Customer vs. Consumer: Key Differences

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.

In general usage, the terms consumer and customer are frequently interchanged. Simply said, a consumer is someone who consumes a product. A customer, on the other hand, is someone who buys or purchases a thing.

Now the question arises, what is the difference between a customer and a consumer? Nonetheless, the consumer is indeed the primary goal in the commercial world. A customer, on the other hand, consumes or uses the product. He is the only one who can reveal the outcome. A consumer decides whether or not a product or service is of high quality.

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.

A customer is someone who buys goods and services from a vendor regularly and pays for them to meet their requirements. Many times, a customer who purchases a product is also the consumer, although this is not always the case. When parents buy a product for their kids, for example, the parent is the customer and the kids are the consumers. Clients or buyers are other terms for them.

Different Types of Customers

There are a few different categories of customers:

• Loyal Customer- 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

• 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.

• 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.

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

• Impulsive Customers- These customers are difficult to persuade because they don't buy a specific product but rather buy anything they think is excellent and fruitful at the time.

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

• Wandering Customers- These are the least valuable customers because they are unsure of what they want to buy.

Defining Consumer

Someone who buys something for their personal use and subsequently consumes it is referred to as a consumer. The consumer cannot resell the product or service, but he or she can use it to support themselves. A consumer is a person who consumes a product or service without the permission of the buyer. A consumer, in simple words, is someone who buys or utilizes goods or services.

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.

Every person who participates in the economy is a consumer of the product. When a person buys groceries for their family from a grocery shop, for example, they become a customer because they are only acquiring commodities. However, when they feed the groceries to other family members, they become the consumer.

Types of Consumers

Consumers are important in a variety of ways, as shown below:

• The Extrovert Type: People who fall into this category are those who have a thing for branded goods. They will almost certainly continue with them and attempt to become loyal. They have a good probability of becoming brand supporters if they are presented with high-quality items and services. These people seek unique brands for purchase and can become loyal customers for that brand if they find quality products and services.

• The Inferior Goods Type: These consumers generally suffer from low income, which forces them to seek inexpensive products for consumption. As a result, people are obligated to purchase only those items that are necessary for their existence.

• The Commercial Type: This group of people buy products and goods in bulk, irrespective of their actual needs or requirements. This group of customers will buy goods and products in large quantities, regardless of their actual needs. This could be utilized for commercial purposes or not.

• The Discrete Type: As the name implies, these customers prefer to shop discreetly. Simply said, they will consider spending a significant amount of money on only a few specialized products, such as cosmetics, jewelry, or clothing. And I'm going to try to avoid thrifting in the other categories. These consumers have a unique buying habit, generally spending a considerable sum of money on electronic products and apparel.

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 categorized 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.

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.