Which Business Philosophy is Right for Today’s World?

The global philosophy of businesses has shifted over the years. Modern business began with the product centered philosophy and was eventually replaced with the selling philosophy. Most recently, the business world has evolved into a marketing-centric philosophy. The question is, “Which business philosophy is right for today?”

The answer is, “It depends.”

Production Concept

In the late 1800s, Ralphs Waldo Emerson said, “Build a better mousetrap, and the world will beat a path to your door.” His expression is a perfect example of the production philosophy of business. The production philosophy says, “I’m going to build this thing and you, the consumer, will buy what I build.”

Henry Ford, in the early days of the Model T automobile launch, is attributed with the saying, “You can have any color you want as long as it is black.”

The assumption among executives prior to the Great Depression of the 1930s was, I know what I like, so I will make it the way I like, and other people will also like it.

Engineering and production departments determined what the company could build. They designed it, built it, and placed it in a catalog for people to buy.

Corporate sales forces were relatively unknown, and marketing departments didn’t even exist in those days.

Selling Concept

The Great Depression of the 1930s was a time of high unemployment and limited consumer demand. The resources for consumer goods throughout WWII were redirected to the war effort. So, by the time the war ended, there was significant excess production capacity from all the factories that had been built, and there was an enormous pent up consumer demand.

Companies continued to be driven by engineers and production departments. Essentially, they only made what they knew how to make. But suddenly, making a product and putting it in a catalog wasn’t enough. Consumers had a lot of products to choose from, so companies couldn’t just wait for the customer to find them.

The solution was for companies to employ a sale force to visit potential customers and take orders. Advertising, to augment the efforts of the sales force took on a larger role in helping to make the consumers aware of the new products available to them. Initially, advertising campaigns focused on newspapers and magazines. Then, eventually, advertisers also started using the fledgling radio market.

The limitation of the selling concept is it is driven by the engineering and production departments without a solid understanding of consumer needs/wants.

Marketing Concept

The 1950s saw a significant shift away from engineering and production, controlling the business toward the consumer. Companies realized they needed to make products customers actually wanted and would meet the consumer’s needs. As a result, marketing, rather than selling, became the focus of many businesses.

The focus on marketing meant that the company planning and operations needed to be customer-oriented. Products needed to deliver profitable sales growth, rather than to make sales for the sake of sales.

Businesses to realize the full benefits of the marketing concept needed to understand and meet consumer needs by coordinating the efforts of the engineering, production, and marketing departments.

The limitation of the marketing concept is, the emphasis is on developing familiar products, not “new to the world” products.

Selling versus Marketing Comparison

Still, several business people do not understand the difference between selling and marketing concepts. Many executives think they are similar when, in fact, they are nearly opposite philosophies.

Production/Selling Concept	Marketing Concept
1) Emphasis on the product.	1) Emphasis is on customer wants/needs.
2) The company makes the product, then figures out how to sell it.	2) The company first determines what the customer wants/needs. Then figures out how to make and distribute the product.
3) Management is focused on sales for sale’s sake.	3) Management is focused on profitable sales.
4) Planning is short-term.	4) Planning is long-term.
5) Stresses the needs of the manufacturer.	5) Stresses the needs of the buyer.

So Which Philosophy is Best?

Now, to revert back to our opening question, “Which business philosophy is right for today?” My answer is, it depends. However, in some cases, none of these current philosophies by themselves is sufficient.

Think about all the “first of its’ kind” products. There are pocket-size transistor radios, videotape recorders, hand-held calculators, cell phones, Pampers, Crest White Strips, and Swiffer. The list of products invented by engineers in research labs is endless. Every single one of these products was produced because some engineer invented it, and then, some production guy figured out how to make it.

Consumers didn’t know they needed the product because they had never seen it before. But once it was made, marketing created consumer awareness and demand. Likewise, the sales forces filled channels of distribution with the product.

However, what successful “new to the world” products have in common today is that they are designed and built with an understanding of consumer needs. Focus groups, research studies, beta testing, and test markets are all used to develop and refine products.

My conclusion is, the production and selling philosophy still has a place in the business world, but only to the extent that it leverages knowledge from the marketing concept.

Join the Conversation

As always, questions and comments are welcome. Which business philosophy do you think is most suited to meet the changing wants/needs of today’s consumers?

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Category: Sales Management