Consumer Goods: Definition, Types & Examples
What is a Consumer Good
A consumer good, also known as a ‘final good’, is the end product a business produces and is purchased by the consumer. For example, microwaves, fridges, t-shirts, and washing machines, are all examples of consumer goods. They are final goods that the consumer purchases.
Consumer goods contrast with intermediate goods in the fact that intermediate goods are used to create the final consumer good. Goods such as copper, coal, iron, or other raw materials, are not consumer goods because they are used to make a final consumer good. For instance, copper can be used to create trays, bowls, and other containers which are considered consumer products. These are examples of intermediate goods that are in turn used to create final consumer goods.
- Consumer goods, also know as final goods, are those that are consumed by the customer and are not used to make other goods.
- There are 3 main types of consumer goods. They are durable goods (that last longer than 3 years), nondurable goods (that last less than 3 years), and pure services (that are consumed instantly).
- There are 4 main types of consumer goods. They are convenience goods, speciality goods, shopping goods, and unsought goods.
Types of Consumer Goods
1. Convenience Products
The term ‘convenient’ means ‘involving little trouble or effort’. So convenience products refers to those that require little trouble or effort to purchase. They are both easy to access and frequently purchased.
Examples include: food, drink, laundry detergent, toilet paper, deodorant, and toothpaste. These goods are all easily available from the local supermarket and consumers purchase them on a daily, weekly, or monthly basis. Hence why they are known as convenience products.
Example of Convenience Goods
Those products that are frequently purchased are classified as ‘convenience products’ because there is little effort required in buying them. For instance, you may have a favourite type of cereal you purchase each week. You go straight to the cereal aisle and pick it up without thinking. This is convenient as you don’t spend half an hour debating whether you prefer Coco-Pops or Cheerios.
Characteristics of Convenience Products
The main characteristics of Convenience Products include:
- Frequently purchased
- Easily available
- Relatively low price
2. Shopping Products
Shopping goods contrast with convenience products in the fact that they are brought less frequently and are not so easily available. Consumers take more time to decide on what to buy and take a more deliberate effort before making a decision.
Such examples include furniture, clothing, video games, mobile phones, fridges, and other white goods. These are not so easily accessible as convenience goods such as fruit, vegetables, and cereals. Nor are they so frequently purchased. Therefore the consumer takes more time in deciding.
Example of Shopping Goods
Shopping products require the consumer to take more time to decide. This is because the opportunity cost of a wrong decision is more costly than trying a new loaf of bread. For instance, when deciding between a new mobile phone, the consumer may end up paying $500 for a phone they hate. Therefore, the incentive to make the correct decision is greater.
Characteristics of Shopping Products
The main characteristics of Shopping Products include:
- Infrequently purchased
- Not so easily available
- Compared to other similar goods
- Greater opportunity cost
Speciality products are goods that consumers do not take long when deciding to purchase. They have unique characteristics like being rare, or being an original design, so are largely incomparable to other products. For example, speciality products include: sports cars, rare paintings, high-spec laptops, rare ornaments, or designer clothing.
Speciality products are naturally unique, but they can also rely on brand recognition. For instance, Ferrari is known for its high quality sports cars, and Picasso is well known for his masterpieces. The products they produce are specialities in the fact that they represent a high level of quality.
Example of Speciality Goods
Speciality products are similar to Shopping products in the fact that they are infrequently purchased, are durable, and have a high opportunity cost. However, what differentiates them is the fact that consumers do not take so long to decide. The brand image of a Ferrari or a Picasso sells itself, so if the consumer has the money and likes the brand, they easily part with their cash.
Characteristics of Speciality Products
The main characteristics of Speciality Products include:
- Infrequently purchased
Unsought products can range from new innovations to old goods. They are simply goods that consumers do not know about or would think to buy. Equally, they are not necessarily goods that the consumer would want to buy.
Unsought products often offer no direct benefit at the time of purchase. For example, insurance is an unsought good. Yet few consumers actually want to buy insurance, but do so in order to reduce their risk.
They can require significant levels of marketing and investment to make them ‘sought’ after goods instead. This is because consumers are not necessarily aware of the benefits the product provides.
