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The Production Concept

Provided by IFC, adapted from Business Edge® workbook, “Introduction to Marketing Concepts"

Some organizations tend to emphasize the product and production more than marketing. They believe that the product will sell itself as long as it is available and affordable; therefore they concentrate on low costs and mass distribution. These firms are usually referred to as product oriented. They focus on production and then look for people to purchase their products or services. This approach is based on the view that consumers will choose whatever products are available, regardless the quality. Companies should, therefore, focus on improving production efficiency because distribution and sales will take care of themselves.

For example, Tata Motors, a car manufacturer in India used this approach. It manufactured a low cost vehicle, Tata Nano, and made it available to the customers who would not otherwise be able to afford a car. It relied on mass production and sales to gain a market share, offering a car to the public for about USD 2,000.

This approach is useful when demand for a product exceeds its supply. If there is not enough of the product available for everyone who wants it, then a company could simply look for ways to increase production. This approach is also useful when the product is expensive to produce and improved productivity or greater volume can bring its cost down.  

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