Who is Consumer?
Consumer means a person, the one who consumes products or services for satisfying needs of the body, mind, intellect and soul. Consumer is the most important person in the business. Only to give maximum satisfaction to the consumers, the production and marketing activities are undertaken by the producers and traders. Traders and consumers are the two parties in the process of commerce. The relations between the two, need to be based on understanding of the duties and obligations of each of them towards each other. Consumer should not be exploited by traders. Business is dependent on consumers, and its growth is only possible through their active support and co-operation.
Definition of Consumer
1. According to the Dictionary of Modern Economics defines the term consumer as follows:
"Consumer means any economic agent responsible for the act of consuming final goods and service. Typically, the consumer is thought of as an individual, but in practice consumers will consist of institutions, individuals and group of individuals."
2. According to Oxford Dictionary a consumer is defined as follows:
"purchaser of goods and services"
3. According to Black Law Dictionary consumer has been defined as follows:
"One who consumes; individuals who purchase, use, maintain and dispose of products and service."
Importance of Consumer to Business Organization
It is rightly said that consumer is a king in the market. Importance of consumer in the market is understood from the following points:
1. Increases Turnover
Every businessman is interested in increasing the turnover of goods. Turnover decides the amount of profit. The turnover depends on demand. Consumers demand the products and services. Increased turnover increases profit of the organization.
2. Expansion of Business
Increase in demand generates more sales and ultimately profits. The profits earned are reinvested in business. As a result, the business is expanded. Today we find large-sized organizations, which have been developed because of consumers only.
3. Ensures Survival and Success
Good consumers ensure survival and success of a business firm. Satisfied consumers continue to provide patronage to business organization. They go for repeat purchases of the firm's products. No business organization can survive and succeed without the support of its consumers.
4. Increase the Wealth of a Firm
Customers increase the wealth of a firm. Through repeat purposes, loyal customers increased the profits of a firm. Increase in profits leads to increase in the wealth of the owners or shareholders of the firm.
5. It helps to Face Competition
Loyal customers help to face competition in the market. The loyal customers do not easily switch over to competitors product in spite of tempting offers by the competitors. Therefore, a business firm gets a competitive advantage due to satisfied customers.
6. Facilitate Product Development
Customers facilitate product development. Some customers may give suggestions to improve the quality or features of the product that they are using. The company may also undertake market research to get the feedback from the customers. Through such feedback, the company can introduce product modifications.
Customers are like brand ambassadors. They help to improve the image of the company. They may talk good things about a company, which in turn helps to extend or enhance the company image in the minds of several people. For instance, lecturers in a college (who may be the customers of a particular company) may give examples of a good company to support their lecture in the class.
8. Capital Formation
Consumer is responsible for capital formation. A business organization raises capital through the contribution of the consumers. Subscription to share capital, debentures, bonds, deposits raise capital for industry.
9. It Facilitates Optimum use of Resources
Customers enable to a firm to make optimum use of its resources. Through repetitive orders, the firm is in a position to make use of its resources, which otherwise would remain idle.
The resources include:
- Physical resources
- Capital resources
- Manpower resources
10. Social Welfare
A business organization can undertake social welfare schemes only on the support of consumers. If consumers (customers) grow in large number, business organizations make more profits and so they can utilize a portion of the profits for the well-being of the society.
11. Economic Development
The economic development of a country ultimately depends upon the response of consumers to commercial and industrial activities. Consumer response is also essential for successful completion of projects of public sector undertakings.