What Are Consumer Goods?
Consumer goods are products bought for consumption by the average consumer. Also called final goods, consumer goods are the end result of production and manufacturing. Clothing, food products, and dishwashers are examples of common consumer goods.
The Consumer Product Safety Act of 1972 regulates the sale of most common consumer goods and created the U.S. Consumer Product Safety Commission, a group of five appointed officials who oversee the safety of products and issue necessary recalls of faulty consumer products.
- Consumer goods, or final goods, are goods sold to consumers for their use or enjoyment.
- Consumer goods can be classified as durable, nondurable, or service goods.
- Consumer goods are categorized based on consumer behavior and marketed by type of good, such as a convenience product or specialty item.
Types of Consumer Goods
• Durable goods are consumer goods that have a life span of over three years and are used repeatedly over time. Bicycles and refrigerators are considered durable goods.
• Nondurable goods are consumed in less than three years, are commonly used one time and include packaged food and drinks or laundry detergent.
• Service goods include items like auto repairs and haircuts that are intangible consumer goods.
A product recall is a request to return, exchange, or replace a product after a manufacturer or consumer watch group discovers defects that affect product performance or harm consumers.
Marketing Consumer Goods
How the consumer views and uses a product determines the way companies market their goods.
• Convenience goods are those that are regularly consumed and are readily available for purchase. They are often nondurable goods and low-priced items sold by wholesalers and retailers. Examples of convenience goods include milk and tobacco products.
• Shopping goods are those items bought less frequently, are durable, and are commonly more expensive than convenience goods. Examples of shopping goods include furniture and televisions.
• Specialty consumer goods are rare and often considered luxury purchases. They are often marketed by brand or geared to a niche market. Sports cars and fine art are examples of specialty consumer goods.
• Unsought consumer goods are readily available but not often sought by the consumer. Although they may be necessary purchases, they require marketing to consumers to nudge a purchase. Examples of unsought consumer goods include life insurance and pre-paid funeral expenses.
What Are Fast Moving Consumer Goods?
Fast-moving consumer goods include nondurable goods like food and drinks that move rapidly through the supply chain from producers to distributors and retailers to consumers. Companies and retailers like this segment as it offers high shelf-space turnover opportunities.
What Is the Consumer Goods Sector?
Consumer goods are considered a sector for investment. Investors can purchase shares of funds which include companies that produce consumer goods. The largest consumer goods ETF is the iShares U.S. Consumer Staples ETF (IYK). With 58 stock holdings and $954 million in net assets under management (AUM) as of February 2022, the fund's top holdings are Procter & Gamble, Coca-Cola, PepsiCo, Philip Morris, and CVS.
What Is the Difference Between Capital Goods and Consumers Goods?
Capital goods, such as buildings, machinery, equipment, vehicles, and tools, are physical assets that a company uses in the production process to manufacture products and services that consumers will later use. Capital goods are not finished goods but are used to make finished goods. Consumer goods are those used by consumers and have no future productive use.
Which Companies Rank as Most Trusted for Consumer Goods in the U.S.?
Hasbro, Yeti, and Proctor & Gamble are the top three ranked companies in 2022 for consumer goods in a survey conducted by Edelman Research.
How Has E-Commerce Affected Demand for Consumer Goods?
According to the U.S. Census Bureau, Americans spent $791.7 billion during 2020 on e-commerce for consumer goods, up 32.4% from 2019, largely in part due to the COVID-19 pandemic with categories like groceries, sporting goods, and home improvement items on the rise using e-commerce platforms.
The Bottom Line
A consumer good, or final good, is the end product a business produces that is purchased by a consumer. Consumer goods can be classified as durable, non-durable, or services. Marketing of consumer goods depends upon the use, price, and features of the item. The Consumer Product Safety Act of 1972 and the U.S. Consumer Product Safety Commission ensure that consumer protections are in place for the goods that are available on the market.