As a basic definition, A consumer is a person that buys goods and services. An example of a consumer is a person who purchases a new cell-phone or any daily foods. Consumer goods are goods that directly meet human needs. In other words, Consumer Goods are goods that directly satisfy people wants. Consumer Goods are the things we continuously buy for ourselves.
Consumer goods are goods that are not re-processed. Some of these products are consumed and finished while they are used. Some of them discarded when their functionality is weakened. Fresh food products have a limited storage life, even if they are not used. On the other hand, some goods could be used with years such as televisions and refrigerators.
Another example is in the category of consumer goods for goods such as jewellery, whose usage process is quite long, and whose wear and tear probability is low. While some of the consumer goods are consumed immediately, some of them are goods that meet long-term requirements.
Identifying The Consumption Goods.
Consider three farmers who grow wheat, oat and rye. All of them selling their products to a pasta factory. At this stage, the products are not consumer goods. These are called Intermediate goods, producer goods. These products will be used to create another product. At this stage, these products are sold from one company to another. The purpose of the purchasing company is to produce a new product using these intermediate goods.
The pasta factory produces pasta with these products (wheat, oat and rye) and sells them to a wholesaler in packaged form. The wholesaler sells these products to supermarkets and grocery stores. Finally, consumers buy packaged pasta from markets and grocery stores. At this stage, pasta is now a consumer product.
When a someone walks into a store and buys a TV for home use, he is buying the final product. For this reason, products sold directly to consumers are called consumer goods or, in other words, “final” goods. Any product purchased by the end consumer for use, not for resale, is included in this category. For example: fruit, vegetables, canned food, chairs, seats, phones, bicycles, computers, watches, cosmetics and thousands of other products. Anything purchased by a consumer is part of the consumer business industry.
What is a Good – Classification of Goods
The goods are the embodiment of the service offered in economy and accounting. Unlike service, all kinds of objects qualified as good can be distributed, changed hands and transferred from the producer to the consumer. For example, a haircut made in a hairdresser is an example of service, while the clothing purchased in a garment purchase is in the form of goods.
The Goods are divided into two classes as free and economical. Free goods are goods that are obtained without any effort, like sunshine and air. These are beyond the scope of economics.
In order for something to be considered “good”, it must have an exchange value. Within the economy, goods are divided into two according to the labor factor used in their production:
Free Goods: They are goods that are already ready in nature, so no need to spend any effort to produce them. Free goods vary between regions and seasons depending on geographical location and climatic characteristics. As an example, air, forest, plants… etc.
Economic Goods: They are goods that have spent a certain amount of effort and expense in their production or acquisition.
Economic goods are also divided into two according to their use:
a) Production Goods: Goods that meet the needs of people indirectly. Production goods cannot be consumed directly; However, with these goods, goods that people can directly consume can be produced. For example, flour is used to make bread, and an oven is used for baking.
b) Consumption Goods: They are the goods that people buy for direct use to meet their needs. Consumption of goods can directly consume. For example, milk, chocolate, telephone, automobile…
Durable Goods vs Non-durable Goods
Consumer goods are divided into two category according to the duration of the benefits people get from them:
a) Durable Goods: Goods that are used for a long time, the benefit of which does not end with one or more uses: furniture, refrigerators.
The types of goods that are used for a long time and whose useful lives are gradually destroyed are called durable consumer goods. The consumption of these products and the end of their useful life happens over time. Durable products are also tangible; they are tangible and visible.
Cars, computers, refrigerators, cell phones are examples of durable products. Their life does not end with one or several uses. The expiration of the life of these products occurs when they become useless, or their technologies become obsolete.
For example, a physically sound and working television has lost its function, and its service life has expired after smart televisions have emerged and TV broadcasts on the Internet have become widespread.
b) Non-durable Goods: Non-durable consumer goods are the goods whose use ends after using one times. In other words, they can only be consumed once. For example, when you eat an apple, that product ends, you cannot consume it again. Another example is that the gasoline you fill in your vehicle allows your vehicle to travel a certain distance. At the end of this distance, you need to get petrol again to your vehicle.
Examples of Non-Durable Goods: Foodstuffs, tissue paper, motor oil, gasoline, dairy products, bread can be given as examples of nondurable products.
Fast-Moving Consumer Goods
Fast-moving consumer goods are basically non-durable goods like food and drinks that move rapidly through the chain from producers to distributors and retailer than on to consumers. Companies and retailers like this segment as it contains the fastest-moving consumer goods from stores, offering high shelf-space-turnover opportunities.
Consumer Goods Sector
The consumer goods sector is a category that relates to items purchased by households and individuals. So the consumer goods target audience, i.e. the main customer group is consumers (people), not companies.
Consumer goods companies make and sell products that are intended for direct use by the buyers for their own use. This sector includes companies involved with food and beverages, clothing,, Luxury Goods, automobiles, and electronics.
The consumer goods market consists of people who have the necessary purchasing power. In order to talk about a market, we need products that are put on the market and people who need these products. In a competitive market, several brands of the same product are available. The consumer prefers a brand for various reasons in the product category they need.
Some products have very limited buyers. There may be different reasons for this.
- The price of the product,
- The reason for using the product
- Conditions where the product will be needed
For example, although the cars produced by Ferrari is the dreams of millions of people, however, very few people can buy it. These cars are produced in limited numbers and are very expensive.
Another example, customers of blood pressure medicine are blood pressure patients.
An economy can grow in a few limited ways; Natural resources can be discovered, technology can be improved, the supply of qualified labor can be increased. Another method is to improve capital goods structure. The quality and capacity of capital goods support production growth in three ways: by increasing capacity, by improving labor productivity, and by raising the level of productivity.
