Difference Between Customer and

Consumer
Do you know the fact that we all are consumers in some way or the
other, no matter what our age, gender, race, caste, community is.
The consumer is the one who consumes the goods, i.e. the user of the
goods. It is commonly misconstrued with the term customer, which
refers to a person who buys the goods or commodity and pays the
price for it.

Each and every marketing activity is directed towards influencing the

behavior of customers, i.e. to induce them in such a way that they take
an action intended by marketers. So, customers are regarded as the
king of the business.

In the business world, these words are used scores of times in a day
and most of the time they are used interchangeably. There are
instances when customer and consumer, both are same persons,
meaning that when a person purchases goods for his/her personal use.
But they are not one and the same thing, they carry different
meanings, so take a read of the given article to understand the
difference between the two.

Content: Customer Vs Consumer

1. Comparison Chart
2. Definition
3. Key Differences
4. Conclusion

Comparison Chart

BASIS FOR
CUSTOMER CONSUMER
COMPARISON

Meaning The purchaser of goods or services is known The end user of goods or services
 BASIS FOR
CUSTOMER CONSUMER
COMPARISON

as the Customer. is known as a Consumer.

Resell A customer can be a business entity, who No

can purchase it for the purpose of resale.

Purchase of goods Yes Not necessary

Purpose Resale or Consumption Consumption

Price of product or Paid by the customer May not be paid by the consumer
service

Person Individual or Organization Individual, Family or Group of

people

Definition of Customer

By Customer, we mean a person who buys the goods or services and

pays the price thereof. The word customer is derived from the term
‘custom’ which means ‘practice’, so the word customer means the
individual or entity who purchases product or services from a seller at
regular intervals. It can also be known as client or buyer. They are
divided into two categories:

 Trade Customers: The customers who purchase goods in

order to add value and resell them. These include Manufacturers,
Wholesalers, Distributors, Retailers etc.
 Final Customer: They are the customers who purchase it
either for their own use or to hand over it to the final user.
The customers are regarded as the king, in every business because
they help in earning revenue. The businesses focus on converting
shoppers into buyers. They also try to maintain a good relationship
with the customers in order to keep the business going. Below given
are the three kinds of customers:

 Former customers or ex-customers

 Existing customers
 Prospective customers

Definition of Consumer

We define consumer, as a person who is the end user of the product.

The word consumer is made from the word ‘consume’ which means ‘to
use’. In this way, the word consumer means a person who purchases
the product or service for his own use or consumption.

As per the Consumer Protection Act, 1986, it does not include the
person who purchases the commodity for the purpose of adding value
or resale for any commercial purpose. However, a person can use
those goods or services to earn livelihood or self-employment. Any
type of user, other than the buyer who purchases goods, consumes the
goods by taking permission of the buyer will also come under the
category of Consumer. It includes the person who avails the services
for any consideration. Moreover, the beneficiary of such services will
also be regarded as the consumer. There are three Consumer
protection council in India:

 At national level: Central Protection Council

 At state level: State Protection Council
 At district level: District Protection Council

Key Differences Between Customer and Consumer

The fundamental differences between customer and consumer, in
marketing are described below:
 1. The person who buys the goods or services from a seller is known
as the Customer. The person who uses the goods or services is
known as a Consumer.
2. The customer is also known as buyer or client whereas the
Consumer is the ultimate user of the goods.
3. The customer can be an individual or a business entity while a
Consumer can be an individual or a family or a group of people.
4. Customer pays the price of the product or service however he
may recover it from the other party, in case if he had purchased it
on behalf of any person. Conversely, Consumer not necessarily
pays the price of the product, like in case the goods are gifted or
if they are purchased by the parents of a child.
5. The customer purchases the goods for the purpose of resale or to
add value or for his personal use or on behalf of another person.
In contrast to Consumer, who purchases the goods for the
purpose of consumption only.

