Difference Between Customer and Consumer

People often make the mistake of using the terms ‘customer’ and ‘consumer’, interchangeably. While in some cases customer and consumer may indicate the same section of people, it is still vital to understand the key differences between these two widely used terms.

Defining Customers: Who is a Customer?

To understand and appreciate the distinction between customers and consumers, one should start by understanding the definition of each. Derived from the word ‘custom’, customers are defined as those individuals who buy products or services after paying the monetary price for the same. For example, XYZ Ltd. buys a thousand cartons of eggs and pays Rs.50000 for them. Thus, XYZ becomes a customer for that commodity.

Customers can also be referred to as clients or buyers. Therefore, any person or business buying goods or services regularly from a seller is known as a customer.

Different Types of Customers

Customers can be divided into two distinct groups. These are –

1. Trade Customers- These customers buy products to add value to the items and resell them for a profit. For example, manufacturers, wholesalers, retailers and other such entities are trade customers since they are not the end-user of the goods they purchase.

2. Final Customers- People who purchase products for their own use are known as final customers. In such a case, no reselling or profit generation takes place after goods purchase.

Apart from these groups, one can also divide types of customers into the following five categories.

1. Discount Customers- These customers only purchase goods and items when there is a discount applied to the products.

2. Loyal Customers- These customers are satisfied with the services and quality of products from a brand or store. Therefore, they tend to return multiple times for purchases

3. Need-Based Customers- These customers tend to limit their purchase to only those items or goods, which they require.

Defining Consumers

Now that you know about customers, you must be wondering “who is a consumer?” Consumers are those customers who buy goods and services for their own use. Thus, all end users of a particular product are its consumers. For example, Raju heads to the nearest store to buy a carton of eggs for himself. In this scenario, he is both a customer and a consumer.

Consumer Types

There are four major types of consumers in the market. They are –

Discretionary Spending Consumers- These consumers have a unique buying habit, generally spending a considerable sum of money on electronic products and apparel.

Commercial Consumers- This group of people buy products and goods in bulk, irrespective of their actual needs or requirements.

Inferior Goods Consumers- These consumers generally suffer from low income, which forces them to seek inexpensive products for consumption.

Extroverted Consumers- These people seek unique brands for purchase and can become loyal customers for that brand if they find quality products and services.

True or False Section

Q. All Consumers are Customers, but not all Customers are Consumers. Is this statement true or false?

A. False

A person needs to buy products and goods to qualify as a customer. However, a consumer may not necessarily be the buyer of the product. For instance, if goods are gifted to an individual, he/she is still the consumer but not the buyer in this instance.

Similarly, customers who purchase products to resell cannot be categorised as consumers of the said item. Thus, not all customers are consumers.

Customer Vs Consumer

When trying to gauge the difference between consumer and customer, refer to the following table for help.

Consumer

Customer

Any individual purchasing products from a seller for his/her own use is a consumer.

Any individual purchasing products from a seller is a customer.

Consumers do not resell products that they purchase.

Customers may or may not resell the purchased goods for profit.

Consumers always refer to a single individual, a family or a group of people.

A customer can be any entity within an economy.

Consumers may or may not need to pay the price of the goods they consume. For example, a child’s parents buy the food that he/she consumes.

Customers always need to pay the price of the product.

End-motive is the consumption of the product.

The motive here may be reselling the purchased goods or consumption

 Do it Yourself-

If X buys rice to sell at his retail outlet and Y buys rice for his family, identify whether X and Y are consumers or customers.

The distinction between a consumer and a customer is a key concept for all commerce students. If you still have doubts regarding consumer vs customer, you can sign-up for Vedantu’s live online classes for a more nuanced understanding. Conducted by subject experts, these classes can assist students in appreciating and learning the finer elements of class 11 and 12 commerce.

FAQ (Frequently Asked Questions)

1. What is the Difference Between a Consumer and a Customer?

The primary difference between a customer and a consumer is that customers pay money to purchase goods and services. These goods may be for self-use or for reselling. On the other hand, a consumer is any person that buys goods and services for self-consumption only.

2. What is the Distinction Between Final Customers and Consumers?

Final customers refer to those customers who purchase products for their own use. Consumers are also the end-user for a product. However, a difference between them is that final customers always pay the price for a commodity. However, a consumer may or may not pay the price. For instance, an individual receiving the product as a gift is still the end-user of the same, but he/she does not need to pay for the item.

3. What are the Four Major Consumer Types?

Consumers are divided into four standard groups, namely, inferior goods consumers, discretionary spending consumers, commercial consumers and extroverted consumers. The classification is made based on individual buying and consumption habits. For example, inferior goods consumers have limited income and thus, can only afford to buy inexpensive products.