Production concept

Production concept
See also
Price-Taker Cost advantage Organizational strategy Factors affecting pricing Market expansion Market dynamics Competition-based pricing Conglomerate diversification Low cost strategy

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.

The five district concept of marketing

The changes in marketing concepts are broadly classified into five phases:

• 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:

• 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.

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