Consumer Goods

What is Consumer Goods?

Consumer goods are the products that are purchased by the buyers for consumption and not for resale. Also, referred to as final products, the examples of consumer goods include an Apple cellphone or a box of Oreo cookies. Consumer goods companies and the industry itself offer a vast range of products which heavily contribute to the global economy.

Key Takeaways


To understand what is the concept of consumer goods, we need to differentiate them from raw materials and capital goods. Consumer goods should not be confused with capital goods such as bricks and tools utilized by the businesses to build final products. On the other hand, consumer goods are complete products bought for consumption to fulfil the needs and wants of life. For example a toothpaste, socks, phones, toys, and appliances.

The consumer goods industry is built on supply and demand. There will always be a demand for basic goods like food, clothing, appliances, and furniture. For products rising beyond the boundaries of need, such as toys or luxury cars, the demand rises and falls based on their popularity and a company’s positioning. High-value consumer products are likely to be more in demand in a growing economy.

According to the Federal Reserve Bank of St. Louis, billions of dollars are spent each month on consumer goods and services. This makes them a robust industry that keeps the economy afloat globally and contributes to other sectors such as manufacturing, advertising, and retail. The consumer product industry accounts for around ⅔ of the trade in the world, according to Global Edge, offering products varying from country to country. Items like soap and toothpaste will be popular worldwide. Other products’ popularity will vary depending on the country’s socio-cultural aspect, per capita incomePer Capita IncomeThe per capita income formula depicts the average income of a region computed by dividing the total income of that area by the total population of the region. It is used to figure out the average income of a city, provision, state, country, more, and economic well-being.

Some of the largest consumer economies are the United States and China. Countries such as Burundi and Yemen with a weak economy are struggling consumer economies due to rampant corruption, lack of financing, low digital penetration and the like.

Types and Examples of Consumer Goods

There are three types of consumer goods: durable, non-durable, and services.

Consumer Goods

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#1 – Durable Goods

Durable goods do not quickly become obsolete and are resilient to survive for some years. For instance, laptops are a good example of durable goods. These items tend to be more expensive than nondurable goods as they are relatively a long term investment. Consumers are more likely to spend time researching and planning their purchase.

Here are a few examples of items in this classification of consumer good:

  • Appliances
  • Furniture
  • Automobiles
  • Electronics
  • Medical Equipment

Bottom line: A product a consumer purchases and expects to use for more than three-four years is a durable good. An expensive sector, companies dealing in durable goods work on product enhancements to boost the durability to cut across the stiff competition.

#2 – Non-Durable Goods

A nondurable good is the one you may need to consume quickly to avoid them from becoming perished. Examples include a box of doughnuts, hair care product or clothing. The resilience of non-durable goods varies from product to product. For example, clothes will probably last longer than a bag of veggies. Another term for this category is soft goods.

Here are a few examples:

  • Cosmetics
  • Food
  • Cleaning Products
  • Clothing
  • Shoes
  • Medication

Bottom line: These goods need to be quickly consumed, or they won’t last beyond three-four years of use. Nondurable goods are usually much less expensive than their durable counterparts.

#3 – Services

The last category is of the services. Services are consumed immediately and are not tangible items. Here is the list of consumer goods from Services:

  • Salon services
  • Home Painting Services
  • Grocery Delivery
  • Electronic repairs

Bottom line: A service that makes your daily life easier or is needed to keep functioning, such as getting your air conditioning repaired falls into this category.

How Does the Consumer Goods Industry Work?

The industry has been around for centuries. It consisted of handmade items like hunting tools, rawhides, or food, which could take hours to days to make. Now, thanks to technological advancements, they are quickly and efficiently manufactured. Mass manufacturing began around 1750, during the industrial revolution. The technology grew with a steam engine powering the machinery in factories and assembly lines being introduced. Assembly lines are still used in many factories today.

The products sold diversified. Within the durable and non-durable range of goods, sub-classification cropped up. Referred to as consumer products, their classification includes convenience products, shopping products, specialty products and unsought products. Due to the vast expanse of their utility, along with the changes in the marketing strategies, this sub-classification emerged. From door-to-door selling, it advanced into retail and internet selling.

Today, the industry fuels the advertising industry. In 2019, it was estimated that 560 billion dollars were spent worldwide on consumer product advertising. A whopping 229 billion was spent in the United States. China came in second place, spending around half of what the U.S. did. In 2017, the single biggest worldwide advertising spender was the U.S. company, Procter and Gamble. They spent around 10 billion dollars.

Some of the famous consumer goods companies include L’Oréal, Hugo Boss and FMCG giants like Nestle. FMCG, defined as fast-moving-consumer-goods are a dominating segment of the industry as they are usually made of low-priced packaged products that sell like hotcakes. The consumer product industry also helps with job creation. To keep products on the shelf, workers are needed in factories and retail establishments, both online and in brick and mortar shops.

This has been a guide to what is consumer goods and its definition. Here we discuss the top 3 types of consumer goods along with industry examples and how it works. You may learn more about financing from the following articles –