What are consumer goods and their main types?
Jul 8, 2024
Consumer goods play a vital role in meeting consumers' diverse needs and wants, as well as contributing to the support and development of the economy. Thanks to advanced technologies and changing lifestyles, consumer goods are constantly undergoing transformations in design and performance to meet growing consumer expectations. This necessitates a precise understanding of consumer product and goods types to know how to professionally promote them to boost sales, increase innovation capability, and foster growth.
Let's explore the different types of consumer products and how to professionally promote each type to achieve desired goals and increase profits.
What are Consumer Goods and Products? 🛒
Simply put, they are products that consumers purchase on a daily or periodic basis for personal consumption. This includes all household and individual needs, such as various food types, skincare products, and much more. These goods differ from industrial products used for commercial or production purposes.
Consumer goods and products are characterized by several advantages, including:
Satisfying consumers' basic needs for food, drink, clothing, and so on.
Variety of available options in terms of types and brands, allowing consumers to choose products that suit their needs, wants, and budget.
Rapid and frequent consumption, which is a significant advantage for companies and stores that produce and sell these goods.
Fast inventory turnover, which reduces the risks of spoilage or obsolescence.
Key Characteristics of Consumer Goods:
Consumer goods and products have several characteristics that distinguish them from other types, including:
Continuous and Repeated Demand:
Consumer goods are essential for daily life, making their demand continuous and relatively stable. Consumers regularly buy food products, beverages, detergents, and personal care items due to their daily or weekly consumption, which leads to sustained sales compared to durable goods, such as electrical appliances, which are purchased infrequently.
Furthermore, consumer goods are affected by seasons and occasions, such as increased demand for food products during Ramadan or higher consumption of cold drinks in summer. This requires companies to provide sufficient quantities to meet consumers' changing needs.
Short Product Life Cycle:
Unlike durable goods that last for long periods, consumer products are consumed quickly within a short timeframe, necessitating constant repurchase. Perishable foods, such as dairy, fruits, and vegetables, spoil quickly and require regular inventory replenishment, while non-food items like cosmetics and personal care products are consumed within a few weeks or months, leading to repetitive demand. Some consumer goods are also affected by seasons and fashion, as is the case with summer beverages, perfumes, and cosmetics, making them subject to frequent updates to keep pace with market needs and meet consumer expectations.
Price Sensitivity and Promotional Offers:
Consumers are often highly price-sensitive when buying consumer goods, as they are frequently purchased, leading them to constantly search for the best prices and promotional offers. Therefore, companies use promotions and discounts to attract customers and increase sales, such as discounts when buying large quantities or special offers during seasons and holidays.
High Competition and Abundance of Alternatives:
The market is filled with many brands offering similar consumer products, which creates fierce competition among different companies. This leads to improved quality, product development, and the launch of new versions that meet diverse customer needs. For example, many companies compete in producing milk, soft drinks, and detergents, giving consumers a wide range of options.
Influence of Personal Habits and Preferences:
Habits and traditions significantly influence the consumption of these types of products, as the demand for some products varies between countries based on cultures. For instance, in some Arab countries, the consumption of Arabic coffee and dates increases, while in other countries, consumers prefer soft drinks or juices. The healthy lifestyle trend has also become a factor influencing consumer directions, with increasing demand for organic products, and those free from preservatives and artificial sugars, prompting companies to develop products that suit these preferences.
Availability across Diverse Distribution Channels:
One of the most important characteristics of consumer goods is their constant availability across diverse distribution channels to ensure easy access for consumers. They are sold in supermarkets, small shops, and grocery stores, in addition to their presence in e-markets via e-commerce platforms. This diversity in sales channels allows consumers to quickly access the products they need, whether through direct purchase or through rapid delivery services, which have become an essential part of the modern shopping experience. The availability of consumer goods in various sales channels also guarantees continuous demand and reduces the likelihood of stockouts, which boosts company sales and increases consumer satisfaction.
Vulnerability to Economic Trends and Inflation:
Consumer goods are among the products most affected by the general economic situation and inflation, as consumers are forced to adjust their spending patterns if prices rise. During economic recessions, consumers may prefer lower-priced products or resort to buying smaller quantities of expensive products, while the opposite is true during periods of prosperity and stable prices.
The types of consumer goods are numerous and include different product categories, as detailed in the following section.
