Industrial and consumer goods are both classified as products, but their difference lies in their distinct role in the production process. Industrial goods, otherwise called capital goods, are used during the production process, while consumer -- or final -- goods are actually its result. Therefore, these two types of goods feature distinct characteristics and appeal to different potential buyers.
Industrial Products Defined
Industrial products are those used during the production process to make other goods. Examples of such goods are hammers used by blacksmiths; factories, and assembly lines. Such goods help workers process raw materials into the final product. They are available for sale only through specialized merchants, as the public does not need such products; consumer needs are fulfilled by the so-called consumer goods.
Industrial Goods Produce Value
With the use of industrial goods, workers of an industry process raw materials and create a final product more valuable that its initial materials. For instance, a piece of raw wood is far cheaper than a carved wooden birdhouse. Labor in general and industrial goods' use in particular produce new value, which constitutes the basis of industrial production's profitability. This is because profits are based on the fact that a piece of plastic, for example, worth $5 can become -- through the use of industrial goods -- a satellite receiver costing $30.
Consumer goods, otherwise called final products, are the result of the production process. They don't assist production; they are production. Shampoos, shoes, frozen meals, cars and cellphones are all consumer goods. The purpose of consumer goods is to satisfy a specific need of consumers directly. Consumer goods are divided into durable products, those that consumers can use for years, such as cars, books and furniture, and nondurable products, including food, batteries and clothes.
Consumer Goods Bring Profit
Industrial goods create new value by assisting the processing of raw materials, but this does not mean that the industry automatically earns money for that. Instead, what brings profit to the industry is the sale of consumer products. The higher the number of products sold, the larger the income for an industry. For this purpose, marketing a final product to lure consumers is a highly important activity in modern business.