Consumer Goods - Explained
What are Consumer Goods?
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What are Consumer Goods?
Consumer goods refer to products purchased by the average customer or buyer, mainly for consumption. In the chain of production, consumer goods are mostly the end result of production and manufacturing, and they are sometimes referred to as final goods. These products are available at almost every shopping mall or supermarket.
- Examples of consumer goods include but are not limited to clothing, food, and jewelry.
Raw materials such as wood are not considered to be consumer goods since they can be used in creating other products like furniture, boards, or heat.
What Constitutes a Consumer Good?
Consumer goods are often classified into three primary types:
- durable goods
- nondurable goods
Services are often offered by handymen or laborers. They are mostly for hire and not classified as being bought.
- Examples include hairstylists, fashion designers, home services, or repair services.
The term durable goods is used to classify commodities that can last for more than three years. They serve the purchaser repeatedly and are said to add important value to users.
- Examples of these goods are air conditioners, clothes, refrigerators, etc.
On the other hand, nondurable goods can not last up to three years, but they do serve important needs when they are used.
- Examples would include food, drinks, toothpaste, soaps, etc. Also known as final goods, consumer goods are usually consumed after purchases, i.e., they do not aid further production.
Consumer goods, however, exclude vehicles like cars, yachts, and jets, as they can be used for providing services. These products are mostly sold to homes, schools, or recreational centers, and in most cases for personal uses.
In 1972, the Consumer Product Safety Act was established to supervise the sale of the most-used consumer products. This act, in turn, established a committee of five members known as the U.S. Consumer Product Commission to oversee the safety of these consumer goods and issue recalls of existing products.
Types of Consumer Goods
The main categories of consumer goods include convenience, shopping, specialty, and unsought goods. Consumers' buying patterns were used to determine these categories.
Here is a detailed explanation of each consumer product category.
Consumer Goods These products are consumed on a regular basis and are easily available to the average buyer. Convenience goods tend to solve buyers needs in one case, while on the hand, it is mostly bought as wants. Food is a product which a buyer would need, while cigarettes are non-priority goods. Convenience goods are mostly offered to the market by wholesalers and retailers.
Shopping Goods Shopping goods take a longer time to plan than convenience goods. This is because consumers would be stuck with them for a long period of time, and getting rid of them can be quite tedious. Examples of these goods would be electronics like televisions, refrigerators, or furniture.
Specialty Goods If you have an idea about those things which people use to show off their wealth, then youve certainly seen specialty goods. Items like fur clothes, original silk clothing, and jewelry are good examples of specialty products. These commodities are mainly for the elites who prefer to distinguish themselves from the rest of the masses.
Unsought Goods These goods are always available, but they are not purchased frequently or by everyone. A perfect example would be insurance.
Fast-Moving Consumer Goods Nondurable goods like food and drinks are examples of fast-moving products. Being the largest segment of the consumer market, most firms and retailers prefer to be part of it as the speed at which products are consumed can allow them to maximize profits.
Consumer Goods Exchange-Traded Funds The iShares U.S. Consumer Goods ETF (IYK), which was founded in 2000, is the largest consumer ETF in the United States. It was reported that this company had 11 stock holdings and $448.79 million in assets under management (AUM) in April 2019. This ETF tracks the DJIA U.S. Consumer Goods, which was also established in 2000. The top holding companies in this sector are Coca-Cola, Altria, PepsiCo, Phillip Morris, and Procter & Gamble. However, the largest consumer goods company in the world is Nestle as of April 2019, followed by Gerber, Toll House, Stouffers, Lean Cuisines, and Purina.
Consumer Goods which are Privately Traded iShares does not include privately traded consumer goods firms. In this category, the two leading companies are Mars and SC Johnson. SC Johnson focuses on homes with brands like OFF, Pledge, Raid, Ziploc, and the Windex, while Mars, on the other hand, is widely known for its candy bars and gum brand.
- Total utility
- Marginal Utility
- Diminishing Marginal Utility
- Marginal Utility per Dollar
- Rule of Maximizing Utility
- Consumer Goods
- Changes in Income Affect Consumer Choices
- Changes in Price Affect Consumer Choices
- Substitution Effect
- Income Effect
- Budget Constraints Create Demand Curves
- Lifecycle Model of Consumption
- Autonomous Consumption
- Permanent Income Hypothesis
- Lipstick Effect
- Engel's Law
- Paradox of Thrift
- Behavioral Economics