May 4, 2016

Production concept

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.

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.

Related  Horizontal integration explained with examples

Also read – Company orientation towards the marketplace

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About Hitesh Bhasin

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  2. Renu manki says:


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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. […]

  4. […] it was popular to focus on what needs to be made, manufactured or produced. And after a while the production concept was formed, which has become the focal point of every business at the time. In its essence, the concept is […]

  5. […]  Production Concept – Consumers prefer products that are widely available and inexpensive. The production concept is more operations oriented than any other concept.  Second the Product Concept – Consumers favor products that offer the most quality, performance, or innovative features. The product concept believes in the consumer and it says the consumers are more likely to be loyal if they have more options of products or they get more benefits from the product of the company. Third is the Selling Concept – Consumers will buy products only if the company aggressively promotes or sells these products. Off course, in this era of marketing, we know that selling is not the only tactic to sell your product. You have to focus on marketing as well. Forth is Marketing Concept – Focuses on needs/wants of target markets & delivering value better than competitors. Marketing concept believes in the pull strategy and says that you need to make your brand so strong that customers themselves prefer your brand over every other competitor. This can be achieved through marketing. And the last is Strategy is a pattern in actions over time; for example, a company that regularly markets very expensive products is using a “high end” strategy. […]

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