Lesson 2-THE MARKETING CONCEPTS

Lesson 2-THE MARKETING CONCEPTS - THE MARKETING CONCEPTS...

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THE MARKETING CONCEPTS 1.1 DEFINITION The marketing concept is the philosophy that firms should analyze the needs of their customers and then make decisions to satisfy those needs, better than the competition. Today most firms have adopted the marketing concept, but this has not always been the case. The marketing concepts help marketers to answer the following questions; What philosophy should guide a company’s marketing efforts? What relative weights should be given to the interests of the organization, the customer and society? The concept of marketing has changed and evolved over time. Whilst in today’s business world, the customer is at the forefront, not all businesses in the past followed this concept. Their thinking, orientation or ideology put other factors rather than the customer first. In 1776 in The Wealth of Nations, Adam Smith wrote that the needs of producers should be considered only with regard to meeting the needs of consumers. While this philosophy is consistent with the marketing concept, it would not be adopted widely until nearly 200 years later. Very often, the organizational interests are conflicting. The competing concepts under which organizations have conducted marketing activities include the production, the product, the selling, the marketing and holistic marketing concept. 1.2 THE PRODUCTION CONCEPT The production concept is one of the oldest concepts in business. This is the production orientation where the focus of the business is not the needs of the customer, but of reducing costs by mass production. By reaching economies of scale the business will maximize profits by reducing costs. It holds that consumers will prefer products that are widely available and inexpensive. The managers of production oriented businesses concentrate on achieving high
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production efficiency, low costs and mass distribution. The production concept prevailed from the time of the industrial revolution until the early 1920's. The production concept was the idea that a firm should focus on those products that it could produce most efficiently and that the creation of a supply of low-cost products would in and of itself create the demand for the products. The key questions that a firm would ask before producing a product were: Can we produce the product? Can we produce enough of it? At the time, the production concept worked fairly well because the goods that were produced were largely those of basic necessity and there was a relatively high level of unfulfilled demand. Virtually everything that could be produced was sold easily by a sales team whose job it was simply to execute transactions at a price determined by the cost of production. The production concept prevailed into the late 1920's.
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