Conclusion

So from the above discussion, it is clear that the person who is a

customer is not necessarily a consumer and vice versa. Now, it is a big
question for many marketing executives to whom they focus on a
customer or a consumer?

Enterprises must focus on the two as they should take care of what is
demanded of the product by the consumer as well as they should
advertise the product so well that it will grab the attention of the
millions of customers instantly because the buying decision is taken by
the two together or by keeping in view of the other. So, the companies
should give equal importance to both.
 MARKET
A market is one of the many varieties of systems, institutions, procedures, social
relations and infrastructures whereby parties engage in exchange. While parties may
exchange goods and services by barter, most markets rely on sellers offering their goods or
services (including labor power) in exchange for money from buyers. It can be said that a
market is the process by which the prices of goods and services are established. Markets
facilitate trade and enable the distribution and resource allocation in a society. Markets
allow any trade-able item to be evaluated and priced. A market emerges more or
less spontaneously or may be constructed deliberately by human interaction in order to
enable the exchange of rights (cf. ownership) of services and goods. Markets generally
supplant gift economies and are often held in place through rules and customs, such as a
booth fee, competitive pricing, and source of goods for sale (local produce or stock
registration).
Markets can differ by products (goods, services) or factors (labour and capital) sold, product
differentiation, place in which exchanges are carried, buyers targeted, duration, selling
process, government regulation, taxes, subsidies, minimum wages, price ceilings, legality of
exchange, liquidity, intensity of speculation, size, concentration, exchange asymmetry,
relative prices, volatility and geographic extension. The geographic boundaries of a market
may vary considerably, for example the food market in a single building, the real estate
market in a local city, the consumer market in an entire country, or the economy of an
international trade bloc where the same rules apply throughout. Markets can also be
worldwide, see for example the global diamond trade. National economies can also be
classified as developed markets or developing markets.
In mainstream economics, the concept of a market is any structure that allows buyers and
sellers to exchange any type of goods, services and information. The exchange of goods or
services, with or without money, is a transaction.[1] Market participants consist of all the
buyers and sellers of a good who influence its price, which is a major topic of study
of economics and has given rise to several theories and models concerning the basic
market forces of supply and demand. A major topic of debate is how much a given market
can be considered to be a "free market", that is free from government intervention.
Microeconomics traditionally focuses on the study of market structure and the efficiency
of market equilibrium; when the latter (if it exists) is not efficient, then economists say that
a market failure has occurred. However, it is not always clear how the allocation of
resources can be improved since there is always the possibility of government failure.

Contents

 1Types of markets
o 1.1Physical consumer markets
o 1.2Physical business markets
o 1.3Non-physical markets
o 1.4Financial markets
o 1.5Unauthorized and illegal markets
Types of markets[edit]
A market is one of the many varieties of systems, institutions, procedures, social
relations and infrastructures whereby parties engage in exchange. While parties may
exchange goods and services by barter, most markets rely on sellers offering their goods or
services (including labor) in exchange for money from buyers. It can be said that a market is
the process by which the prices of goods and services are established. Markets
facilitate trade and enables the distribution and allocation of resources in a society. Markets
allow any trade-able item to be evaluated and priced. A market sometimes emerges more
or less spontaneously or may be constructed deliberately by human interaction in order to
enable the exchange of rights (cf. ownership) of services and goods.
Markets of varying types can spontaneously arise whenever a party has interest in a good
or service that some other party can provide. Hence there can be a market for cigarettes in
correctional facilities, another for chewing gum in a playground, and yet another for
contracts for the future delivery of a commodity. There can be black markets, where a good
is exchanged illegally, for example markets for goods under a command economy despite
pressure to repress them and virtual markets, such as eBay, in which buyers and sellers do
not physically interact during negotiation. A market can be organized as an auction, as
a private electronic market, as a commodity wholesale market, as a shopping center, as a
complex institution such as a stock market and as an informal discussion between two
individuals.
Markets vary in form, scale (volume and geographic reach), location and types of
participants as well as the types of goods and services traded. The following is a non
exhaustive list:
Physical consumer markets[edit]
 Food retail markets: farmers' markets, fish markets, wet markets and grocery stores
 Retail marketplaces: public markets, market squares, Main Streets, High
Streets, bazaars, souqs, night markets, shopping strip malls and shopping malls
 Big-box stores: supermarkets, hypermarkets and discount stores
 Ad hoc auction markets: process of buying and selling goods or services by offering
them up for bid, taking bids and then selling the item to the highest bidder
 Used goods markets such as flea markets
 Temporary markets such as fairs
 Real estate markets
Liberalization
The basic aim of liberalization was to put an end to those
restrictions which became hindrances in the development and
growth of the nation. The loosening of government control in a
country and when private sector companies’ start working
without or with fewer restrictions and government allow private
players to expand for the growth of the country depicts
liberalization in a country.

