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What is an Industrial Consumer?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 08 September 2016
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Also known as an industrial customer, an industrial consumer is an entity that purchases products with the intent of using those products in the course of operating a business. This is different from a private consumer, who purchases goods and services for their own personal use. The term is also sometimes used to identify any customer that purchases industrial products, whether they are intended for use by a business, a non-profit organization, or by an individual.

The industrial consumer may be associated with just about any type of industry. Customers in the agricultural industry who purchase heavy farm equipment, or buy supplies needed to operate commercial farms would fall into this category. In like manner, mining operations that purchase equipment and supplies that are essential for the process of extracting minerals and other natural resources from the earth would be considered industrial customers or consumers. Even a business that is part of the transportation industry, such as a company that builds roads for municipalities, will purchase materials used in the course of their business operation, and fit the description of an industrial consumer.

An industrial consumer may purchase any type of good or service. A common example is utilities, such as gas and electricity. Manufacturing plants require electricity to operate equipment that in turn produces the goods that the factor owner sells. The energy company supplying the power to the plant would consider the company that operates the factory to be an industrial consumer.

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It is not unusual for an industrial consumer to purchase goods and services in bulk. This strategy helps the customer to obtain discounts that would not be possible with purchasing smaller quantities from time to time. Volume purchasing agreements are created with industrial consumers in mind, since they often provide a lower price per unit purchased in exchange for the customer making a commitment to purchase a minimum number of units within a defined period of time. A contract of this type can be used for all sorts of goods, as well as for telecommunication services and similar products.

There is some difference of opinion over whether the term “industrial consumer” is actually correct. For those who feel that a consumer is an individual and not a business or other organized entity, the preference is to refer to those users as industrial customers. In spite of misgivings in some quarters of the business world, many producers of the products purchased in bulk by companies and other entities refer to their clientele as industrial consumers

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David09
Post 3

@everetra - There’s a store in our area that has been advertising for quite some time. They are a shop that sells restaurant equipment and supplies.

Clearly the industrial consumer is their target market. However, recently they changed their marketing strategy. They are now aggressively courting generic consumers, telling prospective customers that they can buy industrial grade supplies for their own household.

This new pitch seems to be working well. There seems to be a desire among some consumers to be able to buy the same things that the businesses buy. In this case there is a mild blurring of the difference between consumer and industrial products, at least from a marketing perspective.

everetra
Post 2

@Mammmood - That’s great that you work in the utility industry. What I’ve always admired about those kinds of professions is that they seem to be unaffected by economic downturns. Everyone will always need electricity, after all.

One thing I’d like to point out is that while general consumers and industrial customers will buy different things, there are times when consumers can buy some of the same stuff as the industrial customers.

There are consumer industrial products like some cleaning products for example, which you can buy at a home improvement store. Some of these products advertise that they are the same stuff that the professionals use; they’ve just been packaged for home use.

I’ve also seen other things like fillers and sealants for driveway and pothole repair. Again, it’s the same stuff the big guys use, except you can use it for home use. It might save you a few dollars to do some of this stuff yourself.

Mammmood
Post 1

I would agree that the utilities fall into the category of industrial consumer. I work for a software company that caters to the utility industry. I am not too hung up on whether you call then consumer or customer, but we use the term customer.

The difference between general electric consumer and industrial customer is of course what they buy. The consumer buys the electricity, but the electrical industrial customer buys all the equipment and stuff in order to generate the electricity.

In the case of the utilities, they also buy relays, transformers, circuit breakers and things like that as part of their substation equipment.

We sell software to the utilities, however, and the software is not cheap. However industrial customers like utilities have bigger budgets than typical consumers, so they can buy our software, even if costs a million dollars in some cases. That’s good for us, because it keeps us employed.

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