The Difference Between Consumer Vs. Customer (With FAQs)

By Indeed Editorial Team

Published 14 May 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Businesses rely on financial transactions between sales representatives and people who have an interest in using products or services that a company offers. Typically, people who purchase or consume products are customers or consumers. As marketing and sales professionals interchangeably use these terms, learning the difference between consumers and customers can help develop an effective business strategy and build long-term relationships with both of them.

In this article, we discuss what consumers and customers are, understand their types, explore consumer vs. customer, discover the importance of knowing the difference between the two terms and find answers to some frequently asked questions (FAQs).

Consumer vs. customer

Here is the main difference between consumer vs. customer:

Definition

For a business, any person who consumes the services and uses the goods is the consumer. A customer purchases services and goods from the seller and pays for them to fulfil their needs. A consumer cannot resell the goods or services but consume them to earn a livelihood or support themselves. In short, a consumer is the end-user of the products or services that a company offers.

Usually, a customer is the buyer of the company's offering. Often, a customer is the product's consumer, but it might not be true every time. For instance, if Rohit purchases a house for his personal use and pays for it, Rohit is both the customer and consumer. Suppose Rohit buys a dress for his wife and pays for it. Here, Rohit is the customer, whereas his wife is the consumer.

Type and purpose

A customer can be an organisation, business or individual that buys products or services. A consumer can be a family, a group of people or an individual that uses services and products, regardless of whether they purchased them. Also, the purpose behind a consumer purchase is consuming the service or product, but the purpose of a customer purchase can be to consume or resell the services or products.

Payment

Consumers may or may not pay for the price of goods they purchase. For instance, when parents buy a diaper for their child, the child is the consumer, but they do not make the payment. A customer pays for every product they use and every service they avail.

Who is a customer?

A customer is a buyer who exchanges money for services or goods. When a customer makes a purchase, their relationship with the company ends when they receive their products. For example, a person buying food at a restaurant is a customer because the restaurant provides food for the money. Also, good marketers try to influence the customers first because they can trigger sales and revenue.

Related: What Is Customer Service? Definition And Career Advice

Types of customers

A few types of customers a business can encounter are:

  • Loyal customers: These are customers who are happy and satisfied with a company's service or products. Though they might make up a minority of customers, they generate a significant portion of sales.

  • Final customers: Customers who purchase products for personal consumption are the final customers. A final customer does not resell products after making a purchase.

  • Trade customers: A trade customer buys products to add value to the items and resell them to earn a profit. Retailers, wholesalers and manufacturers are trade customers because they do not buy self-consumption products.

  • Discount customers: These customers purchase a product or service only when the company offers a discount.

  • Impulsive customers: These customers make a buying decision instantly, provided that the company offers favourable buying conditions. For instance, if a person wants to purchase a toothbrush, they might also purchase toothpaste.

  • Wandering Customers: These customers generate the lowest revenue because they are unsure of what they want. Typically, these customers like the social interaction of their shopping experience.

  • Need-based customers: A need-based customer purchases products based on a specific need. These customers might buy for a specific occasion and usually hard to upsell other products.

Related: What Is A Customer Care Executive? (With Duties And Skills)

Who is a consumer?

A consumer is the end-user who purchases goods and services for personal satisfaction and fulfilling their requirements. They do not resell the product for profit generation. Consumers are essential for a business because they help a company judge the usefulness of the products and services they offer. For instance, when a father purchases a gift for his daughter, the father is the customer, whereas his daughter is the consumer. As consumers discern the quality of products, companies focus on consumer surveys and reports to make strategic business decisions.

Types of consumers

Here are a few common types of consumers you might encounter:

  • Commercial consumer: Often, a commercial consumer purchases products in bulk because of the special needs associated with their purchase order. Organisations and governments are two examples of commercial or organisational consumers.

  • Seasonal consumer: Often, these consumers purchase seasonal products and shop at a certain time of the year. A consumer might purchase an umbrella during the rainy season and a Christmas tree in December.

  • Habitual consumers: A habitual consumer feels compelled to purchase products or avail services of a particular brand. A habitual consumer might use the same brand of clothing or perfume.

  • Inferior goods consumers: Often, depending on financial conditions, some consumers might prefer to use low-quality products at lower prices. Rather than buying a branded perfume, an inferior goods consumer buys a local perfume.

Frequently asked questions (FAQs)

Here are some commonly asked questions about consumers and customers:

How is a final customer different from a final consumer?

A final customer is the one who pays for the goods they purchase or services they avail. On the other hand, a final consumer may or may not pay the price. For instance, when a wife buys a gift for her mother-in-law, the wife is the final customer and the mother-in-law is the final consumer.

Related: 15 Necessary Customer Service Skills And How To Develop Them

Are customers consumers?

Not all customers are consumers. To become a customer, it is essential to purchase a service or product. Also, a consumer might not be the purchaser of the product. When a person receives a gift, consumers and customers are two different people. When a customer purchases to resell it, the customer is not the consumer. For instance, when a family members buy milk for his entire family, he is both the consumer and customer of the milk.

Why do businesses study their customers?

Businesses frequently study the profiles of their customers to create effective marketing strategies and tailor their products to attract new customers. Companies often group customers based on demographics, geographic location and income level when studying their customers. This helps a business identify the customer's persona and create an ideal customer profile. Analysing and studying customers' profiles can increase customer relationships and help the company reach the untapped market.

Related: Business Strategy Components And Examples

How is a customer different from a client?

A client engages with a business to purchase professional services. Depending upon the business model, a client can pay upfront fees or create a different payment plan. For instance, a family might be a client of a doctor, which means every family member visits the same facility and gets treatment from the same doctor. Some businesses that rely on a client base include accounting services, law firms, SaaS companies, gymnasium and child care services.

On the other hand, a customer buys a good or service from a company either for personal use or for earning a profit by reselling it. For instance, a person who buys a shirt from a boutique store is the store's customer. Some businesses that rely on a customer base include retail stores, beauty salons, coffee shops, hotels, grocery stores and restaurants.

Related: Guide: What Does A Customer Service Representative Do?

What is the role of a customer and a consumer?

Customers are the key focus areas of a business and help a business grow. A business can thrive only when a customer makes a purchase. Without customers, a business has no reason to operate a business. As consumers are the end-users of a product or service, they provide a good judgment of the functionality and usefulness of a product. Companies can identify obsolete and outdated products based on consumer behaviour.

What is it essential to understand the difference between consumers and customers?

It is essential to understand the difference between consumers and customers because it helps in:

  • developing service divergence

  • balancing the demand and supply of goods and services

  • encouraging demands of the products

  • developing the right marketing and business strategy

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