September 23, 2014

Production concept

A production orientation dominated business thought from the beginning of Capitalism 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.

The basic proposition 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 vol-umes, 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

Hitesh Bhasin

Hitesh Bhasin

Admin at Marketing91
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Hitesh Bhasin
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Comments

  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:

    understandablely

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  1. […] Production Concept – Consumers prefer products that are widely available and inexpensive […]

  2. […] Production Concept – In this concept the company mainly tries to increase production irrespective of demands of the customer. The production concept is almost extinct now with companies paying more and more attention to the customer. Read more about The Production concept. […]

  3. […] Production Concept –  The production concept concerned itself mainly with manufacturing, production and efficiency issues.  http://www.marketing91.com/production-concept/ […]