Definition of a Consumer

by Investing School on July 19, 2010

Within the context of investments and finance, a consumer is any entity (whether it is an individual or a group) that purchases and makes use of the goods and services provided by a company. One important distinction here is that purchasers of goods that are intended for future re-sale – or goods that are intended for use as part of the manufacture of another product – are not considered to be consumers. Rather, only those purchasers who can make an active decision to buy a particular item, and who can actually be influenced by marketing and advertising efforts, are considered to be true consumers.

Finding and keeping active consumers is of great importance for the long-term stability of a business organization. Because of this, most companies are more than willing to expend significant resources on advertising and strategic marketing activities. All of this is done in an attempt to maintain the current consumer base (as well as to find additional consumers) for their goods and/or services.

Because of their importance in business success, consumers are the life blood of a business organization. Consumers directly drive the overall health and stability of any company. There must be consumers for the products or services that are available to be bought and sold, or else there will be little to stimulate the exchange of money. The loss of consumers, whether it is due to direct competition from another company, a shrinking market for specific goods and/or services, or an overall economic downturn, will negatively affect the success of a company.

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