ASSIGNMENT OF SERVICE MARKETING

MBA-PART TIME

SUBMITTED BY: MANALI SHARMA ROLL NO-00480304310

RUKMINI DEVI INSTITUTE OF ADVANCED STUDIES

An ISO 9001:2008 Certified Institute

(Approved by AICTE, HRD Ministry, Govt. of India)

Affiliated to Guru Gobind Singh Indraprastha University, Delhi

2A & 2B, Madhuban Chowk, Outer Ring Road, Phase-1, Delhi-110085.

Q1. Do you agree that India is changing from an agricultural economy to industrial economy? Compare this change with movement from industrial economy to service economy.
|Ans:- Yes, I definitely agree that Indian economy has been changing from agriculture economy to industrial economy. Agriculture Growth Rate in India GDP had been growing earlier but in the last few years it is constantly declining.

Contribution of Industrial sector showing how India is changing from an agricultural Economy to industrial economy

The contribution of the Industrial Sector in India GDP:

The industrial sector is one of the main sectors that contribute to the Indian GDP. The country ranks fourteenth in the factory output in the world. The industrial sector is made up of manufacturing, mining and quarrying, and electricity, water supply, and gas sectors. The industrial sector accounts for around 27.6% of the India GDP and it employs over 17% of the total workforce in the country. The Growth Rate of the Industrial Sector in India GDP came to around 5.2% in 2002- 2003. In this year, within the India GDP, the mining and quarrying sector contributed 4.4%, the electricity, water supply, and gas sector contributed 2.8%, and the manufacturing sector contributed around 5.7%.The Growth Rate of the Industry Sector in India GDP came to around 6.6% in 2003- 2004 and in this year, the electricity, water supply, and gas sector contributed 4.8%, the mining and quarrying sector contributed 5.3%, and the manufacturing sector contributed 7.1% in India GDP. Industry G r o w t h R a t e i n I n d i a GDP came to 7.4% in 20042005, with the manufacturing

s e c t o r contributing 8.1%, the mining an d quarrying sector contributing 5.8%, and the water supply, electricity, and gas sector contributing 4.3% in India GDP.

Industry Growth Rate in India GDP came to 7.6% in 200 5- 2006. In this year, the mining and quarrying sector contributed 0.9%, the manufacturing sector contributed 9.0%, and the water supply, gas, and electricity sector contributed 4.3%. The

Growth Rate of the Industrial Sector finally came to 9.8% in 2006 - 2007. This shows that Industry Growth Rate in India GDP has been on the rise over the last few years.Now the industrial sector is one of the main sectors that contribute to the Indian GDP instead of agriculture sector.

Moving from industrial economy to service economy:

The percentage of the share of these sectors in the composition of India GDP differs and also has changed over the years. India GDP Composition Sector Wise was that the agriculture sector contributed around 32%, services sector contributed 41%, and the industry sector contributed 27% in 1990- 1991.

The sector of industry accounts for 27.6% of India GDP for it employs around 17% of the total workforce in India. The industrial sector contributed 7.6% to India GDP in 2005- 2006 and the next year, this figure increased to 9.8%. This shows that the contribution of the industrial sector is increasing in India GDP. The services sector contributes the most to the India GDP for it accounted for 53.8% in 2005.After independence it was the agricultural sector that contributed the most to the India GDP but in recent years it has been the services sector, which has contributed the most. The agricultural sector contributed 20%, industry sector contributed 26%, and the services sector contributed around 54% to the India GDP in 2005- 2006.

