Class 1 Flashcards
Intro
The 3 main business concepts:
- Production Oriented
- Sales Oriented
- Marketing Oriented
How do the business concepts evolve
Most marketing-oriented companies have evolved over the years, passing through the first two stages before reaching the third. However, some companies start off being marketing oriented.
The Production Concept:
In the early parts of the 20th century the fundamental role of business was seen as production. Manufacturers operated in a suppliers’ market and were faced with strong demand for their products.
In the production stage: If customers are not buying the firm’s products then, as far as the firm is concerned, there can only be two possible reasons;
1) The customer is stupid
2) The sales force is inefficient
The Sales concept:
The economic recession of the 1920s and 1930s, Production capacity was under-utilised and there were many unsold goods. Gradually business people began to realise that it was not enough simply to produce goods as efficiently as possible, for profits to materialise these goods had to be sold – they wouldn’t necessarily sell themselves. The business philosophy of many firms switched from a production to sales orientation.
What is important for long term success?
A customer or market-oriented approach is necessary for long-term success.
What are the key points of the selling concept?
- Consumers can always be induced to buy through various sales techniques
- Consumers tend to resist purchasing and it is the sales person’s job to overcome this
- The firm’s key task is to organise an effective sales force
- In a sales oriented company the sales function is given equal seniority with finance and production
- The basic assumptions of these firms is to get the sale and not worry about post-purchase satisfaction
During the production concept era it would be true to say that a sellers’ market operated. Today, many firms have to operate in a buyers’ market. Because: (6)
- Customer are more affluent today than they were in the past
- Greater disposable income brings greater choice
- Many markets have been opened up by privatisation or deregulation
- Greater emphasis upon consumer rights
- Increased globalisation
- The digital revolution
Today, many firms have to operate in a buyers’ market.
What are some of the reasons for this?
Customer are more affluent today than they were in the past
Greater disposable income brings greater choice
Many markets have been opened up by privatisation or deregulation
Greater emphasis upon consumer rights
Increased globalisation
The digital revolution
What concept(s) is/are described as ‘like looking into a mirror’
the selling and production concepts
What concept(s) is/are described as ‘like looking out of a window’
the marketing concept
What are the 4 key features of the Marketing Concept?
1) Identify the Target Market
2) Identify the real needs of customers
3) Integrate all marketing activities
4) Make a profit (or cover your costs)
