(I) Production Concept
The production concept is the oldest business concept.
The production concept believes that consumers like products that are available everywhere and at a low price: so operators should strive to improve labor productivity and increase sales coverage.
The essence of this concept is seller orientation.
The production concept first believes that consumers need products that are cheap and good. Following this business concept, the direction of the enterprise’s efforts is to improve labor productivity. By improving labor productivity, it can not only increase production but also reduce costs. Therefore, organizations that pursue the production concept often produce a single product, and hope to increase production and reduce costs by expanding scale, using more efficient machines or other methods, and use a wide range of sales channels to sell as many products as possible to customers. Henry Ford, the founder of Ford Motor Company in the United States, is considered to be the founder of this concept. He once said: “I don’t care what consumers need, I only produce black T-type cars.” The production concept has developed to the present and is still pursued in some organizations, especially those that reject the marketing concept.
The drawback of the production concept is that it is producer-centered and ignores the needs of consumers. “What I produce, you have to consume” is the most typical portrayal of the concept of managers in corporate organizations that pursue the production concept. At the same time, this concept cares more about the quantity of products than the quality of products. Therefore, once the supply of products in the market is sufficient and competition appears, companies that pursue the production concept will suffer marketing failure.
(II) Product Concept
The product concept is a business concept that appeared later than the production concept. The product concept believes that consumers need high-quality, multi-functional and distinctive products. Therefore, companies should be committed to producing high-quality and high-value products and constantly improving products.
Compared with the production concept, the product concept is a concept that business operators pay more attention to the product itself that is output to the market. Managers who pursue this concept are very fascinated and appreciate products with good quality, exquisite production, distinctive features and multiple functions. Therefore, they may turn a blind eye to changes in consumer demand.
A typical expression of the product concept is: “The product is the customer.” This means that as long as the products produced by the enterprise are good, there will be no worries about sales. Good products will naturally attract a large number of customers to buy them, which is the so-called “good wine needs no bush”.
The product concept is essentially the same as the production concept, and it still belongs to the production or seller-oriented business philosophy, and it still focuses on producers. The product concept leads to the emergence of “marketing myopia”. That is, marketers always look inward rather than outward, always see their own products, rather than whether the needs of consumers or customers are well met, and whether the needs and desires of customers have changed.