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written by | September 1, 2022

What is the Difference Between a Customer and a Consumer?

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Most of us don’t understand the difference between consumer and customer. Often the two terms are used by people interchangeably. But the two words do not mean the same thing. While a consumer is one who finally makes use of the product or service, it is the customer who purchases/buys the service or product. The distinction exists and is essential for consumerism’s economic ideology.

A customer is that person or business which buys the products or services of some other company. A customer is essential since it is the customer who drives revenues. In the absence of customers, businesses will collapse. Businesses compete with other businesses to pull in customers. They do heavy and aggressive advertising, lower prices, or create a unique experience and products that customers love. 

How does a consumer differ from a customer, or what is the difference between consumer and customer? In the business world, acquiring a customer is what the business is targeting. The consumer is the one who gives a verdict on the service/product’s quality. 

It is a fact that the customer and the consumer could be different people.  It is important to note that it is in the hands of the consumer to impact the decision to buy a specific item, and the customer will have to purchase it. 

Did you know? 

As high as 88% of potential customers get influenced by the reviews that are posted online when it comes to deciding whether or not to make a purchase.

Consumer and Customer

Let us look at who is a consumer and who is a customer.

Also Read: 10 Tips for Successful Money Management for A Profitable Business

Consumer

Definitions of consumers are both subjective and tricky. Here is an example of a business that makes use of goods and services. In such a case, the business is considered a consumer. Despite the fact that a customer may also be a consumer, this is not always the case.   

In other words, an entity with no choice but to use or consume a product or service for its own purpose and not resell it will be considered a consumer. So, all end-users of the using or buying chain of products and services are consumers.

Look at it with an example.  Food items are bought for a birthday party.  All the people who come to the party and eat those items are consumers of the items.

Customer

A customer is that person or entity who does the actual purchasing of a good or service in which some monitory transaction is involved. While a customer can be a consumer, this is not always the case. 

Look at it with an example.  When a business buys stationery for its employees, the business is the customer.

Here is an example for depicting customer and consumer differences. A person going to a birthday party buys a gift for the person whose birthday it is.  The person buying the gift is the customer.  When the gift is handed over and used by the receiver, the receiver of the gift will become the consumer.  If the person who bought the item decided to keep it and use it instead of gifting it, then this person would be both customer and consumer.

Also Read: What is Business Equity? Meaning, Calculations and Tips Explained

Various Categories of Consumers and Customers

Consumers

Seasonal Consumers: These consumers buy and use goods and services only at specific times when there is a need for that service or product.  For example, buying a swimming costume when the summer begins. 

Personal Consumers: These consumers are individuals who buy products to be used for the household, family, or used personally. For example, you are buying a car for personal use.

Organisational Consumer: These consumers will buy products and services for a business, government, or organisation. They will generally be bought in bulk, and the orders might be recurring. 

Impulse Buyers: These consumers will plan to buy a product or service on the spur of the moment, unplanned. Their decision is made quickly, and the purchase is made without delay. This could be for big spending or just buying a bar of chocolate.

Need-Based Consumers: These consumers will purchase products and services only at the time when they are required. For example, purchasing a lock or a bulb.

Discount Driven Consumers: These consumers will go in for a product or service only because of the lowered price.  They wait for the discount to make their purchase. These consumers will be price sensitive. For example, they will buy winter clothes at the end of winter when brands put up their end-of-season sales and stock up for the following winter.

Habitual Consumer: These consumers have a compulsion to use certain types of products or specific brands. For example, buying specific brands of cigarettes.

Customers

  • Resell Customers: These customers will purchase goods or products to sell them further and make a profit on them. Examples of reseller customers are traders and wholesalers. So, a reseller customer is not the end-user of the product purchased.
  • Final Customers: These customers are the ones who actually use the goods or services purchased by them. The products are bought for personal use and not for selling to make a profit on them. 

Also Read: Strategic Planning Process in Business: Goals and Benefits

Difference Between Consumer and Customer with Example

The one who pays for the goods or services is the customer. But, the customer does not have to be the one using the purchase. A person who uses a product or service is a consumer, and there is a direct relationship between customer and vendor. It is possible that a customer uses the goods or services purchased, which makes the customer a consumer, too. 

Here is an example. A grandparent takes a grandchild to the movies. The grandparent buys two tickets, and both of them enter the theatre and watch the film. Here, the grandparent is both the customer and consumer, while the grandchild is a consumer. In case a parent buys an air ticket for a child, the child will be the consumer and the parent a customer.

Conclusion:

A consumer is the end-user who uses products and services, while a customer is the purchaser of the goods and services. A consumer will not sell a product or service but use it, while a customer could probably sell it for profit. It is significant to note that a consumer need or need not make a monetary transaction for acquiring the product or service, but a customer is required to complete that transaction. 
Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.

FAQs

Q: What are some examples of a consumer?

Ans:

  • An individual gets their hair styled for an event and pays the hair stylist for the service.
  • An individual purchasing a meal for self-consumption is a consumer.
  • A father purchases school supplies for his children.  Here, the children are the final consumers. 
  • An organisation purchasing a coffee machine for use by the employees.  Here, the employees are the final consumers.

Q: How can consumer and customer safeguard their interest?

Ans:

Under the Consumer Protection Act, 2019, following consumer protection councils have been set up:

  • Central Consumer Protection Council
  • State Consumer Protection Council
  • District Consumer Protection Council

Q: What is the difference between customer and consumer?

Ans:

  • A customer is one who buys the products or services while a consumer is the end-user of products or services.
  • A customer could be an individual or a company, while a consumer could be a group, family, or individual.
  • A customer makes a purchase for the purpose of either consumption or reselling, while the purpose of a consumer is consumption.
  • A customer may buy goods and has the ability to resell, while a consumer cannot resell goods or services.
  • A customer will need to make a payment for the product or service, while a consumer may need to pay or not pay.
  • A customer has to buy a service or product to be able to use it, while a consumer need not necessarily purchase the service or product.

Q: Who are consumers and customers?

Ans:

A customer is the one who purchases a product/service and the consumer is the one who uses a product/service.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.