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Marketing Basics - Kotler Philip

Production Improvement Concept

This is one of the oldest approaches guided by sellers.

The concept of production improvement asserts that consumers will be favored by products that are widespread and affordable, and therefore, management should focus on improving production and increasing the efficiency of the distribution system.

The application of the concept of production improvement is suitable in two situations. First one? when the demand for goods exceeds supply. In this case, management should focus on finding ways to increase production. Second one? when the cost of goods is too high and must be reduced, which requires an increase in productivity. The whole concept of Henry Ford was to debug the production of the “T” model to such a state that it was possible to reduce its cost and make the machine accessible to a wider circle of people. He joked that he could offer a car of any color while it was black. Today, Texas Instruments Corporation (TI) is pursuing this approach, expanding production and cutting costs to lower the price of its products. Guided by this concept, the company was able to win the bulk of the American market for wrist calculators. However, when the company applied the same strategy to the digital watch market, it failed. Despite the low prices, Texas Instruments watches did not appeal to consumers5.

The concept of improving production adhere to some service organizations. Many medical and dental institutions are organized according to the conveyor principle, as are some government organizations such as labor exchanges and bureau for issuing driver's licenses. Despite the fact that they all hourly serve a large number of visitors, they are complaining about their anonymity and indifference to consumers.