For example, life insurance is an unsought good. Nobody really wants to think about their death and won’t associate any benefits to it, so largely think of it as an unnecessary purchase. However, aggressive marketing campaigns have increased the awareness of the benefits such as pre-paid funeral care, legal fees, etc. As a result, such products can turn into ‘sought’ goods when consumers become aware of the true benefits.
Characteristics of Unsought Products
The main characteristics of Unsought Products include:
- Consumers lack of knowledge on the product
- Usually purchased to prevent a negative outcome
- Infrequently purchased
Consumer Goods Examples
When looking at consumer goods, it is important to remember that they are goods that are for final consumption. Unlike capital or intermediary goods, consumer goods is the final product. They are not used to make other products, but are intended to be consumed by themselves.
Therefore, one of the characteristics on consumer goods is whether the consumer can buy it. Then, whether this good is used to make another product. If it is not used to make another product, then it will be a consumer good.
Doughnuts are an example of a convenience consumer good. It is frequently purchased and is easily accessible from local stores. At the same time, it meets the characteristics of a convenience product as it is a non-durable good at a relatively low price.
This lends itself to convenience as the cost of an incorrect decision is low, meaning the consumer takes less effort and time in deciding. Hence, a convenient product.
A Ferrari is an example of a speciality consumer good. It is unique, expensive, durable, and infrequently purchased. Yet it is not a shopping good because it is largely incomparable to other such products due to its unique features. Whilst shopping goods are comparable, speciality goods are not.
A Gucci handbag is an example of a speciality consumer good. Similarly to the Ferrari, it is unique and largely incomparable to other products. Gucci has designs that are unlike others, so if the consumer likes the design, they won’t be able to get it elsewhere. By contrast, goods such as bread or basic laptops are almost indistinguishable.
Laptops generally fall under speciality products or shopping products. High-end laptops such as Apple MacBook Pro’s or Google’s Pixelbook can be classified as speciality consumer goods. This is because they are unique in their design without a real comparable product.
Apple has its own software with unique features, so is therefore a specialist product. By contrast, low-end laptops can be classed as shopping consumer products. This is because there is a wide variety with little differential between them. There are many low-end laptops on the market and it requires some level of research to find which is the best one.
Life insurance is an example of an unsought consumer good. Consumers do not necessarily desire it, nor is it common for the average consumer to actively go out to purchase it. Instead, the product relies on heavy advertising and sales techniques to draw in consumers.
It comes under an unsought good because consumers do not purchase it willingly, but rather because they want to avoid adverse effects. For example, life-insurance has no immediate benefit to the consumer like a doughnut or a laptop. The benefit is at a much later date, which is why the product is not sought after.
Pre-paid funerals are also an example of an unsought consumer good. Consumers do not purchase it out of pure desire and willingness. Rather, they purchase it because they do not want the adverse effects to occur.
For example, a father may fear that his children will be unable to afford such a service. So rather than burden his children with the cost and responsibility, it is paid for in advance. There is no real immediate benefit to the father, which makes it an unsought good.
Durable and Non-durable Consumer Goods
Consumer goods are therefore those goods that we purchase and use. They can be split into durable consumer goods, and non-durable consumer goods.
Durable goods are those that we are able to consume over a long period of time. For example, fridges, microwaves, and motor vehicles are all durable consumer goods. In other words, durable consumer goods are not completely consumed after one use. By contrast, a non-durable consumer good such as bread is completely gone after it is consumed as part of a sandwich.
Non-durable consumer goods are those that no longer exist once consumed. In other words, they can only be consumed once. For example, food, drink, and cigarettes are all non-durable. Once you eat a banana, you can no longer eat it again because it’s in your stomach. By contrast, durable goods like a motor vehicle can be used over and over again.
FAQs on Consumer Goods
There are 4 types of consumer goods:
Consumer goods cover convenience products such as doughnuts and milk, shopping products such as laptops, speciality products such as Ferrari’s and Gucci handbags, and unsought products such as pre-paid funeral funerals and life-insurance.
Paul Boyce is an economics editor with over 10 years experience in the industry. Currently working as a consultant within the financial services sector, Paul is the CEO and chief editor of BoyceWire. He has written publications for FEE, the Mises Institute, and many others.