What is a Production Concept? | Features vs Examples

The production concept is one of the oldest and most operation-oriented management concepts. This concept says that a customer prefers those goods and services that are affordable and easily available. Production concept began in the early era of Capitalism in the mid-1950. At that time, the main concerns of the businesses were manufacturing, production, and efficiency issues. To achieve the expected results from the targeted market, the organization has to decide the philosophy that will influence and guide its marketing efforts. The managers focus on achieving high production, mass allotment, and low cost.

The basic idea of the Production concept is that to increase the scale and profit; the businesses will produce maximum volumes of cheap goods. Customers are assumed to be attracted to products easily available at cheaper prices. No concern was given about whether the customers’ requirements were fully addressed. This type of approach is only effective where there is significant potential for Economies of scale or for those businesses that operate on a large scale.

The main issue with the production concept is that businesses can face problems with not producing quality goods and customer service issues. If a company business is in an industry showing tremendous growth, only then is this philosophy useful. If a business only focuses on the production of cheap goods can easily lose its market. It can result in the loss of business even if it produces accessible and cheap goods.

Key Takeaways

1. The production concept is a business strategy focusing on maximizing production efficiency and minimizing costs.
2. This approach assumes that customers prioritize low prices and availability of products over other factors like quality or design.
3. Companies that adopt the production concept rely on mass production, economies of scale, and standardization to achieve their goals.

Example of Production Concept

The best example to understand the Production concept is China.

China has a good amount of easily available manual labour. So with manual labour, China has mass-produced products and distributed them worldwide. This way, they have increased their overall production of the country and are now counted among the world’s biggest exporters.

Similarly, India is counted among the biggest IT service exporter in the world. India also did the same with their Information Technology services by mass-producing IT talent.

Features of Production Concept

1. High Production Efficiency

This concept believes that to achieve higher production efficiency; businesses should use standardization, modern technology and production at a larger scale.

2. Production Oriented

This concept’s main emphasis is the mass production and selling of goods.

3. Wide Distribution

A product must be easily and widely accessible. So arrangements for distribution and sales must be made.

4. Low Price

This concept says that customers are attracted to those products that are cheaper. So, to gain more customers, the product’s price must be reduced.

References

1. https://link.springer.com/content/pdf/10.1007/s11740-009-0193-x.pdf
2. https://www.sciencedirect.com/science/article/pii/S0959652602000471
3. https://www.sciencedirect.com/science/article/pii/S0960852411015732
4. https://pdfs.semanticscholar.org/06f2/911a8804b3fb07f85b578756d01f7544ce67.pdf