The Production Cocept

The production concept believes that consumers will factor those products that are widely available and low in cost. It is the oldest business concept. Managers of production oriented organizations concentrate on achieving high production efficiency and wide distribution coverage. Their focus is on the existing products and all efforts are directed at raising out put bevels and produce standardized product. The concept is based on the philosophy of mass production and mass merchandising. It assumes that buyers are fully aware of the available brands and given a choice, will generally buy the lowest priced product. Thus, under this concept, the price is thee critical variable in the buying decision. A business that adopt the concept focus on building internal capabilities of the business in terms of production and selling. Business uses the lower costs to cut prices and expand market sizes.

Most of the Nepalese companies are currently working under the production concept. This may be due to the fact that in many product sectors the demand for the product exceeds the supply.
When such a condition exists, production concept can play in the market areas. However, we see that many business organization like confectionery, cigarettes, tea, and soaps are adopting the production concept when the market for these products has become highly competitive and consumers highly sensitive to non-price factors.