What are the three levels of production

what are the three levels of production

Can You Define The Levels Of Production?

Apr 18,  · There are three main levels of production: 1. SUBSISTENC­E PRODUCTION (TRADITIONA­L PRODUCTION) When a country is producing at the subsistenc­e level, it is 2. DOMESTIC PRODUCTION (LOCAL PRODUCTION) This level of production involves the quantity that is produced locally by a 3. THE EXPORT. Jan 18,  · Production can come in three levels. Subsistence Level; Domestic Level; Surplus Level; Subsistence Production – The basic needs of a country in which it takes place. in other words, sufficient enough is produced only to survive but not enough to improve the standard of living.

Consumers often think that a product is simply the physical item that he or she buys. This concept is known as the Three Levels of a Product. So with the car example, the benefit is convenience i. Another core benefit is speed since you can travel around relatively quickly. You can get some use out of it.

Again with the car, it is the vehicle that you test drive, buy and then collect. You can touch it. The actual product is what the average person would think of under the generic banner of product. It usually consists of lots of added value, for which you may or may not pay a premium. The augmented product is an important way to tailor the core or actual product to the needs of an individual customer.

The features of augmented products can be converted in to benefits for individuals. Features and benefits of a product are also relevant what are the three levels of production the three levels of the product.

Products tend to have a whole series of features but only a small number of benefits to the actual consumer. You can also have access to the Internet. Avatars are adaptable so you can create yourself and your friends.

These are all examples of features to the consumer. However a what does certified mean when buying a used car may buy it because he or she wants to stay fit and will use software and peripherals to become healthier. Becoming healthier is the benefit to the consumer.

That is why professional salespeople for example, often ask many questions whereas a novice salesperson will just tell you the features of the product. NPD aims to satisfy and anticipate needs. NPD delivers products which offer benefits at the core, actual and augmented levels.

NPD might offer a replacement product for a current line, it could add products to the current line, it could discover new product lines and sometimes it delivers very innovative products which the world might not have seen before.

New products are launched for all sorts of reasons. As we know from our previous lesson on the business environmentlegislation i. An example of this was when we moved from videotape recorders to digital and DVD recorders.

So products need to be modified for changing target markets. Sometimes the company will what are the three levels of production to increase the volume that a production plant delivers, since maybe it is not running at full capacity. So product lines are extended, in this case the reason being is what are the three levels of production ease operational efficiency. Intense competitive rivalry in the market will also lead to the need for NPD.

Just think freeway what we do is wrong lyrics your smart phone and how quickly such products go through their product life cycles, throughout your customer life-cycle.

Change in any element of the marketing mix would influence NPD, for example there is a movement to shop online and some products need to be distributed via online retailers, and the product is adapted to make it compact and simple to deliver. NPD can be driven by many influences from changing consumer tastes to the need to adapt products and services for local or how to use bajaj coffee maker market.

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The three levels of Production

Can You Define The Levels Of Production? 1)Primary/Extraction 2)Secondary?Manufacturing 3)Tertiary/Construction. Consumers often think that a product is simply the physical item that he or she buys. In order to actively explore the nature of a product further, let’s consider it as three different products – the CORE product, the ACTUAL product, and finally the AUGMENTED product. This concept is . Apr 27,  · The three levels of product: Core Value, Actual Product, Augmented Product Three levels of product can be identified. Each level adds more customer value. The first and most basic level is called the core customer value.

Let us make an in-depth study of the meaning, definition, types and factors of production. Since the primary purpose of economic activity is to produce utility for individuals, we count as production during a time period all activity which either creates utility during the period or which increases ability of the society to create utility in the future. They are artificial entities created by individuals for the purpose of organising and facilitating production.

The essential characteristics of the business firm is that it purchases factors of production such as land, labour, capital, intermediate goods, and raw material from households and other business firms and transforms those resources into different goods or services which it sells to its customers, other business firms and various units of the government as also to foreign countries. This definition makes it clear that, in economics, we do not treat the mere making of things as production.

What is made must be designed to satisfy wants. The making or doing of things which are not wanted or are made just for the fun of it does not qualify as production. On the other hand, all jobs which do aim at satisfying wants are part of production. Those who provide services Such as hair-dressers, solicitors, bus drivers, postmen, and clerks are as much a part of the process of satisfying wants as are farmers, miners, factory workers and bakers.

The test of whether or not any activity is productive is whether or not anyone will buy its end-product. If we will buy something we must want it; if we are not willing to buy it then, in economic terms, we do not want it. So from our above definition it is clear that many valuable activities such as the work done by people in their own houses and gardens the so-called do it yourself exercise and all voluntary work such as free coaching, free-nursing, collection of subscription for a social cause such as flood-relief or earthquake- relief immensely add to the quality of life but there is no practical way of measuring their economic worth value.

This includes production in manufacturing industry, viz. They are generally described as manufacturing and construction industries, such as the manufacture of cars, furnishing, clothing and chemicals, as also engineering and building. Industries in the tertiary sector produce all those services which enable the finished goods to be put in the hands of consumers.

In fact, these services are supplied to the firms in all types of industry and directly to consumers. Examples cover distributive traders, banking, insurance, transport and communications. Government services, such as law, administration, education, health and defence, are also included. Any activity connected with money earning and money-spending is called an economic activity.

Production is an important economic activity. It results in the output creation of an enormous variety of economic goods and services. Production of a commodity or service requires the use of certain resources or factors of production. Since most of the resources necessary to carry on production are scarce relative to demand for them they are called economic resources.

