Production concept
Production concept holds that consumers will favour products that are available and highly affordable. Therefore, management should focus on improving production and distribution efficiency. This concept is one of the oldest orientations that guides sellers.
The production concept is still a useful philosophy in some situations. When the product's cost is too high, improved productivity is needed to bring it down to enable sellers to charge competitive prices. Or, when the demand for a product exceeds the supply, it makes sense for management to look for ways to increase production.
For example, computer maker Lenovo dominates the highly competitive, price-sensitive Chinese PC market through low labour costs, high production efficiency and mass distribution.
However, although useful in some situations, the production concept can lead to marketing myopia. Companies adopting this orientation run a major risk of focusing too narrowly on their own operations and losing sight of the real objective - satisfying customer needs and building customer relationship[1][2].
The five district concept of marketing
The changes in marketing concepts are broadly classified into five phases[3]:
- Production Concept under this concept, businessmen or producers believe that customers want products at lower prices. They do not concern for product attributes, i.e. product qualities.
- Product Concept is somewhat different from the production concept. Production concept seeks to win markets via large-scale production and low unit costs; the product concept seeks to achieve the result via product attributes. The product concept holds that consumers appreciate quality products even by paying higher price.
- Selling Concept as more and more markets become buyers' concept, the sales concept assumes increasing relevance. It is realized that production is not as a big problem as sales is. It is sales only that converts goods and services into money and revenue and loss/or profit. Hence, selling assumes greater importance.
- Marketing Concept is broader than selling concept in the sense that it considers the needs and wants of consumers. In other words, selling concept considers the present growth whereas the marketing concept focuses on future growth. It is, thus, said that marketing concept is consumer oriented with the objective of earning profits in long-run.
- Societal Concept is an extension of the marketing concept that covers the society at large in addition to the consumers. Under this concept, marketing is not considered a business activity alone but an activity to take care of social needs.
Developing the Production Control Concept
The production control concept for a production situation determines an appropriate way to stratify production control. Such a production control concept has to be taylor made. But of course there are certain general elements in it. Some of these general elements will be discussed[4]:
- in the first place there is the concept of production unit.
- in the second place in each production situation where resources are used for more products one needs to find a way to structure the interference between these products.
- in the third place there is the question of how to coordinate production and sales. For each organisation with limited resources it is important to guarantee in some way that commitments that are made to customers can be realized.
Examples of Production concept
- McDonald’s: This is a great example of the production concept. McDonald’s has been able to offer affordable and quickly-prepared meals to customers around the world. The fast food chain has been able to scale production quickly and efficiently, and offer a low-cost menu that still offers great quality and taste.
- Walmart: Walmart is another example of the production concept. The retail giant is able to offer a wide variety of products at low prices by leveraging its massive buying power and efficient production processes. Walmart is able to quickly scale production to meet customer demand and offer products at prices that are often far lower than its competitors.
- Amazon: Amazon is another example of the production concept. The e-commerce giant is able to offer products at low prices by leveraging its vast logistics network and efficient production processes. Amazon is able to quickly scale production to meet customer demand and offer products at prices that are often far lower than its competitors.
Advantages of Production concept
The advantages of the Production concept include:
- Increased efficiency and cost-effectiveness of production and distribution, as management focuses on improving production and distribution systems. This allows companies to produce goods at lower cost and make them more accessible to consumers.
- Quality of products is improved as production processes are streamlined and modernized. This allows companies to produce goods with higher quality and reliability, which improve customer satisfaction.
- Creation of new markets and opportunities for growth as companies create goods that are more affordable and accessible. This leads to increased demand for goods and services, which can be beneficial for the economy.
- Increased competitiveness in the market as companies are able to produce goods that are more affordable and accessible than their competitors. This creates a more level playing field and encourages innovation and creativity.
Limitations of Production concept
The Production concept has several limitations that should be considered when making decisions about marketing and product development. These limitations include:
- It focuses only on cost-efficiency and ignores customer needs and preferences, resulting in products that may not be well-received by the market.
- It ignores the competition and their products, which can result in outdated offerings or a lack of innovation.
- It can lead to a lack of differentiation in the market, resulting in low prices due to intense competition.
- It can lead to a lack of proper marketing and promotion, resulting in low visibility and sales.
- It can lead to a lack of customer service, resulting in poor customer satisfaction.
Production concept is related to other approaches that focus on improving the efficiency of production and distribution.
- The Marketing concept: This concept states that the key to achieving organizational goals consists in determining the needs and wants of target markets and delivering the desired satisfaction better than competitors do.
- The Selling concept: This approach assumes that consumers and businesses, if left alone, will ordinarily not buy enough of the organization's products.
- The Product concept: This approach holds that consumers will favor products that offer the most quality, performance and features and that the organization should therefore devote its energy to making continuous product improvements.
- The Societal Marketing concept: This concept holds that the organization should determine the needs, wants and interests of target markets and deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer's and society's well-being.
In conclusion, Production concept is one of the oldest orientations that guides sellers and it is related to other approaches such as the Marketing concept, Selling concept, Product concept, and Societal Marketing concept. All of these concepts focus on improving production and distribution efficiency in order to gain a competitive advantage in the marketplace.
Footnotes
| Production concept — recommended articles |
| Price and non-price competition — Price-Taker — Low cost strategy — Concentration strategy — Customer driven — Free competition — Imitator strategy — Global marketing strategy — Cost leadership strategy |
References
- Anbuvelan K., (2005), Management Concepts for Civil Engineers, Firewall Media, New Delhi.
- Fandel G., Zäpfel G., (2012), Modern Production Concepts, Springer Science & Business Media, New York.
- Khanka S.S., (2014), Business Ethics and Corporate Governance, S. Chand Publishing, New Delhi.
- Kotler P., Armstrong G., Wong V., (2010), Principles of Marketing, Pearson Education, Edynburgh.
Author: Marlena Dopnik
