What is Production Concept?
The production concept relies on the idea that customers are inclined to choose products that are easily accessible and cost-effective. Businesses under this philosophy aim to maximize profits by producing large quantities, benefiting from economies of scale.
This approach originated during the Industrial Revolution to meet high demands stimulated by a growing population and economic changes. The production concept’s core belief is that by increasing production efficiency, a company can offer goods at lower prices, more attracting consumers.
Although an early marketing concept, it remains relevant in situations where reducing product costs or meeting high demand is crucial. It’s especially applicable when labor is affordable and plentiful.
As such, the production concept of marketing prioritizes widespread availability and affordability. It has enduring value, particularly when cost reduction and increased production are pivotal for success.
A Brief History of Production Concept
The history of the production concept in marketing traces back to the Industrial Revolution, gaining prominence as businesses sought efficient ways to meet surging demands. Emerging during the 20th century, it emphasized producing goods in large volumes to lower costs and offer products at accessible prices. This approach prevailed until the mid-20th century.
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Initially, businesses believed that mass production would lead to more sales and profits. Fast forward to today, this concept still holds relevance in certain scenarios. For instance, companies in countries with affordable labor, like China and India, use mass production to offer cost-effective products globally.
However, in today’s competitive landscape, customer preferences and quality have become equally important. While the production concept remains a valuable tool, it needs to be balanced with evolving market demands to ensure long-term success.
Characteristics of Production Concept
The production concept in marketing, rooted in the Industrial Revolution era, has the following distinctive characteristics that shape its approach:
Mass Production Focus
At its core, the production concept centers on creating a large number of products efficiently. Businesses believe that by producing in bulk, they can reduce costs and offer items at lower prices to attract customers.
Cost Efficiency Emphasis
This concept places major importance on minimizing production costs. Companies streamline their processes and operations to achieve economies of scale, aiming to maximize profitability by keeping expenses low.
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Widespread Availability
The key belief is that customers prefer products that are readily available. Companies strive to flood the market with their goods, ensuring that customers can easily access them whenever they need them.
Price-Centric Approach
Under the production concept, the primary factor driving customer choice is price. Consumers are assumed to be highly price-sensitive, making affordability a crucial aspect for businesses.
Historical Significance
The production concept emerged during the mid-20th century and dominated the market until competitive pressures and changing customer preferences pushed companies to adopt other marketing philosophies.
Modern Relevance
While customer preferences have evolved, the production concept still finds relevance in specific scenarios. Countries with low-cost labor, like China and India, continue to leverage mass production to offer cost-effective products to global markets.
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How Does Production Concept Work?
Companies adopting the production marketing philosophy should follow the following four steps. These four steps of the production concept illustrate how this marketing philosophy starts to work and how ultimately it generates profits.
The Starting Point: Factory
Under this production philosophy, the factory is the starting point. Companies following this philosophy first start their business by establishing a factory to produce desired products.
Focus: Mass Production
The next step in the production concept is giving focus to mass production. It explains companies should focus on producing desired products as much as possible.
Means: Affordable Price
The production concept argues the means of profit maximization should be through the maintenance of lower prices of products. Companies should make their product’s price lower i.e. affordable to consumers and make products easily available through mass distribution.
Ends: Profit Through Production Efficiency
The production philosophy explains companies following this concept should make their profit through production efficiency. For this, companies should optimize their manufacturing process to produce products at high output while minimizing waste and costs.
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Pros and Cons of Production Concept
Let’s explore some advantages and disadvantages of the production concept of marketing.
Pros:
- Affordable Prices: The production concept helps companies offer products at lower prices, making them more accessible to a wide range of customers. By producing large quantities of goods, businesses can take advantage of economies of scale, which reduce the cost per unit. This makes the products affordable for price-conscious consumers.
- Job Creation: The focus on mass production leads to increased demand for labor, creating more job opportunities in manufacturing and related industries. As companies expand production, they need more workers to keep up with the higher output. This boosts employment rates and supports the local community.
- Community Benefits: Mass production not only provides jobs but also contributes to the local economy. When companies produce goods at scale, it stimulates economic activity. Employees spend their wages on products and services, creating a positive cycle of income distribution within the community.
- Investor Attraction: Businesses operating with the production concept often generate higher profits due to their cost-efficient methods. This profitability can attract investors looking for stable and lucrative opportunities. Increased investor interest can provide additional capital for business growth and expansion.
- Market Filling: In scenarios where demand exceeds supply, the production concept ensures that the market is adequately filled with the necessary products. This prevents shortages and helps satisfy consumer needs, creating a stable and satisfied customer base.
Cons:
- Quality Compromise: While the production concept aims to maximize output, it might lead to compromises in product quality. Companies focused on quantity might prioritize quantity over the finer aspects of product design and craftsmanship, resulting in products that don’t meet higher quality expectations.
- Neglecting Customer Preferences: Emphasizing mass production may cause businesses to overlook the specific preferences and desires of individual customers. This could lead to a lack of product variety and personalization, potentially alienating customers seeking tailored experiences.
- Market Saturation: Over time, the production concept’s strategy of flooding the market with low-cost goods might saturate the demand, leaving little room for further expansion. Once the market reaches its saturation point, businesses could struggle to find new growth avenues.
- Environmental Impact: The pursuit of mass production might lead to increased consumption of resources and energy. This can contribute to environmental concerns, such as excessive waste generation, depletion of resources, and heightened carbon emissions, potentially harming the planet in the long run.
- Lack of Innovation: Relying solely on mass production and cost efficiency might hide innovation. Businesses might become reluctant to invest in research and development to create innovative products, limiting their ability to adapt to changing consumer trends and preferences.
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Examples of Production Concepts
Let’s look at some examples of production concepts that illustrate how this concept is still relevant in today’s marketing landscape.
China’s Manufacturing Sector
China exemplifies the production concept through its robust manufacturing industry. This approach revolves around efficient mass production and cost-effective labor. For instance, companies like Foxconn, renowned for manufacturing electronic components for major brands such as Apple, epitomize this concept. They consistently produce substantial quantities of goods at budget-friendly prices.
India’s IT Services
India’s thriving IT services sector mirrors the production concept. Drawing on its skilled workforce, the country provides global clients with competitive IT solutions. Industry leaders like Tata Consultancy Services (TCS) and Infosys embody this concept by delivering IT services with high efficiency and scalability.
Fast Fashion Pioneers
Leading fast fashion players like Zara and H&M embrace the production concept. They swiftly respond to current fashion trends by rapidly producing stylish items. By prioritizing mass production, they ensure accessible pricing, making trendy clothing available to a broad range of consumers.
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Marketing Concepts Beyond Production Concept
As mentioned above the production concept is the earliest marketing concept. After it different marketing concepts have evolved – let’s shortly mention them.
- Product Concept: This idea emphasizes quality and features. Companies believe consumers will choose products offering the best performance, attributes, or innovations, even at higher prices.
- Selling Concept: Here, companies focus on aggressive selling and promotion to move products. They believe customers need a push to buy, especially for items not seen as necessities.
- Marketing Concept: The customer’s needs take center stage. Companies aim to understand customers, tailor products, and create value to meet their wants and build long-term relationships.
- Societal Marketing Concept: This concept goes beyond profits, addressing societal needs and well-being. Companies consider ethical, environmental, and social concerns in their marketing strategies.
- Holistic Marketing Concept: A comprehensive approach integrating various marketing concepts. It considers internal, external, and interactive marketing, ensuring consistent customer experiences and fostering lasting relationships.
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