The contribution of the Services Sector has increased very rapidly in the India GDP for many foreign consumers have shown interest in the country's service exports. This is due to the fact that India has a large pool of highly skilled, low cost, and educated workers in the country

Q2. Identify three service sectors of Indian Economy which are likely to be dominant in the next five years? How do you visualize their impact on Indian Economy? Support your answers with facts and figures.
Ans:- India's journey on the path of economic reforms has transformed it to one of the world's fastest growing economies. Its large and growing population is its best asset and can quadruple GDP and catapult India to the league of developed economies over the next decade. All this if a billion could be transformed into a productive workforce. For over half a decade now, India has been chanting the demographic mantra with little real progress. Because, with opportunities come challenges. The services sector needs many million knowledge workers. Lack of employability is endemic. India's large labour force has been stubborn in transition. Over 90% of the labour force is inadequately trained. Jobs continue to be created, needing an educated workforce and many in sunrise sub-sectors. We need to recognize new opportunities and prepare the supply side. Let us take a quick look at five existing sectors that are likely to hold us in good stead in the future in terms of employment generation and business growth.

Growing service Sectors of India and their Impact on Indian Econony :1. INFORMATION TECHNOLOGY:The IT sector has been India's sunshine sector for quite some time now. The industry has contributed considerably to changing India's image from a slow developing economy to a global player in providing world class technology solutions. According to the IBEF (India Brand Equity Foundation) figures, the Indian IT industry is set to touch $225 billion by 2020.

Industry experts and NASSCOM say the Indian IT workforce will touch 30 million by 2020, becoming the highest sector employer. This will be coupled with steady increase in pay in a sector already offering a high base. The outsourcing industry too is looking towards India and is expected to be a $2.5 billion industry in the next 24 months.

2. HEALTHCARE:There are clear indications that healthcare is going to be a major sector that stimulates economic growth and contribute to employment. Over 40 million new jobs are expected to be generated by 2020, as per a report titled 'India's New Opportunities-2020' by the All India Management Association, Boston Consulting Group and the Confederation of Indian Industries (CII). The Indian healthcare industry also has advantages over other developing countries in becoming a global hub for medical tourism. The medical treatment and educational services in India are a fraction of the cost in developed countries. While we may lag in molecule development and drug patents, an increasing disposable income has led to a strong domestic market potential in India. This will result in significant employment generation across various functions, such as sales, marketing, HR, IT and operations, within the industry. Heathcare service are likely to be provided major employment opportunities in the country. 3. TELECOMMUNICATION:India's telecom story is only getting better. According to Zinnov estimates, India already has nearly 850 million mobile phone subscribers, with a 15% smart phone penetration. All this points to a penetration that is fuelling the growth of enterprise mobility in India, which will lead to significant employment growth. The Telecom Regulatory Authority of India (TRAI) too is targeting a 10-fold increase in broadband subscribers to100 million by 2014. Outsourcing revenues from the telecom sector, as per E&Y, are set to grow at a CAGR of 31% to nearly $2 billion in 2012. India today is at a stage in telecom growth that probably America was 30 years ago. Our mobile and Internet penetration has to increase further, resulting in a new era in enterprise mobility. Today the Indian telecommunications network with over 375 Million subscribers issecond largest network in the world after China. India is also the fastest growing telecommarket in the world with an addition of 9- 10 million monthly subscribers. The tele-density of the Country has

increased from 18% in 2006 to 33% in December 2008,showing a stupendous annual growth of about 50%, one of the highest in any sector of the Indian Economy.

4. INFRASTRUCTURE :India's infrastructure growth has been exponential over the past decade. Today, we are the fourth largest and probably the second-fastest growing economy, with infrastructure being one of the cornerstones. The infrastructure industry in India is highly fragmented and hence difficult to gunge its exact size and the jobs it generates each year in absolute terms.

However, be it roads and highways, railways, aviation, shipping, energy, power or oil & gas, the Indian government and the various state governments seem to making rapid progress. This has led to significant employment generation, though a majority of it is still in the unorganised sector. Over the next 10 years, the infrastructure sector in India will need to continue its growth momentum and is likely to maintain a growth rate anywhere between 7-10%, a very healthy sign.

5.RETAIL:Over the past few months, the retail sector has grabbed headlines with talks of 100% FDI in single brand retail, which is currently capped at 51%. While the outcome is still undecided, the opening up of India's retail will create a stronger, organized industry that will help in generating employment.