Resources, which we shall call factors of production, are combined in various ways, by firms or enterprises, to produce an annual flow of goods and services.

Each factor gets a reward on the basis of its contribution to the production process, as shown in the table. In fact, the resources of any community, referred to as its factors of production, can be classified in a number of ways, but it is common to group them according to certain characteristics which they possess. If we keep in mind that the production of goods and services is the result of people working with natural resources and with equipment such as tools, machinery and buildings, a generally acceptable classification can readily be derived.

The people involved in production use their skills and efforts to make things and do things that are wanted. This human effort is known as labour. In other words, labour represents all human resources.

The natural resources people use are called land. And the equipment they use is called capital, which refers to all man-made resources. The first three factors—land; labour and capital do not work independently or in isolation. There is need to combine these factors and co-ordinate their activities. This two-fold function is performed by the organiser or the entrepreneur. But this is not the only function of the entrepreneur. In fact, production can never take place without some risk being involved; the decision to produce something has to be taken in anticipation of demand and there must be some element of uncertainty about that demand materialising.

Thus, risk taking or enterprise can be considered as a fourth factor of production, and those responsible for taking these risks are usually referred to as entrepreneurs see the box below which is self-explanatory.

We may now study the nature and characteristics of four factors against this backdrop. But before we proceed further we may make a passing reference to factor mobility. In economics the term land is used in a broad sense to refer to all natural resources or gifts of nature. From the above definition, it is quite clear that land includes farming and building land, forests, and mineral deposits. Fisheries, rivers, lakes, etc.

In other words, land includes not only the land surface, but also the fish in the sea, the heat of the sun that helps to dry grapes and change them into resins, the rain that helps farmers to grow crops, the mineral wealth below the surface of the earth and so on.

The total land area of earth in the sense of the surface area available to men is fixed. Therefore, the supply of lands is strictly limited. It is, no doubt, possible to increase the supply of land in a particular region to some extent through reclamation of land from sea areas or deforestation. But this is often offset by various kinds of soil erosion. The end result is that changes in the total area are really insignificant.

Of course, the effective supply of agricultural farm land can be increased by drainage, irrigation and use of fertilisers. In consequence, the prices of land and natural resources tend to be extremely sensitive to changes in consumer demand, rising sharply if they become more desirable.

In this context, we may refer to the sharp increase in the price of building land in Bombay in the last five decades. Although the total supply of land is fixed, land has alternative uses. The same plot of land can be used to set up factories or to grow wheat or sugarcane or even to build a stadium. This means that the supply of land to a particular use is fairly if not completely elastic. For example, the amount of land used for growing tomato can be increased by growing less of some other crop e.

The supply of building land can be increased by reducing the area under agricultural operation. Since land is a gift of nature, it has no cost of production. Since land is already in existence, no costs are to be incurred in creating it.

In this sense, land differs from both labour which has to be reared, educated and trained and capital which has to be created by using labour and other scarce resources or by spending money. However, the above argument is not valid today. In fact, much of the services of land required expenditure of resources to obtain or maintain them and hence they are often called capital i. Another important feature of land is that it is not homogeneous. All grades plots of land are not equally productive or fertile.

Some grades of land are more productive than others. And Ricardo argued that rent arises not only due to scarcity of land as a factor but also due to differences in the fertility of the soil. Finally, we may refer to a special feature of land, not shared by other factors. In fact, production on land is subject to the operation of the law of diminishing return. This simply means that as more and more workers are employed on the same plot of land, output per worker will gradually fall because each additional worker will make less and less contribution to total product.

The law of diminishing return refers to diminishing marginal product of the variable factor. Land is not geographically mobile. But, it is occupationally mobile. In most parts of India, for example, land has many alternative uses. Some of the land, for example, in hill area, of say, Shillong, or Darjeeling, has an extremely limited degree of occupational mobility, being useful perhaps for sheep grazing, golf course or as a centre of tourism.

The income received by the owner of land is known as rent. It may be noted that rent is usually paid for something more than the use of land or another natural resource, but includes also an element of payment for another factor which is involved in making the resource available in a usable form. An example of this is the labour which assists in the process of bringing minerals to the surface.

Iron ore is of no use while it is still under the ground. Productivity and value of land can be increased if it is improved with fertilisers, irrigation and the erection of fences and buildings. So rent paid for this kind of fertile land is rather a mixed type of factor income. Like land, labour is also a primary factor of production. The distinctive feature of the factor of production, called labour, is that it provides a human service. It refers to human effect of any kind—physical and mental— which is directed to the production of goods and services.

As such, there are different types of labour input, varying in effort and skill content, and in particular types of skill content. The term covers clerical, managerial and administrative functions as well as skilled and unskilled manual work. Labour differs from land in an important way. While land is a stock, labour is a flow. So labour is perishable. A related, but important point should be noted in this context.

The worker sells his services in the market, but retains his capital working ability. In other words, what is bought and sold is the service of labour, not labour itself.

A firm cannot buy and sell labour in the same way that it can buy land and capital. Another important point to note is that labour is not only a factor of production. The supplier of labour—the worker—is also a consumer. Thus, labour plays a dual role in a modern economy. Labour is both the subject and the object of production.

In fact, any economic activity takes place to satisfy the consumers. And, consumption demand provides the business people with the incentive to undertake production. In examining labour markets, it is important to recognise that labour has a number of special characteristics which distinguish it from ordinary commodities.

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