1. 2. Growth in intermediate demand from Firms:
Intermediate demand from firms means creating or filling the need of
inputs provided to manufacturing and other sectors of economy.
Depending on intermediate demand firms are divided into three
categories:
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 ordinary
and 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 public
utilities with increasing use of energy with non manufacturing blue
collar forces.
2. Second Stage:
It involves mass consumption of goods and services with increasing
population and changing trends to whole sale and retail in term of
finance, real estate and insurance.
3. Third Stage:
A German Statistician Christian Engel said:
“The proportion of money devoted to food at home begins to drop
and the marginal increments are used first for durables and then for
luxury and recreation.”
Personal services begin to grow as
restaurants,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.
*****************************************************
