C hapter 1 pg 4

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  • 1. 2. Growth in intermediate demand from Firms:Intermediate demand from firms means creating or filling the need ofinputs provided to manufacturing and other sectors of economy.Depending on intermediate demand firms are divided into threecategories: a)Specialists Firms: Set up to provide services previously carried out by existing firms. e.g: Engineering services, personnel services. b)Alternatively Specialists Firms: Set up to provide new services. e.g :data processing. c) Business Buyers: They use services like accounting,construction,banking,insurance,legal,research,adver tising,public relations,training,shipping,consultancy services.Analysis: Companies and other organizations rely on specialist services as it is the need of the day to take hold on technological and competitive pressure with lack of available resources organizations encourage to use outside services other than internally based services.3. Growth in Final demand from Consumers:As societies get wealthier people generate final demands to ordinaryand l uxorious services.According to Law of Economies: “As societies get wealthier and as the marginal utility derived from additional increments of goods decline then people turn to services expenditures.” It tells us about the relationship between income &spending patterns on goods & services.(travel,health,recreation,education,with changing lifestyles.
  • 2. We will discuss post industrial society as it is based on services: Transformation of Industrial to Post Industrial Society: 1. First Stage:Industry develops by expansion of transportation and of publicutilities with increasing use of energy with non manufacturing bluecollar forces. 2. Second Stage:It involves mass consumption of goods and services with increasingpopulation and changing trends to whole sale and retail in term offinance, real estate and insurance. 3. Third Stage: A German Statistician Christian Engel said: “The proportion of money devoted to food at home begins to dropand the marginal increments are used first for durables and then for luxury and recreation.” Personal services begin to grow asrestaurants,hotels,autoservices,travel entertainment ,sports need for technical accessories etc.Impact of Service Economy on Marketing: • Marketers trend to make investments on use of services. • Market search requires area and economy wise marketing • Which economy is more rich in which services • To explore new services for changing patterns of economy. *****************************************************