Objectives of Liberalization Policy

 To increase competition amongst domestic industries.

 To encourage foreign trade with other countries with
regulated imports and exports.
 Enhancement of foreign capital and technology.
 To expand global market frontiers of the country.
 B To diminish the debt burden of the country.
 9.1 CONCEPT OF LIBERALIZATION Globalization and privatization have become the buzzwords in
the current economic scenario. The concepts of liberalization, [Type a quote from the document or
the summary of an interesting point. You can position the text box anywhere in the document. Use
the Text Box Tools tab to change the formatting of the pull quote text box.] 159 globalization and
privatization are actually closely related to one another. This LPG phenomenon was first initiated
in the Indian Economy in 1990 when the Indian Economy experienced a severe crisis. There was
decline in the country’s export earnings, national income and industrial output. The government
had to seek aid from IMF to resolve it’s debt problem. That is when the government decided to
introduce the New Industrial Policy (NIP) in 1991 to start liberalizing the Indian economy.
Liberalization means elimination of state control over economic activities. It implies greater
autonomy to the business enterprises in decision-making and removal of government
interference. It was believed that the market forces of demand and supply would automatically
operate to bring about greater efficiency and the economy would recover. This was to be done
internally by introducing reforms in the real and financial sectors of the economy and externally by
relaxing state control on foreign investments and trade. With the NIP’ 1991 the Indian
Government aimed at integrating the country’s economy with the world economy, improving the
efficiency and productivity of the public sector. For attaining this objective, existing government
regulations and restrictions on industry were removed. The major aspects of liberalization in India
were ; 1.Abolition of licensing : NIP’1991 abolished licensing for most industries except 6 industries
of strategic significance. They include alcohol, cigarettes, industrial explosives, defense products
,drugs and pharmaceuticals, hazardous chemicals and certain others reserved for the public sector.
This would encourage setting up of new industries and shift focus to productive activities.
2.Liberalization of Foreign Investment : While earlier prior approval was required by foreign
companies, now automatic approvals were given for Foreign Direct Investment (FDI) to flow into
the country. A list of high-priority and investment-intensive industries were delicensed and could
invite up to 100% FDI including sectors such as hotel and tourism, infrastructure, software
development .etc. Use of foreign brand name or trade mark was permitted for sale of goods.
3.Relaxation of Locational Restrictions : There was no requirement anymore for obtaining approval
from the Central Government for setting up industries anywhere in the country except those
specified under compulsory licensing or in cities with population exceeding1 million. Polluting
industries were required to be located 25 kms away from the city peripheries if the city population
was greater than 1 million. 160 4.Liberalization of Foreign Technology imports : In projects where
imported capital goods are required, automatic license would be given for foreign technology
imports up to 2 million US dollars. No permissions would be required for hiring foreign technicians
and foreign testing of indigenously developed technologies. 5.Phased Manufacturing
Programmes :Under PMP any enterprise had to progressively substitute imported inputs,
components with domestically produced inputs under local content policy. However NIP’1991
abolished PMP for all industrial enterprises. Foreign Investment Promotion Board (FIPB) was set up
to speed up approval for foreign investment proposals. 6.Public Sector Reforms : Greater
autonomy was given to the PSUs (Public Sector Units) through the MOUs ( Memorandum of
Understanding) restricting interference of the government officials and allowing their
managements greater freedom in decision-making. 7.MRTP Act : The Industrial Policy 1991
restructured the Monopolies and Restrictive Trade Practises Act. Regulations relating to
concentration of economic power, pre-entry restrictions for setting up new enterprises, expansion
of existing businesses, mergers and acquisitions .etc. have been abolished. 9.2 CONCEPT OF
PRIVATIZATION Privatization is closely associated with the phenomena of globalization and
liberalization. Privatization is the transfer of control of ownership of economic resources from the
public sector to the private sector. It means a decline in the role of the public sector as there is a
shift in the property rights from the state to private ownership. The public sector had been
experiencing various problems , since planning, such as low efficiency and profitability, mounting
losses, excessive political interference, lack of autonomy, labour problems and delays in
completion of projects. Hence to remedy this situation with Introduction of NIP’1991 privatization
was also initiated into the Indian economy. Another term for privatization is Disinvestment. The
objectives of disinvestment were to raise resources through sale of PSUs to be directed towards
social welfare expenditures, raising efficiency of PSUs through increased competition, increasing
consumer satisfaction with better quality goods and services, upgrading technology and most
importantly removing political interference. The main aspects of privatization in India are as
follows; 1.Autonomy to Public sector : Greater autonomy was granted to nine PSUs referred to as
‘navaratnas’ ( ONGC, HPCL, BPCL, VSNL, BHEL) to take their own decisions. 161 2.Dereservation of
 Public Sector : The number of industries reserved for the public sector were reduced in a phased
manner from 17 to 8 and then to only 3 including Railways, Atomic energy, Specified minerals. This
has opened more areas of investment for the private sector and increased competition for the
public sector forcing greater accountability and efficiency. 3.Disinvestment Policies : Till 1999-2000
disinvestment was done basically through sale of minority shares but since then the government
has undertaken strategic sale of it’s equity to the private sector handing over complete
management control such as in the case of VSNL , BALCO .etc.

