Consumer Goods vs Capital Goods

Publication Date :

10 Feb, 2021

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Table Of Contents

Differences Between Consumer Goods and Capital Goods

The primary difference between consumer goods and capital goods is their usage. Capital goods are the factors used to produce intermediate goods used by the manufacturers to make the final products. On the other hand, the consumer goods themselves are the end users’ final products for their consumption. Therefore, capital goods come ahead of consumer goods in the same value chain.

Capital goods are tangible assets such as property, plants, and equipment used to produce the final consumer goods. Further, consumer goods are final products such as food, clothes, vehicles, and electronic appliances purchased by end-users for consumption or their intended usage.
Consumer goods are low-priced items compared to capital goods, which involve an investment of a large sum of money.
Given the financial outlay, the benefits of capital goods are received over a longer period than consumer goods.

Differences Between Consumer Goods and Capital Goods

What are Consumer Goods?

The term "consumer goods" refers to the goods purchased for consumption by the end-users. One cannot process the goods further to produce any other goods. Thus, consumer goods are also popularly known as final goods, given that they eventually are in the hands of the intended end-users. It is to be noted that although it says consumer goods, the definition of consumer goods also includes services, given that services are intangible products consumed by the consumers. Particularly, consumer goods are goods and services that directly satisfy the consumers' needs and wants. Some of the most common examples of consumer goods are food, clothes, vehicles, electronic appliances, etc. Consumer goods can be further classified into durable and non-durable goods.

What are Capital Goods?

The term "capital goods" refers to the tangible assets used by the businesses to produce goods or services, which eventually become the raw material or input for creating the final consumer goods. Hence, capital goods are also popularly known as intermediate goods. The purchase of capital goods requires a large investment. Thus, it is considered an important business decision. Moreover, the benefits of capital goods are received over time, so the value of these goods is depreciated over their useful life. Some of the most common examples of capital goods are fixed assets, such as buildings, property, plant, equipment(PP&E), tools, etc.

Consumer Goods vs Capital Goods Infographics

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Comparative Table - Consumer Goods vs Capital Goods

Particulars	Consumer Goods	Capital Goods
Definition	The end-users use these goods for their own consumption.	These goods are deployed in the production of the final goods.
End-user	End-market consumers directly purchase these goods.	Businesses or manufacturers buy these goods.
Marketing strategy	Given the end-market, business-to-consumer (B2C) marketing is used to sell these goods.	Given the end-market, business-to-business (B2B) marketing is used to sell these goods.
Purpose	These goods are mainly purchased for personal consumption.	These goods are purchased for manufacturing other products.
Demand	These goods have direct demand as they directly satisfy the needs and wants of the consumers.	These goods have derived demand as they satisfy the needs and wants of the consumers indirectly.
Price	These goods are usually cheaper in terms of price. However, the prices vary a lot depending on the market demand.	These goods involve an investment of a large sum of money. But the prices are stable as the market demand is not that high.
Benefits	The benefits derived from these goods are generally short-lived and thus don’t involve any depreciation.	The benefits of these goods are derived over a period of time, and thus these goods are depreciated accordingly.