Consumer products are the final goods that households or individuals purchase for their personal use and not for any other economic production activities. Consumer products companies make goods for the consumption of the average consumers.
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What are Consumer Products?
Definition: Consumer products are defined as the products acquired by customers for their use instead of utilizing them to produce any other product. These products are the outcome of composition and production processes. These are the final products that consumers see in the shops and then purchase.
In economics, consumer products are tangible outputs created and ultimately bought by consumers to meet their demands and individual requirements. Consumer goods are considered- pure services if they are consumed instantaneously as they are produced, durable if they are useful for more than three years, and nondurable if they are useful for less than three years.
4 Types of Consumer Products
Consumer products are usually divided into four categories associated with various sorts of purchasing choices.
1. Convenience products
Convenience products are associated with products and services that customers usually purchase with limited purchasing efforts and analysis. These sorts of products are classified as low-involvement purchases.
Convenience products need little or no preparation at all when you need to purchase something. For example, products that we require daily like fruits, milk, sugar, vegetables, eggs. Convenience products have several brand loyal customers since customers want to purchase a product belonging to a specific brand. For example, you might need only a particular brand’s chocolate or juice.
They can be of 2 types-
- Staple convenience goods (fulfilling basic customer necessities)
- Impulse convenience goods (non-priority goods, such as cigarettes)
Different FMCGs (Fast-moving consumer goods) that can be part of convenience goods are-
- Processed foods
- Prepared meals
- Beverages
- Baked goods
- Fresh, frozen foods, and dry goods
- Medicines
- Cleaning products
- Cosmetics and toiletries
- Office supplies, etc.
Unique Characteristics of Convenience Products
- Purchase plan not required – Convenience products do not require any shopping plan. These products are necessities, and people do not plan before buying them.
- Less Quantity- People purchase convenience products in low quantities usually. Since people buy convenience products frequently, they buy them in smaller quantities.
- Buying Frequency- A person buys convenience products regularly and repeatedly. This is because the requirement of convenience products is usually daily. And, since it is purchased in smaller quantities, one buys it repeatedly.
- Available at nearby stores – Convenience products are usually available in the nearby stores. Thus, one can buy them conveniently.
- Cost and Quality Analysis – People usually do not compare the cost and quality of convenience products since they already know what and how much to buy.
2. Shopping products
Shopping products relate to products that the customers do not buy regularly and compare the products with other viable options in the store. Consumers require time, preparation, and efforts to reach the ultimate decision whether they want to purchase the product or not.
Therefore, consumers do not purchase these goods frequently. When people decide to purchase these products, they have in mind certain factors, like the price, time to be taken, efforts, and the product’s urgency. Examples of shopping products include cars, home appliances, clothes, etc.
Unique Characteristics of Shopping Products
- Proper buying plan- Shopping products require to have a precise buying plan. People need to consider their income, time, and other factors before buying these products. Therefore, they require a proper plan before purchasing these products.
- Buying Frequency – People do not purchase shopping products often. This is because these products are not necessities. So, they are not purchased frequently.
- Cost and Quality Analysis – Before buying shopping products, people compare prices, characteristics, quality with other alternatives.
- Selected Stores – Shopping products are not simply available in every store. People purchase these products from selected stores.
3. Specialty products
Specialty products are products that consumers find so unique and desirable that they will purchase specialty products anyhow.
Consumers who buy specialty products understand what they need and will spend as much and time required. Examples of specialty products are luxury goods, fancy cars, priceless paintings, etc.
Unique Characteristics of Specialty Products
- Brand Loyalty – People purchasing Specialty products are highly loyal to a brand they love. No matter how expensive the product is, if they want it, they will buy it.
- Price of the products- The price of specialty products is generally higher as compared to other products.
- Buying Frequency – People buy these products once in a blue moon. The demand for these products is average.
- Promotion – The marketing of these products is done on a more extensive basis to inform the people about the product.
4. Unsought products
Unsought products are products that the consumer does not have any information on. Consumers do not usually think of purchasing these products.
They need to purchase it only if the situation demands those products. The perfect examples of unsought products are books, pest control aids, fire extinguishers, funeral services, and encyclopedias.
Unique Characteristics of Unsought Products
- Buying Plan – Before buying unsought products, people do not make any plans.
- Price – The cost of unsought products is usually high. As the demand for these products is not so high always, the cost of these products is high.
- Brand Loyalty – People usually do not have any brand loyalty towards these products.
Marketing Efforts used by Consumer Products Companies
Consumer goods marketing is addressed to the individual customer. With consumer goods marketing, the approach will be different from advertising the products to the common market.
Consumer goods are firstly classified into four kinds that have been mentioned above. Products need to be put into the right category. Different categories of products require different strategies for selling them.
