BUAD 807: Fundamentals of Marketing Reg. No: DP17MBA0967Production is defined as the creation of goods and services which consumers derive satisfaction from. Production also means processing of finished goods from raw materials. The production process involves both material and immaterial inputs resulting in finished goods. Production is grouped into direct and indirect production.
Direct production entails the capacity to deliver all production materials using internal skill sets less division of labour. While indirect production divided into primary production, secondary production and tertiary production connotes a combine process of gathering raw materials, its conversion to finished goods; finally distribution to the market. The production process creates economic well-being in form of satisfying human needs directly or indirectly. Economic wellbeing is measured by the extent to which a good satisfies a consumer. Two features which explain economic well-being are improved quality- price –ratio of the product, revenue 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.
It is one thing to produce a good and it is another thing to get these goods to the final consumer. For this to happen the producer engages the service of middlemen to get the goods to the final consumer. The middleman ensures the availability of the goods as at when needed.
The middlemen ensures that 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 distance from producer to the buyer. There is market information gap; consumers are ignorant of available commodities and the 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, Produces a product and when consumption takes effect. It is this gap that sometimes result to 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 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.