January 22, 2017

Production concept

When the production concept was found, a production orientation business dominated the market from the beginning of Capitalism to the mid 1950’s. During the era of the Production concept, Business concerned itself primarily with production, manufacturing, and efficiency issues. This view point was encapsulated in Says Law which states Supply creates its own demand (from the French economist Jean – Baptiste Say.) To put it another way, If a product is made, somebody will want to buy it. The reason for the predominance of this orientation is there was a shortage of manufactured goods (relative to demand) during this period so goods sold easily.

Production concept

The basic proposition of the production concept is that customers will choose products and services that are widely available and are of low cost. So business is mainly concerned with making as many units as possible. By concentrating on producing maximum volumes, such a business aims to maximise profitability by exploiting economies of scale. Managers try to achieve higher volume with low cost and intensive distribution strategy. This seems a viable strategy in a developing market where market expansion is the survival strategy for the business. Companies interested to take the benefit of scale economies purse this kind of orientation.

In a production-orientated business, the needs of customers are secondary compared with the need to increase output. Such an approach is probably most effective when a business operates in very high growth markets or where the potential for economies of scale is significant. It is natural that the companies cannot deliver quality products and suffer from problems arising out of impersonal behavior with the customers.

Also read – Company orientation towards the marketplace

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About Hitesh Bhasin

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  1. sethulakshmi says:

    excellent,terms can be easily understood, I can make my students to go through this website and browse for required information

  2. Renu manki says:


  3. I really loved your articles and i would not hide my thanks to you.

  4. hello everyone
    i want to ask a question

  5. Adnan Shah says:

    Can you explain it with example of a company, why it is a product oriented company?

    • Well, there are very few companies following the production concept nowadays. Most of them are actually customer and marketing oriented. Production concept was used when there were very few options in the market.

      • Anand R Babu says:

        give me some examples on production concept

      • Chandan Mitra says:

        I think now a days most of the companies follow Societal Marketing Concept.

      • I disagree. Many companies have CSR projects where they adopt villages and give back to society. Even the government has implemented measures so that corporates dont harm the environment. But the actual implementation in India is very poor. So many rivers and many land areas are polluted by chemicals. So i think the ideal phase where industrialists themselves take care of Environment and society is far away.

      • could you please give an example which company follow the production concept
        i really need your help

      • Nowadays hardly any company is following the same. it used to exist when Manufacturing was everything. Ford was the company which started with the manufacturing concept. But nowadays maximum companies are using the “Customer concept”

  6. usman ghani says:

    what is production concept
    in marketing

  7. can you put in the easiest example for it?

    • A live examples is very difficult because all the companies today believe in the customer concept as well as the marketing concept. However, if you see the rise and shine of FORD motor company, then you will know that ford actually established the moving assembly line back in 1913 and that is a perfect example of Production concept in action. Due its sheer genius in production, Ford became the leader of automobiles and amassed a fortune which catapulted it to fame. Much of the success of Ford is attributed to the fact that they can manufacture beautiful cars very fast.

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