What are Consumer Goods?
In Economics, consumer goods are any tangible commodities that are produced and subsequently purchased to satisfy the current wants and needs of the consumers. In the chain of production, consumer goods are the ending results of production and manufacturing and are sometimes referred to as final goods. They are available in almost all shopping malls and supermarkets. Examples include food, clothing, electronics and appliances, vehicles, furniture, mobile phones, etc. Consumer goods are split into three different categories namely durable goods, nondurable goods, and services.
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What are Durable and Nondurable Goods?
Durable Goods as the name suggests are products that don't break easily. More specifically, durable goods are products that have a life expectancy of more than three years. Examples of durable goods include household appliances, furniture, machinery, property, technology, and automobiles.
Non-durable goods, also known as consumables, are those consumer goods that are immediately consumed or have a life span ranging from minutes to three years. Examples of nondurable goods include gasoline, beverages, clothing, shoes, and many more.
Durable goods can be rented or purchased, whereas non-durable goods are generally not rented. Buying durable goods falls under the category of “demands of goods'' whereas buying non-durable goods falls under the category of “consumption of goods''.
The difference between durable and non-durable goods is based on whether the goods can be used only once or continuously over a period of more than three years. Moreover, durable goods in comparison to non-durable goods have considerably high purchase prices.
Classification of Consumer Products
Consumer goods are classified into four different types namely:
Convenience Goods
Shopping Goods
Speciality Goods
Unsought Goods
Let us now discuss the different types of consumer products along with their characteristics in brief.
Convenience Goods
Convenience goods are those goods that are purchased frequently and easily without putting much effort into them. These goods include newspapers, magazines, grocery items, deodorants, toothpaste, etc. Consumers can buy these goods conveniently and in less time.
Some of the highlighting features of the consumer goods are:
No Plan to Purchase
Purchased Frequently
Price and Quality comparison is rare
Relatively low priced
Intense Competition
Easily Available
Shopping Products
Shopping products refer to those goods that consumers purchase not very frequently and compare with other alternatives available in the market. Consumers demand time, planning, effort, and resources while purchasing these types of products.
Unlike convenient goods which are available easily, shopping products are distributed through selected channels or available in limited outlets.
For example, while purchasing any clothing or apparel, the customers try different styles and compare their price, quality, and material before making a final decision to purchase.
Some of the highlighting features of the shopping products are as follows:
Infrequent Purchase
Advance Purchase Plans
Slow Buying Process
Selective distributive channels
Durable Goods
Speciality Goods
Speciality goods are those consumer products that have unique characteristics and brand identification for which a particular group of buyers are willing to make a special purchasing effort. Some of the examples of speciality goods include brands of fancy products, luxury cars, professional photographic equipment, and highly fashionable clothing. For example, consumers who prefer to purchase a product from a certain manufacturer will prefer to travel a considerable distance in order to purchase that particular product.
Some of the highlighting features of the speciality goods are as follows:
Brand Loyalty
Comparison of Brand
Preference of Particular Outlet
Infrequent Purchase
Inelastic Demand
Unsought Goods
Unsought goods are those types of consumer products that consumers are not mostly aware of or are aware of but do not normally think of purchasing. Unsought goods are fire extinguishers, reference books, new smartphones, etc. The need for unsought goods may not seem urgent to the consumer, and the purchase of these products is often deferred. This is frequently observed with life insurance, preventive car maintenance, cemetery plots, etc. Due to this, unsought goods demand considerable marketing efforts in the form of advertising or personal selling to the consumers.
Some of the highlighting features of the unsought goods are as follows:
Rarely Purchased
No Purchase Plan
High Price
Lack of Desire
Durable
Daily Use Consumer Goods List
Following is the list of examples of different types of consumer goods used regularly by the consumers:
Toothpaste
Soap
Shampoos
Cosmetics
Clothes
Footwears
Mobile Phones
Bags
Stationery
Kitchenware
Home appliances
Eatables
Drinks
Difference Between Consumer Goods and Producer Goods
In Economics, consumer goods are goods that are consumed for their consumption. Consumer goods, also known as finished goods, are the end result of processing and manufacturing and are ready to place on the shelf of a store for customers.
On the other hand, producer goods also known as intermediate goods are goods that are used by producers in further manufacturing, processing, or resale. Producer goods either become a part of the final product or lose their distinct identity in the manufacturing process.