Globalization
It means to integrate the economy of one country with the global
economy. During Globalization the main focus is on foreign trade &
private and institutional foreign investment. It is the last policy of LPG
to be implemented.

Globalization as a term has a very complex phenomenon. The main aim

is to transform the world towards independence and integration of the
world as a whole by setting various strategic policies. Globalization is
attempting to create a borderless world, wherein the need of one country
can be driven from across the globe and turning into one large
economy.

Outsourcing as an Outcome of Globalization

The most important outcome of the globalization process is

Outsourcing. During the outsourcing model, a company of a country
hires a professional from some other country to get their work done,
which was earlier conducted by their internal resource of their own
country.

The best part of outsourcing is that the work can be done at a lower rate
and from the superior source available anywhere in the world. Services
like legal advice, marketing, technical support, etc. As Information
Technology has grown in the past few years, the outsourcing of
contractual work from one country to another has grown tremendously.
As a mode of communication has widened their reach, all economic
activities have expanded globally.

Various Business Process Outsourcing companies or call centres, which

have their model of a voice-based business process have developed in
India. Activities like accounting and book-keeping services, clinical
advice, banking services or even education are been outsourced from
developed countries to India.

What are the  Benefits of Globalization?

The most important advantage of outsourcing is that big multi-national

corporate or even small enterprises can avail good services at a cheaper
rate as compared to their country’s standards. The skill set in India is
considered most dynamic and effective across the world. Indian
professionals are best at their work. The low wage rate and specialized
personnel with high skills have made India the most favourable
destination for global outsourcing in the later stage of reformation.

