Consumer Market Meaning, Definition, Characteristics, Importance
Table of Contents:-
Meaning of Consumer Market
The terms consumer, end user, individual buyer, and individual user refer to the same, a buyer who buys products and services for end use Ordinarily, the term “marker” refers to a particular place where goods are bought and sold.
Related Article:- Consumer Decision Making Process
But, in economics, the market is used from a wide perspective. In economics, the term “market” does not mean a special place but the entire area where the buyers and sellers of a product are spread.
Definition of Consumer Market
According to Prof. R. Chapman, “The term market refers not necessarily to a place but always to a commodity and the buyers and sellers who are in direct competition with one another”.
So specifically, the end user or end consumer market refers to that group of consumers who buy/purchase goods, services, and ideas for their final and ultimate consumption, not for reproduction by any means. The consumer market is likely to be composed of end consumers whose needs differ in a 360-degree pattern. Understanding their need, want, value expectation, and service expectations are the way to win this market through the product and services that a firm is offering.
The consumer market is the market where products/services are purchased & consumed for personal satisfaction or use. Indeed, the consumer should be “king” not only because of the direction of legislation but also because the consumer has more money to spend and more time to spend it than ever before.
Given this increase in the amount of time and money, it should be no surprise that the largest numbers of different products are available in this market. Analysis of the consumer market involves understanding consumer buying behaviour, consumer roles, factors influencing consumer behaviour, and other psychic processes that take place in consumers’ minds.
Characteristics of Consumer Market
The characteristics common to the consumer market are:
1) Largest Number of Buyers and Sellers: In the consumer market there is a large number of buyers and sellers. The result of this is that the buyers don’t have a monopoly in the market and buyers are free to choose and buy products after comparison with different buyers.
2) Wide Variety of Heterogeneous Products: In a consumer market, there are a wide variety of products to choose from. So, consumers have a wide range of choices to buy products.
3) Small Size of Each Individual Purchase: In the industrial market, companies purchase products in bulk but in the consumer market, the buyer purchases in a smaller quantity due to various constraints like money, place of storage or simply need.
4) Wide Geographic Dispersion: In the consumer market, both sellers and buyers are dispersed.
5) Channels of Distribution: If the product is meant for industrial users, the distribution channel will be short. This is because industrial users buy in large quantities and the producer can easily establish direct contact with them. But channels of distribution in consumer markets have a wide chain of distribution.
6) Communication Media: Communication media in the industrial market differs from the consumer market. Communication media in the consumer market are advertising, sales promotion, personal selling, public relations, publicity, etc.
7) Transaction Terms: The transaction term in the consumer market is different from the industrial market. Most of the purchases are in cash or in credit via credit cards.
Consumer and Customer Concept
A consumer is the ultimate user of the service or product; the consumer may not have paid for the service or product. The consumer is a broad label for any one or households that use goods and services generated within the economy.
The concept of a consumer occurs in different contexts, so the usage and significance of the term may vary. The Consumer Protection Act 1986 of India, is slightly more generous with the word ‘Consumer’.
According to this law, the consumer is not only a person who uses the product for domestic personal use, but also one who uses the product to earn his daily livelihood So if the restaurant is a proprietorship company, the individual is the sole proprietor and the purchase of the Mixie is in the name, and then he/she could be deemed a consumer according to the Consumer Protection Act 1986.
A customer buys and pays for a product or service. A customer (also known as a buyer, client, or purchaser) is usually used to refer to a current or potential buyer or user of the products of an individual or organization called the supplier, seller, or vendor. This is typically through purchasing or tenting goods or services.
However, in certain contexts, the term customer also includes by extension any entity that uses or experiences the services of another. A customer may also be a viewer of the product or service ie, being sold despite deciding not to buy them. The general difference between a customer and a client is that a customer purchases “products”, whereas a client purchases “services”.
The word derives from “custom”, meaning a “habit”, a customer is someone who frequented a particular shop, who made it a habit to purchase goods of the sort the shop sold there rather than elsewhere, and with whom the shopkeeper had to maintain a relationship to keep his “custom”, meaning expected purchases in the future.
Related Article:- Scope of Marketing
The difference between customer and consumer is discussed below:
1) Customer is the person who uses the product for the selling purpose to others.
1) Consumer is the person who uses the product for their personal consumption.
2) Reproduction never be there
2) Reproduction is always there.
3) Customer purchases the product or services.
3) Consumer consumes/uses the product or services.
4) For example, assume a customer is the purchasing department of an organisation. Each department of the organisation places an order for goods or services that it needs, such as a pen, paper, and pencil for the administrative department. The purchasing department finds a manufacturer that sells the product and orders the product. The purchasing department is the customer but the administrative department is the consumer.
4) For example, a consumer is the patron of a grocery store. The patron purchases groceries from the store to eat the food. The grocery store purchased those food items from farmers, manufacturers and other vendors so that it could sell these items to consumers. The grocery store is the customer of the farmers, and the shoppers are the consumers of the grocery store.
Importance of Analysing Consumer Market
The importance of analyzing the consumer market is as follows:
1) Product Performance: Analysing the consumer market goes deeper than simply studying if customers are purchasing a particular product or not. It attempts to answer the deeper question of why consumers purchase or do not purchase certain products. If a large sports utility vehicle is not selling well then car companies want to know if it is a general distaste for SUVs or a seasonal decision connected to the price of gas. Information like this can tell companies if a product’s performance is intrinsic to its own merits or defects, or linked to external variables.
2) Predict Future Behaviour: Teasing out the underlying factors in the consumer market can help to predict how products will perform in the long run. The decision to continue or discontinue production of a particular item can prove a costly mistake if a company confuses a temporary lull (break) in sales with a broader distaste for the item. Similarly, making the inverse mistake of sticking with a product due to misplaced faith in seasonal factors can prove just as expensive.
3) Pick Winners: This information helps producers pick their line-up of products. Just as record labels sign many groups, knowing that they will lose money on the majority that doesn’t become a hit to make money from the ones that do catch on, producers have a portfolio of products. The ones that the consumer market indicates are popular, will stay around, and make money for the company. Those products that the consumer market indicates as failed ones can be dropped to minimize company losses.
4) Guide Development: Understanding the consumer market and consumer preferences also helps to guide future product development. This analysis will not only look at product type but individual features as well.
For example, if analysis shows that consumers like SUVs, but prefer fuel economy even more than they like SUVs, then car companies will be more likely to green light SUVs that are more fuel efficient. Even if analysis shows that a product won’t perform well with the general population, but provides a consumer niche from which the company can still make money, then the company can do green light production on a scale appropriate to the niche population.
You May Also Like:-
International Business Environment
Determinants of Economic Development
International Trading Environment
Impact of Globalisation on International Business
Complexities of International Business
Customer Relationship Management
Importance of International Business