Types of Consumer Goods
Consumer goods grouped into 4 categories:
- Convenience Products
- Shopping Products
By dividing consumer goods into these four classes, we can see more clearly the consumer’s purchase frequency and buying habits. Such classifications are particularly useful when conducting sales and marketing activities in the retail sector. Classification of consumer goods is made according to the purchasing habits of the consumers.
1- Convenience Products
Regularly consumed and are readily available for purchase, its the most common explanation for convenience goods. Involving little trouble or effort goods. These goods are mostly sold by retailers Convenience goods also segmented into three sub-categories:
a) Staple convenience goods (fulfilling basic customer necessities): such as toilet paper, shampoo, food, drinks
b) Impulse (non-priority) convenience goods: such as chocolate, snacks, chewing gum, cigarettes.
c) Emergency goods: These goods bought when it’s urgently needed in times of crisis. Emergency goods mostly selling at retail stores so these goods will be available when required, such as batteries, lighters, flashlights umbrellas, tarps.
These products are cheap, bought without much thought. Consumers develop habits when purchasing such products; for example, they always buy the same brand from the same store. The manufacturer that is the owner of the brand carries out the advertising and promotion activities of the products because retailers don’t want to spend too much on low priced products.
Example of Convenience Brands:Nestle, Coca Cola,Unilever, Danone, Heineken
Characteristics of Convenience Products
- Frequently purchased
- Easily available
- Relatively low price
– Branding, packaging and labeling are effective in the sale of such goods.
– Manufacturers of such goods have to advertise the goods in a way that creates brand loyalty.
– Consumers tend to purchase these types of goods from the closest market to their home. Therefore, manufacturers should deliver these goods to as many retailers as possible.
2- Shopping Products
Consumers make a significant effort to purchase these products. For example, they investigate and compare prices and product features to determine which product to buy.
Since these products are long-lasting, they are not taken very often. Manufacturers offer such products for sale at different points of sale. Due to high competition and limited purchasing behavior, these products require an effective sales and marketing effort to be successful in the market. It requires a high level of cooperation between manufacturers and retailers, such as mobile phone, computer, cars, furniture, electronic household items.
Example of Shopping Brands:Sony, Ford, Samsung, Nike, Levis
Characteristics of Shopping Products
- Infrequently purchasing
- Comparable to similar goods
- Competitive price options
– Manufacturer and intermediary companies should resort to distribution and sales efforts.
– Manufacturers often establish close relationships with retailers.
– Manufacturers usually distribute directly to the retailer.
– During the sales phase of such products, the retailer brand is as important to the consumer as the manufacturer.
3- Specialty Consumer Goods
Specialty consumer goods are considered luxurious, one of the main reasons for this is their low number and rarity. Specialty goods are limited produced for an elite class of shoppers. Specialty consumer marketing needs upper-class marketing focused on a niche market. These products include furs and fine jewellery.
Consumers make more careful research and plan when purchasing these products. Brand perception and user comments are as important as the prices and features of the products. When purchasing these products, consumers know what they want. They decide on the brand they will buy before shopping. So they are not choosing a product in grocery shopping.
These products are offered for sale in a few places and often with the presentation of sales professionals. For example, the products of top segment hair care products can only be found in beauty salons, such as high-fashion clothing, luxury cars, fancy products, professional photographic equipment.
Example of Specialty Brands:Ferrari,Gucci, Prada
Characteristics of Specialty Products
- Rare (limited)
– Brand and quality perception is very important during the product purchase phase.
– The distribution area of the specialty goods are very limited.
– There is a close relationship between producer and seller, the success or failure of one affects the other.
– Both the producer and the retailers make efforts to increase the sales of the goods. The manufacturer covers some of the retailer’s promotion expenses. Some advertisements also include the name of the seller; for example ” Brand A is on sale in B retail stores.”
4- Unsought consumer goods
They are goods that consumers are not aware of or do not intend to buy even if they know. In order for these products to be sold, the consumer must be persuaded, and product marketing must be done face-to-face or by phone. These items are not usually purchased repeatedly. Mostly serve specific needs.
In some cases, the sale of one of these products necessitates the purchase of the other product. For example, a consumer with a housing loan will want to buy life insurance with it. In some cases, the sale is compulsory; for example, the bank may require mortgage recipients to take out life insurance.
Intensive marketing activity is required in the marketing of such goods. In particular, personal selling is the most widely used marketing technique.
Example of Unsought: Allianz, Aviva, Citibank, HSBC
Characteristics of Unsought Products
- Infrequently purchased
- Consumers have limited knowledge on the product
- Purchasing to prevent a negative outcome
Characteristics of Consumer Goods
1. Most consumer goods are produced on a large scale. The number of buyers is huge, and they buy many products over and over again.
2. There are many buyers and sellers in the consumer goods market.
3. Many products have substitutes.
4. There will be differences in the price of substitute products.
5. Most consumer goods have an elastic demand. When the price of a product rises, demand may decrease, and the buyer can switch to a replacement product.
7. There is intense competition in the consumer goods market.
8. Consumer goods are transferred from manufacturers to wholesalers or retailers.
9. Manufacturers and sometimes retailers engage in marketing and advertising work for the marketing and sale of consumer goods.
10. Consumer goods are affected by changes in usage habits.
11. Convenience and shopping products are simple to use, but some shopping products may require limited technical knowledge.
12. In the purchasing phase, brand awareness and status affect purchasing decisions more than the benefits of the product.
13. Consumer goods are generally not technically complicated. So, complex technical knowledge is not needed to use the goods.
15. After-sales service is important in durable consumer goods.