Industrial and Consumer Products
In this post, we are going to discuss the distinction between consumer goods and industrial goods. You can learn about the types and characteristics of each as well as the difference between the two from this post.
The Distinction Between Industrial and Consumer Products
Products are classified into two main categories based on their consumers. These two categories are industrial products and consumer products. The main distinction between the industrial products and the consumer products is that industrial products are bought by businesses for further processing while consumer products are bought by individual consumers for personal consumption.
So, the main difference between these two categories of products lies in the purpose for which they are purchased. If a product has been bought by a business for further processing or for use as raw material or for use in a business process, it will be classified as an industrial product. However, if a product is bought by an individual consumer for personal consumption, it will be classified as a consumer product.
An individual buys a car for his personal use. In this case, the car is a consumer product. However, a business buys a fleet of cars for commercial use, in which case, the cars are industrial products. This was to explain the difference between consumer and industrial goods. The same goods can be classified as industrial and consumer goods based on the purpose of purchase. When an individual buys a lawn mower for personal use, it is a consumer product but an industrial product when a business buys lawn mowers for business use.
Now, let’s take a look at the types and characteristics of industrial and consumer goods:
Industrial products:
Here are the main types of industrial products:
Materials and Parts - Materials and parts get fully absorbed after processing. They become a component of the processed good or the final product after processing. Materials and parts are further categorized into two forms including raw materials and manufactured materials and parts.
Raw Materials - Raw materials generally include natural products and farm products. Wheat, cotton, fruits, livestock etc are produced mainly by small producers who then sell them to intermediaries. The intermediaries process and sell these products. Natural products like iron ore or petroleum require a lot of transportation and have low unit value. Sometimes they are to be transported from one corner of the world to another such as the Middle East to Asia. There are few and very large producers that produce natural products. Leading brands like ExxonMobil and Saudi Aramco are engaged in the production of petroleum and petroleum products.
Manufactured Materials and Parts - The manufactured materials and parts generally include components and parts. Component materials are processed further before sales. For example, iron and aluminium have to be processed further to produce various types of products like utensils and electronics products. Component parts on the other hand do not need further processing. For example, an automobile manufacturer sources tyres from a supplier. These tyres do not need to be processed further but can be directly assembled into automobiles. Manufactured materials and parts are generally sold to industrial consumers directly. In their case, quality, price and service are of higher importance compared to marketing and promotions.
Capital - Capital items are the products that help the industrial buyer with production or operations. This category mainly includes installations and accessory equipment. Installations include building and fixed items. Companies need office buildings, assembly plants and warehouses for operation. Equipment like lifts and generators are also needed for operation. Since installations constitute mostly large and significant purchases for a company, there is a long decision cycle involved before their purchase. Buyers will consider several significant factors before making the final purchase. They buy the installations directly from the producers.
Accessory equipment has a shorter lifespan compared to the installations. For example, office equipment will need to be replaced from time to time and so do factory equipment and tools. Accessories do not become a part of the final product but assist with the production and operations. Accessory equipment manufacturers depend on intermediaries such as distributors and resellers for the sales of their products. Buyers of these products are generally geographically dispersed and purchase sizes are small due to which the accessory equipment manufacturers need distributors and resellers.
Supplies and Services -
Supplies and services are not a part of the final product at all. Supplies required for operation as well as maintenance items are classified as supplies. In some regards they are similar to convenience goods or consumer goods. The buyer does not need to consider several factors before purchasing supplies and services. Operating supplies such as paper or pencil and maintenance items do not require a lot of effort and consideration before purchase.
Services generally include maintenance and repair services as well as advisory services. There are various types of services required by businesses like cleaning and maintenance services as well as legal and financial advisory services. Usually, these services are offered under a contract. Maintenance service providers are generally small businesses whereas repair services are mostly provided by the manufacturer of the equipment.
Consumer Products:
Consumer products are the products that we buy for personal consumption. These products have been classified into four different categories on the basis of consumers’ buying habits. These products also differ in terms of their marketing. These four types of consumer products include convenience products, shopping products, specialty products and unsought goods.
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Convenience Products: These products are bought frequently and without much consideration or buying effort. They are widely available and are also less expensive such as milk or soap. The convenience products can be further classified into three categories including staples, impulse goods, and emergency goods. Staples are the products that we buy regularly, such as toothpaste, soap and bread. Impulse goods are not bought regularly but sought after seldom such as chocolates and magazines. They are also bought without much consideration and generally placed next to check out counters where consumers can spot them easily. Emergency products are bought only when urgently needed such as an umbrella. They are also widely available and bought without much consideration.
Shopping Products: Shopping products are bought less often but a lot of consideration goes into their buying and consumers compare them with other products before purchasing. They spend a lot of time gathering information about these products and comparing them with substitutes. They will consider several alternative brands and products to see which one offers the best quality and is most suitable before finally purchasing. Price is also an important consideration behind the purchase of these products. People will buy furniture, used cars, and clothing after a lot of consideration and will select the one that suits their needs the best.
Shopping products are divided into two categories including homogeneous and heterogeneous products. While homogeneous products are considered similar in terms of quality and characteristics, price is the most important consideration behind the purchase of homogeneous products. Consumers will compare prices before buying a pressure cooker or a fridge. However, in the case of heterogeneous products, consumers will consider the quality before the price. For example, when buying a suit, a customer would check out the cut, fit and look. Sellers of heterogeneous products therefore generally keep a wide assortment of products to cater to different preferences of consumers. They also keep salespeople to inform consumers about the features and variety of choices available.
Specialty Products: Specialty products are consumer products with special or unique characteristics and brand identification. These products are in high demand among a particular buyer group which is always willing to make extra efforts to purchase them. Common examples can be found in the luxury segment such as luxury cars or luxury fashion. Sports cars are fancied by a large group of consumers and so are special products by leading luxury brands like Chanel or Dior. Consumers do not spend a lot of time comparing these products but will go to the dealer who keeps the products. While such dealers would not need convenient locations, they are still located in places where their target audience can easily reach them.
Unsought Products: Unsought goods are not sought by consumers normally. These products remain unsought after until their unique characteristics and features which may be useful for consumers are made public through advertising or other forms of marketing communications. Most of the modern innovations first remain unsought goods until they have been made popular through advertising or by publicizing their unique benefits and features.
In another case, there are products that people are aware of but do not consider much about buying them. People have knowledge of insurance products or at least the basic awareness about these products but still do not think of buying them unless essential. It is why in the case of the unsought goods, sellers need to advertise a lot. It is why you generally come across a lot of insurance advertisements. There is also a lot of need for personal selling and other types of marketing efforts behind the sales of unsought goods. Several advanced personal selling techniques have evolved from the need to market unsought goods. Businesses are also using chatbots and AI for marketing and selling unsought goods.
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