Industrial vs. Consumer Goods: What’s the Difference?

Industrial goods are materials that are used to produce consumer goods, which are the finished products sold to and used by consumers. Industrial goods include machinery, manufacturing plants, raw materials, and any other product or component used by producers.

Consumer goods are any products, whether luxuries or necessities, that are ready for consumption by members of the public.

Key Takeaways

• Industrial goods are bought and used by manufacturers.
• Consumer goods are ready for consumption by people.
• While industrial goods are made up of machinery, plants, and raw materials, consumer goods are finished products.

Industrial Goods

Industrial goods are classified as either production goods or support goods. Production goods are used to manufacture a finished product, while support goods, such as machinery and equipment, are necessary to the production process.

Unlike consumer goods, which are purchased by the general public, there are very specific buyers of industrial goods. They include buyers of components, such as car manufacturers, those who purchase and install machinery, and distributors who buy industrial goods for resale.

Characteristics of industrial goods include:

• Rational buying power: The decision to buy industrial goods is rational compared to the decision to buy consumer goods, which may be driven by psychology, status consciousness, or matters of taste.
• Complex product lines: Industrial goods are often complex and technically advanced. Those who use them must be highly skilled.
• Higher purchase value: Industrial goods typically come with a higher price tag because they are long-lasting and expensive to build.
• High level of investment: Those who need to will often invest a lot of money to purchase industrial goods.

Companies involved in the industrial goods sector represent a variety of industries including machinery, construction, defense, aerospace, and housing.

Consumer Goods

Consumer goods are tangible commodities produced and purchased to satisfy the wants or needs of a buyer. That’s why these goods are also referred to as final goods or end products.

They are goods that consumers typically find stocked on store shelves. As such, they can be purchased for use at home, school, or work, for recreational or personal use.

Consumer goods are divided into three different types: Durable goods, non-durable goods, or consumer services.

Durable Goods

Durable goods have a lifespan of three or more years. The consumption of a durable good is spread out over the entire life of the good, which causes demand for maintenance and upkeep.

Bicycles, furniture, home appliances, and cars are all durable goods.

Non-Durable Goods

Non-durable goods are purchased for immediate consumption or use. These goods generally have a lifespan of fewer than three years.

Food, beverages, and clothing are examples of non-durable goods.

Consumer Services

Consumer services are intangible products or services that are produced and consumed at the same time.

Haircuts and car washes are typical examples of consumer services.

Important

Fast-moving consumer goods make up one of the largest consumer goods groups.

Because of consumer buying patterns, consumer goods also are typically classified into four different categories including convenience, shopping, specialty, and unsought goods.

• Convenience goods: These products are ready to be purchased. Milk is a convenience good.
• Shopping goods: These goods may require research, planning, and thought as part of the purchasing process. Electronics and furniture are examples.
• Specialty goods: This category is composed of goods that are deemed to be luxuries. Jewelry is an example.
• Unsought goods: Unsought goods are overlooked by most consumers most of the time and are bought only as needed. Life insurance and funeral services are examples.

Key Differences

There are other key differences between industrial and consumer goods. The market for Industrial goods is limited to a few buyers, and the output of them is relatively small. Consumer goods are bought by everyone, and most are produced in mass quantities.

Demand also differs between both types of goods. Industrial goods are driven by derived or indirect demand. This demand stems from the need to provide finished products to consumers. Demand for consumer goods is direct demand which results from the usefulness of a product or service.

What Are the World’s Biggest Consumer Goods Companies?

To identify the world’s biggest consumer goods companies it’s necessary to break them down into categories. As of 2023:

• PepsiCo is the biggest beverage company
• Haier Smart Home Co., LTD is the biggest household durables product maker
• Nintendo is the biggest interactive media and services company
• Procter & Gamble is the biggest household products company

What Are the Largest Companies in the Industrial Sector?

Some of the giants in the industrial sector include General Electric Co., Caterpillar Inc., Honeywell International, Inc., United Parcel Services, Inc., The Boeing Company, and Lockheed Martin Corp.

What Is the Most Common Type of Consumer Good?

The most common consumer goods are known as consumer staples. These are the goods that nearly everyone considers essential and buys regularly. They include such goods as food, personal hygiene products, clothing, and cleaning supplies.

The Bottom Line

Some industrial products are out there for all to see, like UPS trucks. Most are rarely seen by anyone other than the workers who operate them behind the scenes in manufacturing facilities.

However, industrial goods are necessary to the creation of consumer goods. Those are the goods we all see on store shelves from day to day.

Read the original article on Investopedia.