Reasons for growth in service sector: Introduction: In recent times the service sector is increasing at a very fast pace.

After the liberalization in the year 1991, the contribution of service sector is continuously increasing in the growth of our economy. However, agriculture is still dominating the Indian economy. The services sector now accounts for over 70% of total employment The reasons for growth of the service sector can be broadly categorized into two : 1) Growtih in intermediate demands from firms 2) Growth in final demand from customers. Intermediate demand from Firms: Manufacturing firms realized the importance of staffing function when good services provided by human resources of organisation boosted the sale of those products. Manufacturing firms started bundling with a number of service functions such as selling, marketing research advertising, labor welfare, HRD etc. With the growth of competition and pace of change in consumer exposure and expectations forced organisation to look for specialized services. Final demand from customers There is a growth in direct demand from customers for a variety of services. People spend more and more on services. The demand of health services, beauty, entertainment, travel services and the like registered a significant growth in recent years Service sector are growing not only in volume but also in sophistication and complexity. The growth of service industry is the result of combination of several reasons, they are, Affluence: - The increase in per capita income from Rupees 238.8 in 1950 to Rupees 11,934.5 in 1998 is an indicator of he increase in general affluence has given rise to service like pest-control, personal security, interior designer, etc. Leisure time: - People do get some time to travel and holiday and therefore there is a need for travel agencies, resorts, hotels, and entertainment. There are others who would like to utilize this time to improve their career prospects and therefore there is a need for adult education/distance learning/part time courses.

 Life expectancy: - The health programmed have significantly contributed to an increase in life expectancy given rise to services like old age homes, nursing homes, health care, etc. Changing role of women: - Traditionally the Indian woman was confined to household activities. But with the changing time there has been a change in the traditional way of thinking in the society. Women are now allowed to work. They are employed in defense services, police services, postal services, software services, health services, hospital services, entertainment industries, Business Process Outsourcing and so on. The percentage of working women has been growing rapidly. The changing role of women has created a market for a number of product and services. Earning women prefer to hire services in order to minimize the innumerable roles that they are required to perform. The demand by woman is forcing service organisations to be more innovative in their approach. As more and more women have started working, the need for day care for children has increased, and so is the care with packed food and home delivery. Cultural Changes: Change is the underlying philosophy of culture place of change in Indian culture is not uniform. However, during the last century the factors of change are prominent. The emergence of the nuclear family system in place of the traditional joint family system creates a demand for a host of services like education, health care, entertainment, telecommunication, transport, tourism and so on. There has been a marked change in the thought Processes relating to investment, leisure time perception and so on which has created a huge demand for services. Development of Markets: During the last few decades the wholesaler and the retailer population has grown in the country. Urban India has become a cluster of wholesaling and retailing business. In the Semi urban areas, retailing has spread to the nooks and corners of the streets and in the rural areas retail business is significantly present. A new breed of organisations, offering marketing services has come up. The government also offers marketing services to the small-scale agricultural farmers, artisans and other traditional business sectors such as promotion of regulated markets, export promotion councils, development boards etc. Market orientation: The changing competitive situation and demand supply positions has forced the manufacturing organisation to shift their philosophy from production

orientation to market orientation. Market is a service function that has been added in the organisation. The pressures in the market has further forced the manufacturing organisations to have marketing research, accounting, auditing, financial management, human resource management and marketing research divisions all of which are services functions. Economic liberalization: The economic liberalization of the 1991 has brought many changes in the Indian scenario. With the Disinvestment and the Privatization policies the state owned monopolies in many service areas came to an end Multinationals were permitted to enter the Indian market. Liberal lending policies and lower interest rates motivated many people to become self-employed. Different sectors like Banking, Insurance, Power projects, Telecommunication, Hospitality sector, Health Services, Entertainment, Air transport, and Courier services witnessed intense competition, due to the entry of multinationals. The flow of time-tested service technology from various parts of the world changed the attitude of the Indian consumer towards sources.. Rampant migration: One of the important reasons for the growth of services in India is the rampant migration of rural to semi-urban and urban areas. Migration to urban areas for the want of jobs and livelihood has resulted in the expansion of cities and townships due to which businesses like real estates, rentals, transportation and infrastructure services are rapidly expanding. Export potential: India is considered to be a Potential source for services. There are a number of services that India offers to various parts of the world like banking, insurance, transportation co data services, accounting services, construction labour, designing, entertainment, education, health services, software services and tourism. Tourism and software services are among the major foreign exchange earners of the country and that the growth rate is also very high as compared to the other sectors. Product complexity: - A large no. of products are now being purchased in households which can be serviced only by specialized persons like water purifies, micro wave ovens, home computers, etc. giving rise to the need for services like after sales service agents for durables, maintenance service providers, etc. Life complexity: - As the daily routine gets busier, individuals find it difficult to manage things on their own. Their leads to an obvious need for tax consultants, legal advisors, property advisers, etc.

