BUAD 807: Fundamentals of Marketing Reg.
No: DP17MBA0967Production is defined as the creation of utility or the creation of goods and service which gives satisfaction to the consumer. Production also entails the processing of finished goods from raw materials and distributed to consumers for satisfaction of their wants. The production process involves both material and immaterial inputs resulting in output in form of finished goods. Production is grouped into two major parts namely direct and indirect production. In direct production the entity has the capacity to deliver all required materials for production using her internal skills set without focusing on a single product or requiring different job performances by a staff. While indirect production is divided into primary production, secondary production and tertiary production synonymous to gathering of raw materials and the conversion into finished goods; finally distribution to the market. The production process creates economic well-being in the form of economic activities which satisfy human needs directly or indirectly.
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Economic wellbeing can be measured to the extent which a good satisfies a consumer. Two features which explain economic well-being are improved quality- price –ratio of the product and revenue from growth and timely market production. A major premise in the production process is that it is not complete till it gets to the final consumer. Products are produced by the production department, while the marketers make products available to the final consumers (distribution channels).
It is one thing to produce a good and it is another thing to get these goods to the final consumer. Production is not complete till the goods reach the final consumer. For this the producer engages the service of middlemen to get the goods to the final customer. The middleman ensures the availability of the goods as at when needed. The middlemen ensure the goods are available at the right time, place, form and price. The middlemen in their bid to ensure availability of these goods have encountered many problems including: Spatial or geographical gap caused by the distance from producer to the buyer. There is market information gap; consumers are ignorant of available commodities and markets to purchase from and the consumers lack conviction as to why they must buy these products. Also there exist time separation gap due to the timing of when the producer, manufactures a product and the timing for consumption of such goods, resulting in artificial scarcity.
For the production process to be complete these entire lags must be bridged. For example many producers in Nigeria do not sell products directly to the final consumer, here the consumers perform different task. According to Busch and Houston scholars of the gap theory, marketing must not exist until the social economy attains a height where producers of an economic good are not the consumers. This creates a situation of separation gap. Furthermore Anyanwu in 2006 stated that for this gap to be bridged there should be intermediaries like retailers, wholesalers, commissioned and noncommissioned agents, merchant middlemen and agent middlemen. These intermediaries buy form the producers and make the goods available to the final consumer.
These marketing intermediaries are indispensable in the distribution of consumer goods. Nevertheless, why market intermediaries? Why is the distribution of commodities given to the middlemen? Why does the producer not sell directly to the consumer? This is because it creates the ability or control of intermediaries to decide on how and to whom to sell the products. According to Kotler in 1998, the use of middlemen results in greater efficiency in providing these goods to the market, though not without a price considering the contacts, experience, specialty and scale of operation of these intermediarries since consumers cannot achieve this on their own.