9.3 CONCEPT OF GLOBALIZATION

Globalization essentially means integration of the national economy with the world economy. It implies
a free flow of information, ideas, technology, goods and services, capital and even people across
different countries and societies. It increases connectivity between different markets in the form of
trade, investments and cultural exchanges. The concept of globalization has been explained by the IMF
(International Monetary Fund) as ‘the growing economic interdependence of countries worldwide
through increasing volume and variety of cross border transactions in goods and services and of
international capital flows and also through the more rapid and widespread diffusion of technology.’ The
phenomenon of globalization caught momentum in India in 1990s with reforms in all the sectors of the
economy.

The main elements of globalization were;

1. To open the domestic markets for inflow of foreign goods, India reduced customs duties on imports.
The general customs duty on most goods was reduced to only 10% and import licensing has been almost
abolished. Tariff barriers have also been slashed significantly to encourage trade volume to rise in
keeping with the World trade Organization (WTO) order under (GATT )General Agreement on Tariff and
Trade. The amount of foreign capital in a country is a good indicator of globalization and growth. The FDI
policy of the GOI encouraged the inflow of fresh foreign capital by allowing 100 % foreign equity in
certain projects under the automatic route. NRIs and OCBs (Overseas Corporate Bodies)may invest up to
100 % capital with repatriability in high priority industries. MNCs and TNCs were encouraged to establish
themselves in Indian markets and were given a level playing field to compete with Indian enterprises.

2. . Foreign Exchange Regulation Act (FERA) was liberalized in 1993 and later Foreign Exchange
Management Act (FEMA) 1999 was passed to enable foreign currency transactions. India signed many
agreements with the WTO affirming it’s commitment to liberalize trade such as TRIPs (Trade Related
Intellectual Property Rights), TRIMs (Trade Related Investment Measures) and AOA (Agreement On
Agriculture).

Impact of Globalization:

Advantages of Globalization:

• There is a decline in the number of people living below the poverty line in developing countries due to
increased investments, trade and rising employment opportunities. There is an improvement in various
economic indicators of the LDCs (Less Developed Countries) such as employment, life expectancy,
literacy rates, per capita consumption etc. Free flow of capital and technology enables developing
countries to speed up the process of industrialization and lay the path for faster economic progress.
Products of superior quality are available in the market due to increased competition, efficiency and
productivity of the businesses and this leads to increased consumer satisfaction. Free flow of finance
enable the banking and financial institutions in a country to fulfill financial requirements through
internet and electronic transfers easily and help businesses to flourish. MNCs bring with them foreign
capital, technology, know-how, machines, technical and managerial skills which can be used for the
development of the host nation. • •

• • • Disadvantages of Globalisation: • Domestic companies are unable to withstand competition from

efficient MNCs which have flooded Indian markets since their liberalized entry. It may lead to shut down
of operations, pink slips and downsizing. Moreover skilled and efficient labour get absorbed by these
MNCs that offer higher pay and incentives leaving unskilled labour for employment in the domestic
industries. Thus there may be unemployment and underemployment. Payment of dividends, royalties
and repatriation has in fact led to a rise in the outflow of foreign capital. • 163 • With increased
dependence on foreign technology, development of indigenous technology has taken a backseat and
domestic R and D development has suffered. Globalization poses certain risks for any country in the
form of business cycles, fluctuations in international prices, specialization in fewexportables and so on. It
increases the disparities in the incomes of the rich and poor, developed nations and LDCs. It leads
commercial imperialism as the richer nations tend to exploit the resources of the poor nations.
Globalization leads to fusion of cultures and inter-mingling of societies to such an extent that there may
be a loss of identities and traditional values. It gives rise to mindless aping of western lifestyles and
mannerisms however ill-suited they may be. It leads to overcrowding of cities and puts pressure on the
amenities and facilities available in urban areas.