On Consumer Goods and Durables, and prepaid cards

A few days ago, over tea and pakodas, conversation turned to things managerial. I was sitting with 2 marketing chaps, and we were debating Consumer Goods and Consumer Durables, and how the wise men of marketing classify them.

Firstly we were thinking, “Maybe its about cost. Consumer Durables are usually expensive electronic equipment, and Consumer Goods are comparatively cheap things like toothpaste. And for a time, all was well. But soon people started picking holes into that fine theory. After all, price is a relative thing. An iPod  is incredibly expensive to me…but to Steve Jobs its a very small part of his monthly consumption. But he does not call iPod a consumer good!

So we spent some time researching this topic. Finally, I have an answer that I liked. So here it is!

A consumer good is one which has a finite (And measurable) number of uses. A consumer durable is one that can be used any number of times (or not easily measurable).

For example, toothpaste is a consumer good. Why? Simple! It is because it can only be used for 20 brushings. (25 if you use a small toothbrush). It does not matter if you do not use it for 1 year. After all, its now been rated in number of uses rather than time of use, or of price you paid for it!

We then realized that prepaid Cellphone cards are a perfect example of a consumer good. After all, they have a limited life, and their utility is perfectly subdivided….you can use it for x no. of minutes of talktime.

Now, this brings all sorts of analogies. Today, the cost of a Lux soap is not its manufacturing cost, but is its advertising cost. In the same way, we can expect the Telecom companies to become more brand agents than communication service providers. When is it going to happen? Or is it already happening? I guess we will have to wait and see!