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For example: A new smartphone with exclusive features is an unsought good until the consumer hears about it. Once the smartphone is widely known among customers, it becomes a sought good. A classic example here is the Apple iPhone. Consumers are unaware that they want it unless told about it. Another example to note would be life insurance.
Only if the two products satisfy the three conditions, will they be classified as close substitutes according to economic theory. The opposite of a substitute good is a complementary good, these are goods that are dependent on another. An example of complementary goods are cereal and milk. An example of substitute goods are tea and coffee.
A customer may or may not also be a consumer, but the two notions are distinct. [8] [1] A customer purchases goods; a consumer uses them. [9] [10] An ultimate customer may be a consumer as well, but just as equally may have purchased items for someone else to consume. An intermediate customer is not a consumer at all.
For example, a microwave oven or a bicycle that is sold to a consumer is a final good or consumer good, but the components that are sold to be used in those goods are intermediate goods. For example, textiles or transistors can be used to make some further goods.
The value that a consumer gives to a good or service, can then be defined as their willingness to pay for it (in monetary terms) or the amount of time and resources they would be willing to give up for it. [2] For example, a painting may be priced at a higher cost than the price of a canvas and paints. If set using the value-based approach, its ...
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In the modern day, Gustofsson & Johnson describe a continuum with pure service on one terminal point and pure commodity good on the other. [3] Most products fall between these two extremes. For example, a restaurant provides a physical good (the food), but also provides services in the form of ambience, the setting and clearing of the table ...
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