Types of Consumer Goods and How to Market Them Effectively 📈
Consumer goods are divided into four primary types, which differ in characteristics and the nature of consumer demand:
First: Convenience Goods
These types of consumer goods or products are commonly used by consumers, purchased frequently without the need for significant effort in comparing or thinking before completing the purchase. These products are characterized by their low prices and wide availability in various markets, making it easy for consumers to obtain them at any time. Examples include bottled water, laundry detergents, fast food, etc.
These products face an intensely competitive environment, requiring businesses to work hard to highlight their products and attract consumers' attention through innovative and creative strategies.
For example, prices should be competitive while ensuring a broad targeting of different audience segments. Distribution must be wide-ranging, making these products available in the greatest possible number of diverse distribution channels, from large stores to small shops, ensuring this type of consumer product is close to the consumer and as visible as possible.
Key Factors for Trading in Convenience Goods:
Location (for traditional trade):
Choose a location with high traffic, such as shopping centers or main commercial streets, to ensure easy and quick access for consumers.
Ease of Use (for e-commerce):
Ensure your website features a user-friendly interface and smooth navigation system that allows consumers to complete purchases easily and quickly.
Inventory Management:
Maintain a wide variety of products and sufficient inventory levels to meet daily consumer needs. For instance, you can rely on an application like OTO PACK to efficiently monitor inventory and provide real-time updates, as well as organize operational processes within warehouses from product entry, through packaging and printing shipping labels, up to exiting the warehouse and delivery to shipping companies.
Pricing Strategy:
Set competitive prices that align with those of competing products, as good product pricing helps attract more customers.
Supplier Relationships:
Establish reliable and efficient supply chains to ensure continuous product availability. Strong relationships with suppliers can enhance the sustainability of your business.
Customer Service:
Provide fast and convenient customer service to gain customer satisfaction and enhance brand loyalty.
Second: Shopping Products
This type of consumer good differs from convenience products, as it requires consumers to spend more time and effort carefully comparing them based on several criteria such as quality, price, and style, to select the perfect products according to desired needs.
Shopping products also differ from convenience goods in that they are not purchased frequently and necessitate gathering accurate information and comparing alternatives before making a purchase decision. Examples of shopping products include furniture, clothing, cars, electronics, mobile phones, and flight tickets.
These products demand greater consumer involvement because they require more time, thought, and investment compared to convenience products. Therefore, this type of product needs different marketing strategies, such as smart marketing, requiring greater precision in the targeting process with a focus on innovation to capture consumer attention and persuade them to buy.
If you want to specialize in trading Shopping Products, you should consider the following factors:
Product Variety:
Offer a wide range of options to meet diverse consumer preferences, whether online or in-store.
Quality:
Be sure to provide high-quality products to attract premium customers.
Store Organization (for traditional trade):
Create an attractive and organized store that allows for easy display and comparison of products.
Website Design (for e-commerce):
Ensure high-quality images, detailed product descriptions, and customer reviews are available.
Marketing and Promotions:
Use targeted ads and promotional offers to highlight product features and benefits, and utilize online marketing tools such as social media and email campaigns.
Customer Experience:
Focus on delivering an integrated shopping experience by training employees to deal with customers and answer their questions and inquiries through various services like live chat and virtual consultations.
Third: Specialized Products
These products represent the third category of consumer goods and are characterized by their unique features and association with well-known brands. These products are often directed at a specific category of consumers looking for special specifications or unique advantages not available in ordinary products.
Specialized products include luxury watches, high-quality cars, electronics with advanced features, etc.
These products are characterized by their high prices due to their superior quality and the meticulous care with which they are manufactured, making them highly desirable to consumers with high purchasing power who seek distinction and innovation.
The marketing of specialized products requires different strategies from those used for other types of consumer goods. Marketing campaigns focus on highlighting superior quality, uniqueness in design or performance, and the exceptional experiences they offer to the consumer, thereby enhancing the brand's position in the market and contributing to building a loyal customer base willing to pay higher prices for such distinctive products.
To succeed in selling Specialized Products, try these tips:
Collaborate with prestigious brands to attract high-end customers.
Be keen on acquiring and stocking exclusive or limited-edition products to create a sense of scarcity and distinction.
Offer personalized shopping experiences through recommendation engines, virtual consultations, or other available product customization options.
Ensure the store structure and product display reflect the luxurious nature of the products and use high-resolution images and engaging, diverse online content.
