Production Concept In Marketing: Definition, Features, Advantages, And Examples
There are five main marketing concepts. One of the oldest is the Production Concept. Knowing the Production Concept in marketing gives theoretical grounds for conducting marketing practices to help the business thrive by selling more to make sizeable profits.
You’ll want to understand the definition and features of the Production concept to see how it performs in the real world.
To understand the Production Concept in marketing, you’ll need to look at:
Table of Contents
1. What Is Production Concept?
In the 20th-century industrial revolution, efficiency became key in the business world. Thanks to machinery, mass production became possible and at an affordable rate. This revolution made it easy to notice that the demand for goods grew, which is where the Production Concept in marketing was born.
The Production Concept is a marketing theory that roots in the idea that the more products there are at a lower price, the demand for them increases and creates a high-profit margin. It was extremely effective in the boom of the industrial revolution but less so in the modern era, yet the concept remains valuable in marketing.
The Production Concept functions optimally with other complimenting strategies.
Efficient, low-cost mass production is a key element to successfully implementing the Production Concept. The theory considers that consumers are drawn toward readily available products at low prices. Business efforts need to focus on high output levels and deliver standardized products when considering this concept.
2. What Does The Production Concept In Marketing Mean?
What does it mean to implement the Production Concept marketing strategy? First, the business needs to source and establish a readily available, efficient production line so that mass amounts of goods can get produced with minimal cost and that the marketing focus can be on distribution over a widespread area.
It Means Distribution And Mass Production
It doesn’t help to produce a boatload of products with nowhere to sell them. Therefore a prevalent distribution channel is of utmost significance when executing the Production Concept. Mass production allows the product to be made at lower costs, leaving room to focus on other areas like media marketing to increase brand awareness.
It Means Easier Marketing
Some of the marketing of these mass-produced goods come in when customers notice that they’re conveniently available everywhere, and the low price convinces them to buy them. Who wouldn’t want a lower price on something they need? Since the product is cheap and easy to source, consumers are nudged to keep buying the product, which maintains profit margins.
It Means Competition Needs Consideration
Competition is also a contributing factor to the Production Concept because if there are many competitors selling the same or a similar product, the supply and demand ratio gets skewed due to the product already being mass-produced from multiple sources. The business needs something unique or has qualities that outcompete similar goods.
It Means Lower Quality
The Production Concept rings true to its name because the core focus is all the elements of production, then distribution, followed by advertising. Unfortunately, that means quality hinders, lost to the sheer scale of the number of products. The Production Concept and its lack of quality focus also mean that being customer-centric gets a little lost along the way.
The underlying ethos of Production Concept marketing is as follows:
- Consumers are drawn to availability.
- Low prices are the selling point of the product, as consumers are price-aware when it comes to competitors.
- Customers would rather buy something average and affordable than expensive quality items.
3. Production Concept Features
There are a few features that form the pillars of this marketing concept. The Production Concept is unique in the way that its efficiency and profitability start right at the beginning of the product lifecycle and is what leads to marketing beyond physical advertising.
The Production Concept may be an old marketing strategy, but the foundation it builds can still mean plenty of marketing success.
Mass Production
You will see the words ‘mass production’ scattered across this article, but that’s because it is the centerpiece that holds the Production Concept together, like eggs in a cake! Mass production means that the cost per unit is less.
Producing goods in large quantities requires an assembly line that creates the goods quickly and usually involves machinery and a factory. With the production line in the bag, the low cost per unit means a larger profit margin. Mass production is often the responsibility of an outsourced company.
Production Efficiency
With goods being produced on a large scale, efficiency is certainly a feature that needs to be considered alongside mass production. Measures must be implemented to ensure a quality standard to avoid waste on faulty products and keep customers happy post-sale.
Production efficiency means that machinery receives regular maintenance. The business also needs to ensure that employees who make the product are well-trained to know what is expected for ideal quality. Every stage of production needs to be sought after for the Production Concept functions as it should.
Low Prices
Cheap products are the name of the game because the Production Concept philosophy is that customers are drawn to low prices. Low costs combined with wide availability is a recipe for a high sales volume and high profits. This marketing strategy does everything possible to cut costs.
Low prices are also what give the business a competitive advantage. If production costs are low, it allows the business the opportunity to sell its products in bulk to retailers and still make a worthwhile profit. Another reason production outsourcing is popular is that it could be cheaper than forking out money to start up when the availability for efficient production is already there.
Mass Distribution
The large-scale production of goods means that it needs many places to get sold. The low-cost price per unit means it is easier to find distribution channels because retailers can add their own worthwhile profit margins. The more distribution channels there are, the higher the chances of sales.
