The production concept is one of the oldest and most operation-oriented concepts of management. This concept says that a customer prefers those goods and services that are affordable and easily available. production concept came into existence 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. For achieving the expected results from the targeted market, the organization has to decide the philosophy that will influence and guide their marketing efforts. The focus of the managers is to achieve 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. It is assumed that the customers are attracted to those products that are easily available at cheaper prices. There was no concern given about whether the customers’ requirements are fully addressed or not. This type of approach is only effective where there is significant potential for Economies of scale or for those businesses that operate on a high scale.
The main issue with the production concept is that the businesses can face problems with not producing quality goods and can also face customer service issue. If a company that businesses in an industry that has been showing tremendous growth, only then this philosophy is somewhat 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.
Example of Production Concept
The best example to understand Production concept is China.
China has a good amount of easily available manual labour. So with manual labour, China has been mass-producing products and distributing it all over the world. This way they have increased their overall production of the country and are now counted among the biggest exporters of the world.
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 in the country.
Features of Production Concept
1. High Production Efficiency
This concept believes that to achieve higher efficiency in production businesses should use standardization, modern technology and production at a higher scale.
2. Production Oriented
The main emphasis of this concept is on mass producing and selling of the goods.
3. Wide Distribution
A product must be easily and widely accessible. So arrangements for distribution and sales must be done.
4. Low Price
This concept says that customers are attracted to those products that are cheaper in price. So, to gain more customers the product’s price must be cut down.