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Question
What are industrial products? How are they different from consumer products? Explain.
Solution
Industrial products refer to those products that are used as inputs for the production of other goods. Such goods are not meant for final consumption rather they are used as raw material and inputs by the manufacturers for the production of consumer goods. For example, machines, tools, etc. are industrial products. As against this, consumer products refer to those products that are used by the ultimate customers for their personal consumption purposes. For example, toothpaste, edible oil, furniture, etc. are consumer goods.
The following points highlight the difference between industrial products and consumer products.
|
Basis of Difference |
Industrial Products |
Consumer Products |
|
Number of Customers |
The number of customers is limited. For instance, oilseeds (industrial products) are used mostly by the producers of mustard oil. |
The number of customers is higher. For instance, mustard oil (consumer product) is consumed by many people. |
|
Channel of Distribution |
Such products requires shorter channels of distribution such as direct selling or one level channel. |
Such products require comparatively longer channels before they reach the final consumer. However, the channel of distribution for perishable consumer products is small. |
|
Location |
Industrial products remain concentrated only in those areas where the industries producing these goods are located. |
Consumer products are readily and conveniently available. |
|
Demand |
Demand for industrial products is a derived demand based on the demand for consumer products. |
Demand for a consumer product is not a derived demand rather sets the basis for the demand for industrial products. |
|
Role of Technical Features in Decision Making |
Technical features play an important role while purchasing these products |
Such products do not involve any technical complexities in manufacturing. Thereby, technical features does not have much role in the decision making while purchasing. |
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