Consumer Goods – Definition

Cite this article as:"Consumer Goods – Definition," in The Business Professor, updated September 9, 2019, last accessed June 3, 2020,


Consumer Goods Definition

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.

A Little More on What is a Consumer Good

Consumer goods are often classified into three primary types: durable goods, nondurable goods, and services. 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.

Different Categories 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 you’ve 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, Stouffer’s, 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.

Reference for “Consumer Goods” › Investing › Financial Analysis

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