Many people don’t know the definition of capital and consumer goods. This article will describe the definition and the differences between capital and consumer goods.
Some goods are produced by manufacturing and also for producing other goods. These goods are called Intermediate goods. Examples of these goods are steel, wood, etc.
I think after going through this article, you will have no problem understanding these different goods.
This article will cover.
- Overview
- Capital Goods
- Consumer Goods
- Different Types Of Consumer Goods
- Key Differences
- Examples
Overview
Capital and consumer goods are described by their name. The name describes their usage. A capital goods is for production, and a consumer good is what the consumer uses in their daily life. Consumer good has no connection with production.
A physical good can be both a consumer and a capital good. The difference will make in the usage of that physical good. These goods are called Durable goods.
Suppose a man buys a lawn cleaning machine. In this case, it is a consumer good. But if a landscape business owner buys the same lawn cleaning machine for their business. In that case, the good is a capital good.
Capital Goods
Capital goods can be any physical good behind the production of a consumer good. These goods can be used in any business or service. In most cases, capital goods are durable and can be used often.
There is a term called PPE, or property, plants, and equipment. If human hands do not curve any natural resource, then that can not be called a capital good. However, these goods are behind the making of other goods or services.
From a business perspective, it can tell that capital goods are for higher efficiency levels to produce other goods.
Consumer Goods
A consumer good is for consumption. These goods can not be a part of producing other consumer goods. Basically, these goods are for the end-users. Often consumer goods are called final goods.
There are a lot of examples of consumer goods- foods, vehicles, clothes, appliances, electronics, etc. There are three different categories of consumer goods. These are durable goods, nondurable goods, and services.
The goods we can use for more than three years are durable goods. A few examples are cars, home appliances, furniture, etc. The goods with a lifespan of fewer than three years are called nondurable goods. A few examples of nondurable goods are clothes, food, etc. Services are like repairing services, haircuts, etc. Read More: Money Outlined, The Global Magazine, 7Best things, Lawyers Note
Different Types Of Consumer Goods
There are four different types of consumer goods.
- Convenience Goods
The goods that we buy on a regular basis. Example- milk, eggs.
- Shopping Goods
The goods that are required thought and planning before purchasing. Example- home appliances.
- Specialty Goods
These goods have a small market. These are expensive and target a niche market. Example- jewelry.
- Unsought Goods
These goods are for specific needs. Example- life insurance.
Key Differences
The primary use of the capital good is to make the consumer good. These goods are for production. On the other hand, consumer goods are for personal use.
Consumer goods are for the consumers. Capital goods are the manufacturers, companies, and businesses.
Consumer goods can satisfy the consumers. These goods have a direct demand in the market. Capital goods are an indirect needs for consumer goods.
| Segmentation | Capital Goods | Consumer Goods |
| Usage | Production | Personal Usage |
| End User | Business | Consumer |
| Marketing | B2B | B2C |
| Examples | Unrefined wheat, raw textiles, tractors, milking machinery, crude oil | Foods, clothes, milk, cars, furniture, gasoline |
Examples
In simple words, capital goods are man-made goods that are used in the production of consumer goods. Let me clear out with an example.
Suppose you buy a computer, then the computer is a consumer good because its purpose is to serve you.
But if a software company buys the same computer, then the computer will be a capital good because it is behind the production of software.
Capital and consumer goods are sometimes the product, but we can differentiate them by usage. Or what purpose these goods are going to serve. Know More: Lawyers Inventory, iDream Agency, Finance Team, Wp Blogger Tips
Final Words!
I think now you have your answer. If there is anything that you haven’t understood. Feel free to ask in the comment sector. And if you got your answer, please give your valuable feedback.
