Customers and consumers are two of the most commonly used terms in business. People often use them interchangeably but there are significant differences between the two.
As marketers and entrepreneurs, it is important to understand the difference between customers and consumers because it is significant to your business.
This article will break down the differences between these two groups and help you better understand how they fit into your marketing mix.
Who is a Customer?
When you think of a customer, what comes to mind? Someone who buys products or services from a company? Someone who provides revenue to a company? This is someone likely to return to use the business again. These are all accurate ways of defining a customer.
The term “customer” refers to anyone who has purchased something from your business—whether it’s directly from you, or indirectly through an intermediary.
Customers are often thought of as being people with money: those who can afford and justify buying products. But there are many types of customers that may not have much money but still represent value in some way—such as fans, advocates and brand advocates; influencers; media outlets; etc.
Types of Customers
There are two categories of customers.
- Trade customers
- Final customers
Trade Customers: These are customers who buy your products, but don’t necessarily represent the end consumer. They could be retailers or wholesalers who sell your products to their customers. They may also be “value-added resellers” (VARs), who purchase from you and then add another layer of services such as installing software and providing support to their clients.
Final Customers: These are customers who buy your products and use them to solve a problem or achieve a goal. The final customer is the ultimate beneficiary of your product or service.
Who is a Consumer?
A consumer is a person that uses a product or service to satisfy personal wants and needs. He/she benefits from using the product or service.
The consumer is the end user of a product or service. As long as there is someone using the product or service, he/she/it will be called “the consumer.”
Types of Consumers
There are many types of consumers, but the most important ones are:
- Commercial Consumer: They buy in large numbers whether it is necessary or not and often associate special needs with their purchase orders.
- Discretionary Spending Consumers: They are a target group with unique purchasing habits. They buy clothing and electronic gadgets in large quantities.
- Extroverted Consumer: They become loyal to brands that have consistently provided them with a unique experience and value.
- Inferior Goods Consumer: This group of consumers is comprised mainly of people who have low incomes and buy goods or services that are relatively inexpensive.
Differences Between a Customer and a Consumer
While the terms ‘customer’ and ‘consumer’ are often used interchangeably, there are significant differences between them. The customer is the person who buys or pays for a product or service; they’re not necessarily the end users of that product or service, while a consumer, on the other hand, is someone who uses something as part of their daily life — a consumer may be a customer but not vice versa.
The distinction between customer and consumer can be useful when thinking about marketing strategies: it’s important to know which people your company wants to target with its products/services so you can better tailor your marketing strategy accordingly. For example, if you want to sell more food at restaurants (customers), you would want to target young children who like eating out with their parents (consumers).
|Definition||This is an individual, organization, or group of persons who purchases a product or service.||This is an individual or group of individuals that use a product or service.|
|Purpose||To resell, gift, or consume a product or service.||To use a product or service.|
|Payment||Always makes payment of goods or services purchased.||Does not necessarily pay for a product or service.|
The Relationship Between Customers and Consumers
The major relationship between a customer and a consumer is your product or service. You can also be both a consumer and a customer at the same time. For example, if you’re buying a new pair of shoes, you’re both the consumer (buying them) and the customer (using them).
Importance of Understanding the Difference Between Customers Vs Consumers
Understanding the differences between your customers and consumers can help you create a clear marketing strategy. For example, if you sell certain products for kids, although your consumers are the kids, your customers are their parents.
Understanding this distinction is key to creating good content and marketing strategy that speaks to your customers directly, therefore, increasing sales for your business.
To know how to market something, it’s important to understand what makes someone become a customer in the first place. Your business has to offer something unique enough for its target audience so that those customers will be emotionally appealed to switch over from their current provider of goods or services—the one they’ve been using for years—to patronize yours instead.
To do this successfully requires some research into what makes them switch: why do they choose one brand over another? Where do they get information about brands? How much money do they spend on average during each purchasing cycle?
Who Do You Serve – The Customer Or The Consumer?
The customer is the person who gives you money in exchange for some sort of value. The consumer is the one who uses the product or service to get the value.
In many cases, there is overlap between these two groups: someone can be both a customer and a consumer. However, because of this overlap (and other factors), it’s important to clarify which one applies more accurately to your business to better understand how best to serve them.
But in my opinion, it is important to satisfy both your customers and your consumers because when any of these parties get dissatisfied, this can affect your overall business performance.
Hopefully, you now have a better understanding of the difference between consumers and customers. Understanding this distinction will help you create a marketing strategy for your business that is more effective and productive.