Today, only a small part of retail in India is organized. Despite this, it is estimated that the sector in India is worth more than $400 billion, with domestic and international players planning to expand across the country. Industry leaders predict that the next phase of growth will emerge from rural markets. There are projections of the workforce doubling by 2015, from the current five lakhs in both organized and unorganized sector.

Q3. Identify three reasons for the growth in the services sectors in the Indian context ?

Ans:- Service sector is the lifeline for the social economic growth of a country. It is today the
largest and fastest growing sector globally contributing more to the global output and employing more people than any other sector.

Services or the "tertiary sector" of the economy covers a wide gamut of activities like trading, banking & finance, infotainment, real estate, transportation, security, management & technical consultancy among several others. In alignment with the global trends, Indian service sector has witnessed a major boom and is one of the major contributors to both employment and national income in recent times. The activities under the purview of the service sector are quite diverse. Trading, transportation and communication, financial, real estate and business services, community, social and personal services come within the gambit of the service industry. One of the key service industry in India would be health and education. They are vital for the countrys economic stability. A robust healthcare system helps to create a strong and diligent human capital, who in turn can contribute productively to the nations growth.

REASONS FOR THE GROWTH OF SERVICES IN INDIA:1. Economic affluence: One, of the key factors for the growth of demand for services is the economic affluence. According to the NCAER study the size of the middle income consumer is raising fast and the percentage of the very poor households declining. The rural households in the upper income category is growing at a much faster pace than the urban households in the corresponding categories. The Economic liberalization Process has had a positive impact on the Indian households. Their income as well as their expenditure has been pushed, creating a demand for many goods and services.

2. 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 organizations to be more innovative in their approach. 3. 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. 4. I.T. Revolution: For the last 15 years India6aste,en occupying a vital position in the area of Information Technology. IT became one of the key service businesses of the country. India has the largest software skilled population in the world. The domestic market as well as the international market has grown substantially. Realising the potential for this area many state governments have made IT as their most, prioritized segment states such as Karnntnka, Andhra Pradesh, Madhya Pradesh Maharashtra and Delhi have already achieved substantial progress in Information Technology the In Ile years to come Lille IT enabled se Aces will have a bright future. The growth. of population, industrialization and indiscriminate consumptions have affected the, natural resources, environment and the ecological balance. Due to this there is an imbalance of the ecology various service organisations have been promoted in order to take up social marketing. Thousands of crores of rupees are being spent on safeguarding the rare animals and birds, water pollution, conservation of oil & energy and research to develop new technologies that can promote effective use of natural resources and safeguard the environment.

5. 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. 6. 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. 7. Health-Care Consciousness: In India, the healthcare market has grown substantially. The increased life expectancy is the result of the consciousness of the people regarding the health issues. The growth of fitness clubs, diagnostic centres, medical counselling, health-related information sites are the reflections of the growing demands for health care services. The government as well as the social organisations have taken up the mass campaigns in order to create awareness among the illiterate persons and the rural population on health service. Hence, the growth of health related services. 8. Economic liberalisation: The economic liberalisation of the 1991 has brought many changes in the Indian scenario. With the Disinvestment and the Privatisation 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.

9. 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. 10. 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.

11. Service tax: The growth in the service sector attracted the attention of the government as a tax generating source. Over the years, the number of services brought under service tax has increased- Service tax is levied on hotels and restaurants, transport, storage and communications, financial services, real states, business services and social and personal services. 12. New products: IT has given rise to PCOs, pager service providers, web shoppers etc. The contribution of the Services Sector in the Indian GDP has also increased very rapidly as many foreign consumers have shown interest in the country's service exports. This is due to the fact that India has a large pool of highly skilled, low cost, and educated workers in the country. This has made sure that the services that are available in the country are of the best quality. Foreign companies seeing this have outsourced their work to India especially in the area of business services which includes business process outsourcing and information technology services. This has given a major boost to the Services Sector in India, which in its turn has made the sector contribute more to the India GDP. 13 Others:- growth of the service sector is due to the increase in urbanization, privatization and more demand for intermediate and final consumer services. Availability of quality services is vital for the well being of the economy.