Fourth: Non-Essential Products (Unsought Goods)
This category of consumer goods includes all products that consumers do not know about, or perhaps know about but do not think about buying under normal circumstances. Non-essential or unsought products require intensive marketing efforts to grab consumers' attention and make them consider them, which necessitates great effort to make them visible and appealing. Examples of these products include life and property insurance, and pre-planned funeral services.
To ensure the successful marketing of these goods, the focus must be on creating awareness among consumers about the importance of these products and demonstrating the need for them. This requires intensifying advertising campaigns and marketing strategies that highlight the benefits and offer attractive deals. The key to successful marketing for these products is a deep understanding of consumer needs and the ability to deliver a clear and convincing message.
Trading in Unsought Products requires observing these tips:
Focus on educating consumers about the necessity and benefits of these products through blogs, webinars, and educational content.
Use direct marketing, online advertising, and educational campaigns to reach potential customers.
Build trust through transparent practices, testimonials, and customer experiences.
Provide excellent customer support and guidance to help customers make informed decisions during times of pressure, available 24/7 across multiple channels, including live chat and mobile support.
General Considerations for Trading Across All Types of Consumer Goods
Market Study:
Be sure to conduct comprehensive market studies to understand consumer needs, preferences, and trends. Analyze competitors to know their strengths and weaknesses and identify market gaps that your business can fill.
Business Plan:
Develop a comprehensive business plan that defines the target market, product offerings, pricing strategy, marketing plan, financial budget, and funding requirements.
Regulatory Compliance:
Ensure compliance with local and international laws and standards, including health and safety requirements, product labeling, and obtaining the necessary permits and licenses to operate your business.
Sustainability:
Consider sustainability practices to reduce the environmental impact of your business. For example, you can use sustainable packaging materials and eco-friendly strategies in your supply chain.
The Importance of Consumer Products to the Saudi Economy 🇸🇦
Consumer products are the backbone of the Saudi economy, significantly contributing to boosting economic growth, providing job opportunities, and driving comprehensive development. Below is a detailed look at the importance of these products.
Economic Contribution:
According to a report by the General Authority for Small and Medium Enterprises (Monsha'at), the contribution of the Wholesale and Retail Trade sector—which includes consumer products—to the non-oil real GDP rose from $8.3\%$ in the second quarter of 2021 to $9.4\%$ in the third quarter of the same year. This percentage represents $22\%$ of the non-oil domestic output, placing this sector in the third rank among non-oil economic sectors, indicating strong economic activity and significant demand in this field.
Job Creation:
According to an economic report from Al Arabiya, the retail sector is one of the most prominent sectors providing job opportunities in the Kingdom. The number of workers in the retail sector and commercial establishments reached $3.2$ million workers, including both Saudis and expatriates, highlighting its vital role in providing jobs and reducing unemployment in the Saudi labor market.
The participation of women in the labor market, especially in the retail sector, has also seen a remarkable increase due to policies supporting gender equality. In 2023, women constituted about $34\%$ of the workforce in this sector.
Consumer Spending and Market Growth:
Total consumer spending in the Kingdom reached $1.32$ trillion SAR ($351$ billion USD) in 2023, driven by investment in non-oil sectors, particularly commerce and retail. The e-commerce sector is experiencing rapid growth in the Kingdom. A report by the e-Commerce Council in the fourth quarter of 2022 stated that Saudi Arabia is one of the ten fastest-growing countries in e-commerce, with a growth rate reaching $65\%$.
Technological Advancement and Innovation:
Digital technologies and e-commerce platforms have revolutionized the consumer products sector, making it more accessible, convenient for consumers, and scalable for growth. The Saudi government's efforts to support the digital infrastructure, such as providing $5\text{G}$ internet networks, have contributed to this transformation. Retailers are also benefiting from innovative technologies like Artificial Intelligence and Machine Learning to collect and analyze consumer data to provide a unique and distinguished shopping experience.
A Final Word
The Kingdom of Saudi Arabia is a fertile and prosperous environment for small and emerging businesses. By deeply understanding the types of consumer goods and developing appropriate marketing strategies for each type, you will be able to improve your business operations, gain customer satisfaction, foster sustainable business growth, and increase your return on investment.
Before starting a business, you should identify which types of consumer goods you can start your project with and utilize the suitable marketing strategies for each product type to meet customer needs effectively and achieve profit for your commercial venture.
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