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

Industrial goods are materials used in the production of other goods, while consumer goods are finished products that are sold to and used by consumers. Industrial goods are bought and used for industrial and business use. They are made up of machinery, manufacturing plants, raw materials, and any other good or component used by industries or firms. Consumer goods are ready for the consumption and satisfaction of human wants, such as clothing or food.

Key Takeaways

  • Industrial goods are bought and used for industrial and business use.
  • Consumer goods are ready for the consumption and satisfaction of human wants.
  • While industrial goods are made up of machinery, plants, and raw materials, consumer goods are commodities purchased by a buyer like clothing, food, and drinks.

Industrial Goods

Industrial goods are based on the demand for the consumer goods they help to produce. Industrial goods are classified as either production goods or support goods. Production goods are used in the production of a final consumer good or product, while support goods help in the production process of consumer goods such as machinery and equipment.

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

Characteristics of industrial goods include:

  • Rational buying power: The decision and drive to buy industrial goods is rational compared to consumer goods, which are primarily purchased because of an emotional need.
  • Complex product lines: Industrial goods are usually complex in nature because they can be highly technical. Those who use them must be highly skilled.
  • Higher purchase value: Industrial goods typically come with a higher price tag because of their complex nature and limited target market.
  • 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 (but not limited to) machinery, construction, defense, aerospace, and housing.

Consumer Goods

Consumer goods are tangible commodities produced and purchased to satisfy the wants of a buyer. That's why these goods are also referred to as final goods or end products. They are goods that consumers can typically find stocked on store shelves. As such, they can be purchased for use at home, school, or work or for recreational or personal use. Consumer goods are divided into three different types: Durable goods, non-durable goods, or consumer services.

Durable goods have a significant 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, and cars are examples of 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 are also intangible products or services produced and consumed at the same time. Haircuts and car washes are typical examples of consumer services.

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

Because of consumer buying patterns, consumer goods 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 one example of a convenience good.
  • Shopping goods: These goods require more planning and thought during the purchasing process by consumers. This category includes products like electronics and furniture.
  • Specialty goods: This category, which includes jewelry, is composed of goods that are deemed to be luxuries.
  • Unsought goods: Unsought goods require a niche market and are typically purchased by only a few members in the market, such as life insurance.

Key Differences

There are other key differences between both industrial and consumer goods including buyers. Buyers of industrial goods are generally limited because there are fewer consumers of these products. Consumer goods, on the other hand, have a larger pool of buyers.

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, on the other hand, is direct demand which results from the direct usage of a good or service.