The business must focus on finding many outlets so that its product is widely available for customer convenience. Wide distribution allows for market coverage, and the wider the product availability is, the more accessible the product is for customers. Convenience means more sales because the product is easy to find.
Supply Creates Demand
The ‘supply equals more demand’ philosophy is Say’s law. Say’s law comes from the French economist Jean-Baptiste Say who published a book back in 1803. Since the dawn of the theory, many variations have been theorized, but the core of the belief is that product availability is what sells more of them.
The Production Concept has rooted in the faith that a large supply of goods at many distribution networks means that customer demand increases. Because the product is found at many places at a low price, customers are more likely to purchase it.
4. Production Concept Advantages And Disadvantages
The Production Concept has many arguments for and against its efficiency. It is a rather old marketing concept, and since the economy has evolved vastly since the start of the industrial revolution, one needs to evaluate the strategies of the concept before implementing them.
Production Concept Advantages
- The Production Concept is great for customers in the sense that they don’t have the problem of a lack of supply.
- Lower-income customers can benefit from low prices and enjoy the availability of something they need, which is value for money.
- Customers enjoy the convenience of wide product availability.
- Because products a widely accessible, the likelihood of sales increases.
- Low cost per unit means higher profit margins and more sales.
- Retailers can add a valuable profit if the product is bought in bulk.
- The large scale of production creates job opportunities.
- Suppliers of raw materials get to enjoy good relationships with large manufacturers consistently.
- The concept is perfect for original products that want to break into the market.
- More profits at a larger margin attract investors.
Production Concept Disadvantages
- Product quality is lost to mass production, especially in the beginning stages of the business when efficiency is less developed.
- Customers and their satisfaction have secondary importance as the focus is on the elements of production and distribution.
- There is less of a target market as sales are directed at the masses, leaving marketing campaigns less personalized, which results in a lack of interest.
- Since the Production concept is used mainly for original products, consumers don’t benefit from choosing different options.
- The concept is outdated because competition is fierce in every field, which lessens the demand for a product from a single company.
- The consumer market is conscious of quality nowadays, and mass production means lower quality, resulting in fewer sales.
- The need for a large scale of production at low prices leaves room for exploiting employees by paying them less than they deserve and working ridiculous hours.
5. The Production Concept Importance
The Production Concept is important because it ensures that there are no shortages of products that are needed. Customers also enjoy the convenience of finding what they need at many outlets.
If a company has a unique concept, it can benefit from large-scale production because it keeps its cost per unit low, which allows for wide distribution, more sales, and more significant profit margins.
The immense production scale leads to happy suppliers who get a regular income for their raw materials. Job creation is also excellent for the entire global economy. Countries with a lesser exchange rate attract foreign employers, which benefits employment rates for less developed countries and brings money into the country.
Mass production helps all levels of the economic divide; therefore, the Production Concept keeps the entire market afloat.
6. Real-Life Examples
On a global scale, the Production Concept can be seen in China and India. China is well known for maximizing production for the masses using manual labor and streamlined production methods. They are the largest exporter of manufactured goods in the world.
China is a true example of Say’s law, as their enormous flow of goods at low prices brings roaring economic success to the country. Similarly, in the service industry, India rakes in the highest ICT services. Both these countries benefit from foreign outsourced job creation.
Ford’s Model-T
Henry Ford believed flawless, streamlined production would benefit the business by lowering production costs. Once he perfected the Model-T vehicle’s assembly line, the company turned the Model-T’s price from $800 to $300 thanks to the sheer scale of mass production.
Since Ford’s prices dominated the market, they could sell a copious amount of cars. Many companies from all fields have followed suit on the Production Concept thanks to Ford.
Texas Instrument
This company noticed that if they lowered production costs by producing mass amounts of calculators, they would be able to dominate the market thanks to their low price compared to competitors. The Production Concept gave them a competitive advantage that allowed them to overtake the American economy for calculators.
Shein
A modern-day example of mass production at low prices is the clothing company, Shein. Their stylish and affordable clothing has put them at the top of the online clothing market to the point where they are a household name. Unfortunately, their success comes at the cost of labor exploitation, which shows the disadvantage of the Production Concept.
Wrap Up
The Production Concept in marketing shows that mass production, wide distribution, efficiency, and low-cost manufacturing lead to more sales at a high profit margin. The concept is an old one that has been around since the start of the industrial revolution, which leaves it outdated for the current saturated economy.
There are plenty of advantages and disadvantages to look at, which will determine if the theory fits a business model. The Production Concept would work best when combined with other marketing concepts.
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