Consumer vs customer

NOTE: Latest update: 25 August 2010.
Updated 18 Nov, 2007 after consultation with my the marketing expert, my wife.

Last week, I was in charge of this undergraduate class and I suddenly realised that a number of the students were using the words 'consumer' and 'customer' interchangeably. Guess this is true for a lot of people on the street. However, I have on some occasions come across some academics making the same mistake at academic conferences as well.

As used in marketing terminology, there is a huge difference between the two concepts. The term 'Customer' refers to individuals or households that purchase goods and services generated within the economy. On the other hand, a 'Consumer' is someone who uses the products or services.

At a glance, there doesn't seems to be any difference but if you examine closely, there is. For example, A mother who does the shopping for the family in a supermarket is a customer. She and the rest of the family sit down at the dining table to eat the food she has bought and they are all consumers. The mother is a customer and a consumer at the same time.

You might have come across the term B2B and B2C. B2B refers to Business-to-Business transections. For example, Tesco buys goods from Procter & Gamble in bulk. On the other hand B2B refers to Business-to-consumer transection. For example, I go to Tesco and buy Duracell batteries. For those who did not know, Duracell is owned by P&G.

Did that make any sense to you?