They may be defined either as goods that are immediately consumed in one use or ones that have a lifespan of less than three years. Examples of nondurable goods include fast-moving consumer goods such as food, cosmetics, cleaning products, medication, clothing, packaging and fuel. While durable goods can usually be rented as well as bought, nondurable goods generally are not rented. Consumer durable goods are designed to have an extended shelf life, operating on the assumption of a single purchase that provides utility over a longer period. In economics, they are known for their more elastic supply, while demand tends to be less elastic than utility.
What Are Consumer Packaged Goods (CPG)?
- Households and businesses are more cautious and require careful planning to buy durable goods.
- Purchases of durable goods generally indicate the economy is improving as households and businesses are optimistic about their finances.
- The manufacturing processes for items like cars and electronics often consume significant amounts of energy and raw materials, contributing to environmental degradation.
- Durable goods require a one-time purchase but provide utility for two or more years, setting them apart from capital goods.
For example, cosmetics typically have limited shelf lives, as these products quickly deteriorate if exposed to extreme temperature fluctuations. They are sold in individual packages at varying price points, depending on the brand’s position in the market. After using the products, consumers either discard or recycle the empty vessels. While consumer demand for consumer packaged goods (sometimes known as CPGs) largely remains constant, it is still a highly competitive sector.
Some publicly traded consumer durables producers include Kimberly-Clark Corp., ABB Ltd., Johnson Controls International PLC, The Clorox Co., Mohawk Industries, and Whirlpool Corp. The rise or fall or consumer goods purchases is therefore a key indicator of consumer confidence. durable goods and non-durable goods When consumers delay purchasing new vehicles or refrigerators, it indicates more people are feeling insecure about their income or savings.
Vicious Cycles in the Economy
Non-durable goods are goods with a lifespan of less than three years. Despite experiencing a slowdown in growth over recent years, the consumer packaged goods industry is one of the largest sectors in North America. The sector contributes approximately $2 trillion to the United States gross domestic product (GDP). It is led by well-established companies like Coca-Cola, Procter & Gamble, and L’Oréal. Durable goods are those goods that don’t wear out quickly and last over a long period. Examples of durable goods include land, cars, and appliances.
What Are Some Examples of Consumer Durables?
The opposite condition applies when the economy is weakening. Investors usually reduce their investment allocation in the stock market. They secure money by buying safer assets such as government bonds. Expenditures on durable goods are an important economic indicator.
Consumer durable goods are the items bought by households and individuals that last three years or more. They include automobiles, appliances, furniture, tableware, tools and equipment, sports equipment, luggage, telephones, electronics, musical instruments, books, and jewelry. The category also includes some intangible products such as software. When times are tough, consumers, industries and businesses of every size have to continue buying non-durables, but they often put off spending on durables until times are better. In the financial meltdown that began in 2007 and lasted through most of 2009, the national GDP (gross domestic product) fell by more than 5 percent, and unemployment peaked at over 10 percent.
The purchase of consumer durables is considered an economic growth engine. As individuals purchase more durable goods, this helps boost the economy. The types of products that are considered consumer durable goods include furniture, appliances, automobiles, jewelry, and books. If it is manufactured and intended to last the consumer for three years or longer, it is categorized as a durable good. Nondurable goods or soft goods (consumables) are the opposite of durable goods.
A nondurable good is defined as a product that lasts 3 years or less, while durable goods are those that last greater than 3 years. Frozen dinners are another popular example of consumer packaged goods. These high-volume perishable items are sold at retailers worldwide and are often purchased for immediate use by consumers. Consumers then replenish their frozen meals each time they visit the grocery store, often choosing the brands they already recognize and enjoy. Wholesale durable goods are the same as business durable goods. These businesses specialize in selling durable goods to other businesses in bulk and at cheaper prices than what average consumers pay.
