Find Out the Important Difference Between Consumer and Customer

Find Out the Important Difference Between Consumer and Customer

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Syed Aquib Ur
Syed Aquib Ur Rahman
Assistant Manager
Updated on Nov 28, 2023 17:46 IST

The difference between consumer and customer is understood in terms of transaction, and how each decides to use the product or service. Know what makes them different.

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In marketing, the consumer and the customer are two individual entities. But they are much the same to many when you define them in terms of transactions made. They are related, no doubt, but there are significant differences. The main difference between consumer and customer is that the customer who buys the product may not use it, while the consumer who uses it may not purchase it. Let’s explore the difference between consumer and customer in some more detail. 

  1. Difference between consumer and customer: Quick Comparison
  2. What defines a consumer?
  3. What defines a customer?
  4. Why know the difference between consumer and customer?

Difference Between Consumer and Customer: Quick Comparison

Check out the main differences between consumer and customer. 

Parameters Consumer Customer
Type Can be an individual or organisation Can be an individual only
Use of Product or Service They use it  They use the product or resell it
Transaction They may get a gift, or someone else may buy the product for them They buy the product directly from the business
Business Focus Not the primary focus for revenue, but necessary for future marketing purposes The main focus for earning revenue through inbound marketing and content marketing
Payment responsibility Usually not responsible for payment Directly responsible for payment
Loyalty Loyalty is often to the product or service itself Loyalty can be to the brand or business

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What defines a Consumer?

The dictionary definition of a consumer is “a person who purchases goods and services for personal use”. 

Considering the definition of a consumer in a business context, the consumer has purchasing power but may decide not to buy a product or service. 

Because, at times, the consumer is also not the buyer. They may get a gift, or someone else (the customer) buys the product on behalf of the consumer. 

So you can conclude that the consumer is not directly tied to the seller. Let’s see how. 

You go to a restaurant and order some food. Now the restaurant owner procures the raw materials, i.e., vegetables, fruits, spices, other ingredients, etc. 

In this context, you have not bought the raw materials. The restaurant owner buys from the raw material supplier, making them a customer of the raw material supplier. And since you are purchasing the final product bought by the restaurant owner, it makes you a consumer.  

To know the consumer, marketing executives work on understanding consumer behaviour. By understanding it, they can improve their marketing efforts. 

Basic Characteristics of a Consumer

  1. Consumers directly use a product or service. They experience its benefits or drawbacks firsthand.
  2. Consumers can use a product or service without ever buying it. Borrowing a book from a library or trying out a free sample are instances of being a consumer without being a customer.
  3. They do not intend to resell the product or service. Their relationship with it is primarily for personal use or consumption.

What defines a Customer?

The customer is directly tied to the seller in the sense that they buy the product or service from a business. Unlike the consumer, the customer may not use it. The customer can decide to sell it to someone else, who then becomes a consumer.

Considering it from a business standpoint, the customer is the most important. It is through the customer the business earns revenue. The customer can be a business in itself that procures materials and sells or markets them to consumers. 

There are two types of customers.

  1. Trade Customer – They do not use the product but buy to resell it
  2. Final Customer – The ones who use the product after buying it

Both of these types of customers contribute to the business’s revenue. That’s why businesses spend a lot of resources on understanding the customer. 

They create customer journey maps to help customers through all sales funnel stages-from awareness to purchase decisions. Businesses also conduct customer segmentation to narrow down the ideal customer for the product or service they sell. Only through these marketing efforts can the business earn revenue from the customer. 

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Also, if you are looking at the customer from the marketing and revenue-earning perspectives, see how direct marketing works

 

Basic Characteristics of Customers

  1. Customers are those who have made a purchase. They have engaged in a financial transaction to acquire a product or service.
  2. While customers can be end users, they can also buy goods or services on behalf of others. Consider someone purchasing a gift for a friend or family member.
  3. Customers often have the potential to resell the product or service for profit. This is especially pertinent in industries where products are bought with the intention of resale.

Why Know the Difference Between Consumer and Customer?

Understanding the distinction between consumers and customers is instrumental in enhancing customer experience and product development. Customers make purchasing decisions, but it's the consumers who interact with and experience the product or service.

Understanding the difference between consumer and customer is also crucial for a business strategy to work.

For instance, by understanding the needs and desires of the end-user (consumer), businesses can design and enhance products that meet their expectations and address their pain points. Meanwhile, understanding the preferences and requirements of the customer (such as retailers or distributors) can shape decisions related to packaging, pricing, and delivery methods.

Parting Thoughts

So, in a nutshell, the customer always buys the product or service, but the consumer may not necessarily purchase it. Hopefully, you can quickly improve your marketing and product development efforts through this important distinction. 

If you are new to this topic and feel like exploring the domain, check out some free digital marketing courses along the way!

Further Reads

Learning the Difference Between Need and Want
Learning the Difference Between Need and Want
Distinguishing between needs (essential for survival) and wants (stemming from desire), marketers appeal differently to these concepts. Understanding consumer behaviour, psychological theories like Maslow's Hierarchy, and economic implications help differentiate...read more
How is Marketing Not the Same as Advertising?
How is Marketing Not the Same as Advertising?
While marketing and advertising are closely related, with advertising being a component of marketing, their differences lie in their scope, objectives, strategies, methods, and impact. Marketing is a broader, more...read more

FAQs

Can a consumer also be a customer?

Yes, it is possible for a consumer to also be a customer. In some cases, the individual who consumes or uses a product for personal purposes (consumer) may directly purchase that product from a business (customer). For example, when a person buys a book from a bookstore for personal reading, they are both the consumer and the customer in that transaction.

Can a customer be different from the end consumer?

Yes, a customer can be different from the end consumer. In certain situations, the customer is an entity or organisation that purchases products or services on behalf of the end consumer. The customer acts as an intermediary between the business and the ultimate consumer. For instance, a retail store purchasing products from a manufacturer serves as the customer, while the individuals who purchase those products from the store are the end consumers who will use or consume them.

What are some examples of customer and consumer?

One common example of a customer is a B2B organisation. The company purchases the products as a customer, but it is the employees who are the consumers, as they are using the products on its behalf. Another simple example of a customer and consumer is purchasing a gift for your friend from a store. You become a customer as you paid for it but the friend becomes a consumer as they are using it.

In what ways do businesses focus on consumers and customers separately?

Businesses aim to understand consumer behaviour to improve products and marketing strategies. Simultaneously, they focus on earning revenue through customers, employing strategies like customer journey mapping and segmentation to enhance the buying experience.

How does a customer differ from a consumer in a transactional context?

The key difference lies in the transaction: a customer buys the product or service directly from the business, while a consumer uses the product or service, regardless of whether they made the purchase.

About the Author
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Syed Aquib Ur Rahman
Assistant Manager

Aquib is a seasoned wordsmith, having penned countless blogs for Indian and international brands. These days, he's all about digital marketing and core management subjects - not to mention his unwavering commitment ... Read Full Bio