Final good
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In economics, any commodity which is produced and subsequently consumed by the consumer, to satisfy its current wants or needs, is a consumer good or final good. Consumer goods are goods that are ultimately consumed rather than used in the production of another good. For example, a microwave oven or a bicycle which is sold to a consumer is a final good or consumer good, whereas the components which are sold to be used in those goods are called intermediate goods. For example, textiles or transistors which can be used to make some further goods.
When used in measures of national income and output, the term "final goods" only includes new goods. For instance, the GDP excludes items counted in an earlier year to prevent double counting of production based on resales of the same item second and third hand. In this context the economic definition of goods includes what are commonly known as services.
Manufactured goods are goods that have been processed in any way. As such, they are the opposite of raw materials, but include intermediate goods as well as final goods.
Law
There are legal definitions. For example, The United States Consumer Product Safety Act has an extensive definition of consumer product, which begins:
CONSUMER PRODUCT.--The term ‘‘consumer product’’ means any article, or component part thereof, produced or distributed (i) for sale to a consumer for use in or around a permanent or temporary household or residence, a school, in recreation, or otherwise, or (ii) for the personal use, consumption or enjoyment of a consumer in or around a permanent or temporary household or residence, a school, in recreation, or otherwise; but such term does not include— (A) any article which is not customarily produced or distributed for sale to, or use or consumption by, or enjoyment of, a consumer,
It then goes on to list eight additional specific exclusions and further details.[1]
Durability
Final goods can be classified into the following categories:
- Durable goods
- Nondurable goods
- Services
Consumer durable goods usually have a significant life span which tends to be a minimum of 1 or 2 year based on guarantee or warranty period and maximum life depends upon the durability of the product or good. Whereas for capital goods which are tangible in nature, such as machinery or building or any other equipment which can be used in manufacturing of final product, these are durable goods with limited life span determined by its manufacturer before selling. The longevity and the often higher cost of durable goods usually cause consumers to postpone expenditures on them, which makes durables the most volatile (or cost-dependent) component of consumption.
Consumer nondurable goods are purchased either for the immediate use or to keep it for very short span of time. Generally the life span of nondurable goods may vary from a few minutes to up to three years. Few examples of such goods are food, beverages, clothing, shoes, and gasoline.
Consumer services are the intangible in nature: they cannot be seen, felt or tasted by the consumer but still they give satisfaction to the consumer. They are also inseparable and variable in nature which means they are produced and consumed simultaneously. Examples of consumer services include haircuts, auto repairs, landscaping, etc.
Buying habits
Final goods can be classified into the following categories, which are determined by the consumer's buying habits:
- Convenience goods
- Shopping goods
- Specialty goods
- Unsought goods
Convenience goods
Convenience goods are goods which are regularly consumed and easily available. Generally convenience goods come in the category of nondurable goods such as fast foods, cigarettes and tobacco with low value. Convenience goods are mostly sold by wholesalers or retailers, so as to make them available to the consumers in good or large volume. Convenience goods can further be categorized into:
- Staple convenience consumer goods
- Impulse convenience consumer Goods
Staple convenience consumer goods are those kinds of goods which come under the basic necessities of the consumer. These goods are easily available and in large quantity. Examples include milk, bread, sugar, etc.
Impulse convenience consumer goods are the goods which do not belong to the priority list of the consumer. These goods are purchased without any prior planning, just on the basis of the impulse. Examples include potato wafers, candies, ice creams, cold drinks, etc.
Shopping consumer goods
Shopping consumer goods are the goods which take lot of time and proper planning before making purchase decision; in this case consumer does a lot of selection and comparison based on various parameters such as cost, brand, style, comfort etc., before buying an item. Shopping goods are costlier than convenience goods and are durable in nature. Consumer goods companies usually try to set up their shops and show rooms in active shopping area to attract customer attention and their main focus is to do lots of advertising and promotion so that to attract more customer.
Example include clothing items, televisions, radio, footwear, home furnishing, etc.
Specialty consumer goods
Specialty goods are unique in nature; these are unusual and luxurious items available in the market. Specialty goods are mostly purchased by the upper class of the society as they are expensive in nature and difficult to be afforded by middle or lower-class people. Companies advertise their goods targeting the upper class. These goods do not fall under the category of necessity; rather they are purchased on the basis personal preference or desire. Brand name, uniqueness, and special features of an item are major attributes which attract customers and make them buy such products.
Examples include antiques, jewelry, wedding dresses, cars, etc.
Unsought consumer goods
Unsought goods neither belong to the necessity group of consumer goods list nor to specialty goods. They are always available in the market but are purchased by very few consumers, either based on their interest or their need for some specific reasons. The general public does not purchase such goods often.
Examples include snowshoes, fire extinguishers, flood insurance, etc.