in business. In essence, a consumer good is the product that a company sells to the end user; an industrial good is a tool or supply it uses to create that product. For some companies, of course, the finished product is an industrial good itself, to be sold to a corporate rather than individual consumer. The different customers mean that industrial and consumer goods need to be marketed very differently.

Similarities

Not all aspects of industrial and consumer goods are dissimilar; for instance, the computers used by a company and those found in the home may be very similar, as may other products such as vehicles. Nonetheless, businesses usually buy industrial goods through dealers who are used to dealing with their specific requirements rather than on the consumer market. Even when the products are the same, purchasing and marketing patterns tend to be very different.

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