BUAD 807

BUAD 807: Fundamentals of Marketing Reg. No: DP17MBA0967
Production is defined as the creation of utility or the creation of goods and service which gives satisfaction to the consumer. Finished goods are processed from raw materials for distribution to consumers in other to satisfy their wants. The production process involves both material and immaterial inputs resulting in output in the form of finished goods. Production is grouped into two major parts namely direct and indirect production. Direct production is when the entity has the capacity to deliver all the materials required for production using internal skills set without focusing on a single product or requiring different job performance by a staff. Indirect production is further divided into primary production, secondary production and tertiary production which all involve the gathering of raw materials for the processing into finished goods and finally its distribution to the market. The production process creates economic well-being in the form of economic activities which satisfy human needs directly or indirectly. Economic wellbeing is 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 the products available to the final consumers via distribution channels. It is one thing to produce a good and it is another thing to get these goods available to the final consumer. Production is not complete till the goods reach the final consumer. For this the firm engages the service of the middlemen to get the goods to the final customer to buy. The middlemen ensure 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 middle men in their bid to ensure availability have encountered many problems including. Spatial or geographical gap caused by the distance from the manufacturing firm to the buyer. There is the location Intel gap, because consumers are not aware of available commodities or where to purchase the goods and reason why they must buy these products. Also there exist time separation gap due to the timing of when the factory produces 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 directly the products to the final consumer as we see consumers performing 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 of such economic good. This creates a situation of separation gap. Furthermore Anyanwu in 2006 stated that for this gap to be bridged there should be intermediaries like wholesalers, retailers, merchant middlemen, and agent middlemen, commissioned and noncommissioned agents. 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 to. 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 since consumers cannot achieve this on their own.