Wayne Said, Group 3
4 December 2007
How does the marketing concept differ from the selling concept, the product and production philosophies ? Illustrate the potential perils faced by companies adopting these concepts in todays highly complex and competitive environment and outline which orientations are recommended in a buyer's market ?
The Marketing Concept is a philosophy that says that firms should analyze the needs of their customers and then make decisions to satisfy those needs in a way that is better then the competition. In 1776 in The Wealth of Nations, Adam Smith wrote that the needs of producers should only be considered in meeting the needs of consumers. This philosophy is directly related with the marketing concept, only that it started to be used widely not less than 200 years later. This concept brought with it more intense competition and technological advancement around the 1960s. Normally it is used in a buyer’s market where the buyer ‘wants to buy’ something and different firms try to satisfy that want in the best way they can. An example of a company that uses this orientation is Apple Inc. They know that the consumers want portable music and video, and they want it in the most sleek, elegant and most easy to use device they can find, at an affordable price. With regard to this, Apple created the iPod range, which varies in price, size, and function with which they managed to gain 70% market share in the US. They also recently released the iPhone which satisfies those consumers that want a phone, camera, portable media, and wireless web surfing in one device. !
The Sales Concept (aka. the Selling Concept) on the other hand is used when companies do not
only want to produce the product, but they also want it to reach the customers and convince them to buy it by means of personal selling and advertising. Before they actually make the product, these companies ask themselves, Can we sell this product ? Can we charge enough for it ? Under these two questions, the company doesn't pay attention to whether this product is needed, but their mission is to just sell the product and stay ahead of competition and pay little care to customer satisfaction. This orientation started being used around 1930=1960s when competition started to increase due to technological changes in productions and supply started to exceed demand. These companies then started to create sales teams and appoint sales persons and assumed that good sales persons have the ability to sell any product and make people believe that the product is good. An example of this kind of orientation is an Insurance company. Customers do not wake up one day and decide to go buy life insurance, but a sales person used the hard sales method to try to convince you to insure yourself and your family. Another good example is a company trying to sell an encyclopedia set where the seller tries to convince you that you need this set of books . The Production Concept started around the time of the industrial revolution and lasted into the 1920s. During this time, the production power of factories could not keep up with demand which in these situation was higher then the supply of certain products. This type of orientation is taken into consideration when the business is mainly concerned with making as many units as possible of a particular product which it can produce most efficiently and at a low price. By concentrating on producing the maximum amount that they are able to produce, this type of business tries to be Henry Ford (1863-1947)
profitable by making full use of economies of scale. In a production ori-
ented business, the needs of the customer are not taken as seriously as the need to increase output. This approach seems to be most effective in a high growth market or when the demand for a product is very high
where the potential for economies...
Marketing Advanced Lecture Topic 1 - Mr. Theresa Hoban
Please join StudyMode to read the full document