The price of producer goods is not included while calculating Gross National Income (GNP) because it would result in the double-counting of goods and leads to an excessive estimation of GNP. On the other hand, the price of consumer goods is included in the summation of a country's GNP.
Conclusion
Through this article, we have learnt that consumer goods are goods bought for personal consumption by average consumers. Also known as final foods, consumer goods are the end result of production and manufacturing and are what consumers will observe stocked on almost all shopping malls and supermarkets.
FAQs on Consumer Goods
1. What exactly are consumer goods in Economics?
In Economics, consumer goods are products and services purchased by the average consumer for final consumption, rather than for use in the production of other goods. They directly satisfy human wants and needs. Examples include food, clothes, electronics, and various services.
2. What are consumer durable goods in economics?
Consumer durable goods are products that provide services to consumers over a long period of time, typically lasting for three years or more. Because of their durability, they can be stored and used repeatedly. Examples include cars, refrigerators, and furniture.
3. What are the different types of consumer goods?
Consumer goods are broadly classified into four main types:
- Convenience Goods: These are purchased frequently, immediately, and with minimal effort (e.g., milk, newspapers).
- Shopping Goods: Consumers compare these goods based on suitability, quality, price, and style before purchasing (e.g., clothing, electronics).
- Specialty Goods: These have unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort (e.g., luxury cars, designer items).
- Unsought Goods: These are goods that consumers do not normally think of buying, or do not know about (e.g., life insurance, funeral services).
4. Can you provide some common examples of consumer goods?
Certainly! Common examples of consumer goods vary by their type:
- Durable Goods: Televisions, washing machines, cars, furniture, and kitchen appliances.
- Non-Durable Goods: Food items (bread, fruits), beverages, gasoline, and toiletries.
- Services: Haircuts, doctor visits, education, banking, and public transport.
5. What factors influence the demand for durable consumer goods?
Several factors influence the demand for durable consumer goods:
- Price of the Product: Generally, a higher price leads to lower demand, and vice-versa.
- Income of Consumers: As consumer income rises, demand for durable goods tends to increase.
- Duration of Durability: Demand also depends on how long the product is expected to last; new purchases often occur only when older items need replacement.
- Maintenance Cost: Products with lower maintenance costs are often in higher demand.
6. What factors affect the demand for non-durable goods and services?
The demand for non-durable goods and services is primarily affected by:
- Income of the Family: Higher income generally leads to higher consumption of these goods and services.
- Social Habits and Traditions: Cultural practices often dictate the demand for certain non-durable goods like specific foods or festive items.
- Changes in Habits and Trends: Shifting consumer preferences and trends can quickly impact demand (e.g., new food crazes).
- Taste and Preferences: Individual likes and dislikes play a significant role.
- Demonstration Effect: People's consumption choices can be influenced by observing others' consumption patterns.
7. How do consumer goods differ from capital goods?
The key difference lies in their purpose. Consumer goods are purchased for direct satisfaction of wants and needs, meant for final consumption by households. In contrast, capital goods (or producer goods) are used by businesses to produce other goods and services, not for direct consumption. Examples of capital goods include machinery, factories, and tools.
8. Why does the demand for durable goods fluctuate more significantly than non-durable goods?
The demand for durable goods fluctuates more significantly because their purchase can often be postponed. Consumers can delay buying a new car or appliance if economic conditions are uncertain or if they expect prices to fall. For instance, if prices are expected to rise, consumers might buy more now, leading to a surge. If prices are expected to fall, they might wait, causing a sharp drop in demand. Non-durable goods, like food, are consumed quickly and are essential, so their demand is more stable.
9. Why is understanding consumer goods important in the study of economics?
Understanding consumer goods is crucial in economics because they represent the ultimate output of an economy that directly impacts people's well-being. Studying them helps economists understand consumption patterns, market demand, inflation, economic growth, and the overall standard of living. It also informs policy decisions related to production, distribution, and taxation.
10. What is the main distinction between consumer goods and consumer services?
The primary distinction is tangibility. Consumer goods are physical products that can be touched, seen, and stored, such as a laptop or a shirt. Consumer services are intangible activities or performances provided to consumers, like a haircut, a bus ride, or a concert. Services cannot be stored or owned, and their production and consumption often happen simultaneously.
