Jean Baptiste Say was the founder of the Says Law and it proposes that the supply of goods creates their demand in the market. It dominated the western capitalist market until the mid-50s of the 20th century. Businesses and industries were focusing on the efficiency of production and manufacturing methods.
It was the time where channels of communications were limited and traveling was the major issue. That’s why salesmen were the main source of advertising and marketing. The distribution of goods was also the problem during the time and there was less competition in the market. Therefore, the sale of goods wasn’t an issue under such circumstances.
Today, we will talk about the production concept, how it differs from the product concept, explanation, its pros, cons and examples.
Table of Contents
What is a Production Concept?
In the marketing management philosophies, the Production concept assumes that consumers favor highly available & affordable products, and therefore, management should focus on production & distribution processes.
At the time of production era, the focus of businesses and industries was to increase production, and the economies of scale would lower the cost and increase the profitability of the business. In a developing market, the production concept gives the option of expanding the market.
Businesses and companies don’t give any importance to the needs and wishes of customers in terms of updating their products. This strategy may work in the environment of economies of scale where businesses are growing and expanding. If businesses start focusing on customer and quality products, they can’t do the mass-scale production.
The production concept was popular at a time when the market wasn’t competitive. At that time, people would consume more if industries are supplying more goods in the market at a low price. Ford’s automobiles are a very good example of production. When Ford pushed a large number of automobiles in the market, more people bought its vehicles.
It is the oldest marketing philosophy and still very useful for business in two situations.
- Frist, If the demand for any product exceeds its supply, the management should find out ways to increase production.
- When the product cost per unit is very high, the management should focus on increasing productivity and bring down the cost.
Production Concept Vs Product Concept
The focus of manufacturers in the production concept is to produce low-cost goods with the efficiency of various processes. The focus of the product concept is to manufacture products according to the needs and wishes of the customer. The product concept is similar to some extent similar to the marketing concept because it keeps customers in mind while manufacturing products.
The economies of scale in the production concept help the businesses to lower the cost, and the cheap price attracts customers and the business earns a profit. The price of goods in the product concept is usually because it manufactures quality products in less quantity.
Customers can expect changes in the product/service in the product concept by giving their feedback. On the other hand, the production concept would focus on improving the distribution system and the effectiveness of the product.
Advantages of Production Concept
Good for the Customers
As we know that the focus of the production concept is on the mass production of goods and economies of scale lowers the price of products and services. The quality of products and the efficiency of production methods improves over time. The customers don’t have to worry about the shortage of products. The mass-scale production would take care of it.
The production concept makes sure that the product is available in the market at a reasonable price to the customers. The economies of scale lower the prices of goods and the majority of the people are price-conscious. It attracts the attention of price-conscious customers.
The production concept usually works in the non-competitive market environment. Mass-scale production increases the profitability of the company. When a business is making a profit, it attracts the attention of investors. They’ll end up investing in the business because of the high profitability and share value.
The industry and community are closely linked with each other. People work in the industry to manufacture goods and get paid. They go home and spend the same money on buying the industrial products that they’ve produced. That’s how the economic cycle works. Mass-scale production serves the community in two ways by giving people jobs and products.
Almost all the operations of the industry depend on the availability of raw materials and other basic ingredients. The suppliers prefer to have relationships with big manufacturers so that they have consistent orders. If both parties keep their end of the deal, such relationships usually last for a long time.
If a company is making a profit through the production concept, then it would provide bonuses to its employees. If the business expands its operations, then it would have to hire more people. It means that there would be more employment opportunities for people. If people are satisfied with the job, it would increase their morale and motivation level.
The Whole Society
When various segments of society are performing well, then it’s good for the whole nation. If people have jobs and a reliable source of income, then it means that the unemployment rate would be lower. Most importantly, the production concept would fill the market with the availability of products.
Disadvantages of Production Concept
The efficiency in the manufacturing process comes after a long time. The quality of the company’s products at the beginning of the production concept is low. The reason people buy it is that they don’t have many options in the market.
Avoiding Customers Needs
The needs and wishes of the customers have secondary importance to the manufacturers in the production concept. The company manufactures products for the majority of the people, instead of targeting any particular segment.
The focus of the production concept on satisfying the needs and wishes of the majority, and it doesn’t target any particular segment. The marketing campaign for this concept doesn’t follow the personalized approach. It just manufactures the mass scale products and pushes them into the market, and the customer would buy because they don’t have many options.
The market has become very competitive nowadays. You’ll find competition in every field, it doesn’t matter whatever category is. The business and marketing strategies are highly focused and targeted. You can’t succeed in your business if you aren’t following the personalized campaign. That’s why businesses and companies have changed their focus to other concepts.
Examples of Production Concept
Following are the real-life examples of production concept in marketing management
Ford Motor Company – Ford’s Model-T
The whole philosophy on Henry Ford was to perfect the production process of Ford Model-T. The initial cost of the Ford Model-T vehicle was roundabout 800 US dollars, and it was high at the beginning of the 20th century. The company followed the production concept and developed its assembly line and other manufacturing processes. The price jumped from $800 to $300 and $300 was an affordable price to many Americans at that time.
Texas Instrument (TI)
For several years Texas Instrument followed the philosophy of increased production and lower cost so that they can offer the products on low prices. TI won a significant American market share for handheld calculators. By following the production philosophy the company manufactured cheaper and affordable handheld calculators and offered it to the customers.