Concept (Business)

Published by MBA Skool Team, Last Updated: March 29, 2019

What is Concept (Business)?

Concept are the elements which describe the relationship between the customer and the purchase being done. They are production concept, product concept, selling concept, marketing concept and societal marketing concept.

Production Concept – This type of concept is oldest in business. It opines that customers will prefer only those products that are widely available and are also cheap in nature. Managers pursuing this concept focus on achieving high efficiency in production, low production costs, and mass distribution. This concept makes sense particularly in developing countries, where customers are more interested in the product than in its associated features.

Product Concept - This orientation believes that consumers will favor only those product offerings that offer the maximum performance, quality or superior and innovative features. Managers who focus on this concept particularly concentrate on making superior products compared to other products and continuously improving them over time. However, it happens that these managers sometimes get so involved with their product and they do not realize what the market demands. This type of concept is particularly popular in developed countries.

Selling Concept - This type of business orientation holds that consumers and businesses will not buy enough of the company’s products if left alone to decide. The organization hence therefore must undertake an aggressive selling and promotion effort in order to increase sales. This concept assumes that customers who show inertia in buying or resistance and must be persuaded into buying. Most firms which have overcapacity practice the selling concept. They focus on selling what they make rather than make what the market wants.

Marketing Concept - This is a business orientation that works opposite of the above three business concepts. It holds that the key to achieving its goals of selling consists of the company being more effective than its competitors in developing, delivering, and directing its customer value to its selected target customers. The marketing concept stands on four pillars which are defining target market, understanding customer needs, following an integrated marketing and maintaining profitability.

Societal Marketing Concept - This business concept maintains that the organization’s task is to identify the needs and interests of consumers in the target markets and to deliver effectively and efficiently the desired satisfactions compared to its competitors. Additionally, it holds that this type of marketing must be done in a way that maintains or enhances the customer’s and the society’s well-being as a whole.

Differences between the Sales Concept and the Marketing Concept -

• The Sales Concept focuses on the needs of the seller whereas the Marketing Concept focuses on the needs of the buyer or the consumer.

• The Sales Concept focuses on the seller’s need to convert product into cash whereas the Marketing Concept focuses on satisfying the needs of the customer by means of the product as a solution to their needs.

• The Marketing Concept represents the major change in today’s company’s understanding that it provides the foundation for achieving competitive advantage in the market. This philosophy is the foundation of consultative selling.

• The Marketing Concept has undergone a transition phase and has evolved into a refined company orientation which is the Societal Marketing Concept that is comparatively theoretical in nature and will definitely influence various forms of marketing and selling approaches in near end future.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

Browse the definition and meaning of more similar terms. The Management Dictionary covers over 2000 business concepts from 6 categories.

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