 Resource scarcity and ecology: - As the natural resources are depleting and need for conservation is increasing, we have seen the coming up of service providers like pollution control agencies, car, pools, water management, etc.

Demand Variation in service industry

The middle areas of the figure represent four basic scenarios that may result from different combinations of supply and demand: Excess demand: Demand exceeds maximum capacity; some customers may be turned away. Demand exceeds optimum capacity: no one is turned away but service quality may suffer. Demand and supply balanced at an optimum level of capacity: staff and facilities are utilized at the ideal level. Excess capacity: demand is below optimum capacity, and productive resources are underutilized, resulting in low productivity. (A) MANAGING CAPACITY 1) capacity level 2) adjusting capacity to match demand 1. CAPACITY LEVEL Some capacity is elastic in its ability to absorb extra demand. Here the actual level of capacity remains unchanged, and more people are being served with the same level of capacity. For example, the normal capacity for a subway car may offer 40 seats and allow standing room for another 60 passengers with adequate handrail and floor space for all. Yet at rush hours perhaps up to 200 standees can be accommodated under sardine like conditions.

Another strategy for stretching capacity is to utilize the facilities for longer periods. For example, some banks extend their opening hours during weekdays and even open on weekends. 2. ADJUSTING CAPACITY TO DEMAND PATTERNS This set of options involves tailoring the overall level of capacity to match variations in demand- a strategy that is also known as chasing demand. There are several actions that managers can take to adjust capacity as needed. Schedule downtime during the periods of low demand. To ensure that 100 percent capacity is available during peak periods, maintenance, repair and renovations should be conducted when demand is expected to be low. Cross-train employees. If employees can be cross-trained to perform a variety of tasks, they can be shifted to bottleneck points as needed, thereby increasing total system capacity. In supermarkets, for instance, the manager may call on the stockers to operate cash registers when lines become too long. Likewise, during the slow periods, the cashiers may be asked to help stock shelves. Use part-time employees. Many organizations hire extra workers during their busiest periods. For example, additional hotel employees during vacation periods and for major conventions. Invite customers to perform self-service. If the number of employees is limited, capacity can be increased by involving customers in co-production of certain tasks. One way to do this is by adding self-service technologies such as electronic kiosks at the airport for airline ticketing and check-in or automated check-out stations at supermarkets. Ask customers to share. Capacity can be stretched by asking customers to share a unit of capacity normally dedicated to one individual. For instance, at busy airports and train stations, where the supply of taxis is sometimes insufficient to meet demand, travelers going in the same direction may be given the option of sharing a ride at a reduced rate. Flexing capacity to match demand.

Rent or share extra facilities and equipment. To limit investment in fixed assets, a service business may be able to rent extra space or machines at peak times. Firms with complementary demand patterns may enter into formal sharing agreements (B) MANAGING DEMAND The organization should determine the optimum level of demand for its given capacity. Once this has been determined, it can vary its marketing mix elements of product, price, place and promotion to change demand in line with the capacity. a) Product: As a service provider you can alter the service offering to even the demand. The changes in service offering may be seasonal or based on days of the week or time of the day depending on the nature of demand fluctuations. A hotel for example may focus on weekend family entertainment and recreation package to cope up with low demand from business executives during weekends. However, as marketers you must ensure that by offering different types of services the image or positioning of the service firm is not diluted or confused. b) Pricing: Many service marketers reduce price during the periods of low demand to increase the demand. Airlines offer low fares during odd hours like late night flights, movie theatres offer a lower price ticket for the morning show. c) Place (Distribution): Many service firms modify their time and place of delivery as a strategy to match demand and capacity. Bank may change its timings on specific days or during specific period, finance companies use mobile vans for distribution and collection of forms.

d) Promotion: You can also shift the demand by properly communicating with your customers. The customers should be made aware of the peak timings of the demand and also the benefits they can get in availing the service during nonpeak timings. They should also be properly informed about changes in product, pricing and distribution. This can be done by putting signages at the service outlets (like banks) or advertising. Service firms can also use sales promotion to manage demand. Many airlines offer free ticket for companion in the business class