For channelizing marketing efforts of consumer products, they can be grouped into 3 categories-
- As per consumer behavior
- Different ways consumers shop for consumer products
- How frequently consumers shop for them
Convenience goods are regularly consumed by the consumers and hence, they are widely distributed and quite easily available in the market. Local marketing, TV, Print, or radio ads are some of the easy ways of marketing for these products to create a favorable brand perception. Shopping goods like furniture and televisions demand more thought and planning for their marketing compared to convenience goods.
Specialty consumer goods are luxurious and rare. Hence, they are generally consumed by the elite class of shoppers and their marketing efforts should be directed towards the upper class and associated niche market. Unsought consumer goods like life insurance are purchased by very few members having specific needs, and therefore, for these products, creating demand, informing the audience with valuable content, and utilizing personalized marketing efforts will be more useful.
You can make more effort in optimizing the marketing of your consumer goods by using the below given techniques-
- Use customer insights to know what is driving consumers’ choices
- Utilize artificial intelligence in demand forecasting, individualized store-level assortment, and AI-powered cost-reduction strategies
- Use digital marketing, digital supply chain and incorporate digital platforms run by adept personnel for proactively addressing the growing pains of the consumers
- Incorporate innovation strategy by understanding the trends that are shaping demands
- Ensure personalization by knowing where your consumers are looking, how they are making their purchase, and when they are purchasing the products for their own use
- Utilize pricing optimizations and net revenue management for driving significant impact
- Ensure sustainability for your brand to enjoy a competitive advantage across the value chain
- Utilize zero-based budgeting for decreasing complexity and optimizing the transparency important for clearing cost ownership
What is the Difference between Capital Goods and Consumer Goods?
Capital goods vary from consumer goods since capital goods meet consumer needs discursively by giving the mediums to manufacture consumer products. These are not finished goods but they are used for making finished goods.
Examples of capital goods are factories, machinery, tools, appliances, vehicles, etc. These goods are the tangible assets required by a company during production. Then, the company manufactures the products which are later used by the consumers.
Consumer goods meet the consumer’s demands direct. Consumer goods are the final products utilized by customers and they do not have any future productive use.
List of Consumer Products and Examples
Consumer products are classified into four groups, namely convenience products, unsought products, specialty products, and shopping products.
Convenience product examples –
- Milk
- Medicines
- Grocery
- Candles
- Detergents
Unsought product examples –
- Reference Books
- Life Insurance Policy
- Gas detectors
- Helicopters
Specialty product examples-
- Expensive Jewellery
- Luxurious cars
- Designer clothes
- Fancy watches
Shopping products
- Mobiles
- Electronic appliances like fridge, television
- Furniture
- Airline tickets
- Cleaning devices
Consumer Products Industry Outlook in Future
The consumer goods business is only going to move ahead with aim and determination. The goal of the consumer products industry is to boost revenue and implement the business strategy.
Some of the key strategies that will govern the trends directing consumer products industry evolution during and after covid-19 are-
1. Recalibearting go-to-market strategies
Because of the change in behavior and preferences of consumers, companies should also change their go-to-market strategies.
Businesses should recalibrate their ways of segmenting consumers, positioning their brands, prioritizing channels, deploying service models, establishing product portfolios, etc.
2. Speeding up the shift to digital
Consumer products companies need to speed up their ways of incorporating digital marketing practices to widen reach, generate leads, optimize marketing presence and boost conversions for their goods.
Businesses should allocate resources to improve their e-commerce and shopping platforms.
3. Ensuring supply chain resilience
Along with low-cost supply, globalization, and minimal inventory, consumer products companies should pay attention to building supply chain resilience that would safeguard their supply chains from breaking. It would also help businesses in restoring their supply chain in case if it breaks.
4. Investing in the business foundations
Consumer goods companies need to utilize this period for making improvements across all aspects of their business to be ready for the future. Producers and retailers involved in the consumer goods industry should use strategies like cost structure realignment for making their businesses ready for the future.
5. Adding purpose to profit
Consumer goods companies should have a strategy that places purpose alongside profit by expressing corporate values and ensuring consumer attention. Companies should try to accomplish objectives associated with social justice, sustainability, environmental consciousness, equality, etc for adding purpose with the profit and accelerating the whole process.
Conclusion
Now, it is clear that consumer products are the final goods that consumers purchase for their own use. Hence, these products are not used for reselling purposes or continued production.
Digital transformation has now become an urgent priority for contemporary companies involved in consumer goods to sustain the changing trends of the consumer industry and keep on making money.
What strategies do you consider important for consumer product companies today? Share your opinion with us in the comment section below.
