Euro Star and Its Price Theory - Essay Example

Client's December 2009 Demand and supply play the most pivotal role in deciding the price of a commodity or a service. The same willbe elucidated further with the help of Euro star which is a fast- speed train which covers areas in London, Brussels and Paris. At the end of the paper the reader will be clearly able to understand the concept of price theory. Prices theory is one of the most important parts of Economics. Generally the price of a commodity or service is decided by taking into consideration the production cost incurred on the production of the commodity or the service. Another important element which decides the price is how easily or how difficult is it to get the commodity or the service. Scarce commodities are considered much more important than commodities available in abundance hence there is a significant difference between the prices of scarce commodities and the commodities which are available in abundance. Let us now consider the demand aspect of the price theory, the demand aspect of the price theory is driven by an important factor which is how desperately a consumer is in need of that commodity or service. If a consumer is urgently in need of the service or commodity, he/she wouldn't mind spending even double the amount of money which they would have spent in normal circumstances. So the demand aspect of the price theory is all about the desire of the consumer to have that particular commodity or service at his/her disposal. Another important aspect which is very important is the demand curve; demand curve gives a good enough indication of the will of consumers to buy the commodity or the service at that particular price. Demand curve and supply curves are studied by an organization to arrive at an equilibrium price. Equilibrium cost is the fixed cost and this changes only when the demand and supply is changed and it does not change unless the demand and supply changes. Let us now take into consideration the difference between luxury goods and necessities, the income elasticity of demand tends to be much higher in the case of luxury goods and this is because of a simple reason which is as people become wealthier there wants increase and they tend to spend more money on buying themselves luxuries. The level of income of an individual goes on to decide what luxury is and what is necessity For instance a rich person can stop buying bikes and as a replacement start collecting cars, this purely depends on the level of income of people. The word luxury has more meanings than one, one often mistakes luxury as a status symbol, for instance a person can buy a Nike shoe considering as a luxury knowing very little about how good the shoe is, so it depends on individuals on how they define luxury. Euro Star and its Price Theory Euro star is a high speed train which covers areas in London, Brussels and Paris. The price theory of the high speed train will be highlighted in the remaining of the paper. There are three different classes namely, the standard class, the Leisure select and the last one is Business Premier. The rates vary depending upon the class, for a journey from London to Paris it would roughly cost about 178 if one chooses to travel in Standard class, on the other hand the fare is higher if one chooses to travel by Leisure select, it would cost roughly about 325 if one chooses a two way journey from London to Paris and back. The third and the most expensive class is the Business Premier which would cost a person roughly about 328.50 for a one way journey from London to Paris. The demand factor of the price theory comes into effect here; people opt to travel by Euro star because they have the willingness to pay for the service offered by the train. This is a very essential concept in price theory, if the people don't feel the willingness to travel by the train they will stop travelling by the train. This goes to show that the prices of the services offered by the train are quite reasonable and this is exactly why the people feel willing to travel by the train. The tickets of the train vary depending on the time, this is again because of the demand factor of Price theory, the rates of travel are higher at night because the urgency generally is higher at night and this is why the rates are higher at night, the urgency factor is very important in price theory, price of a commodity or service rises with the rise of the level of urgency of the consumer. What would happen if Euro star had a uniform price policy The occurrence of this event is highly improbable, the train will never have a uniform price policy because that would be a case in which all the principles of price theories will be defied. As discussed earlier, necessities and luxuries depend upon the level of income and taking such a decision would mean treating all the people equally with regard to the services provided in the train. For this to happen the staff will have to remove all the luxury seats from the train and make sure that all the seats in the train appear to be equal. If Euro Star adopts a uniform price policy then the services offered to the people who want luxury will surely be curtailed and this would not go down well with those people and they will certainly find an alternative mode of transport. It would not make sense to have a uniform price policy simply because people earn to make their lives comfortable and they choose luxuries depending on the level of their income and in such a case it would be make no sense to those who prefer to travel by the Business Premier class as this is the most luxurious class of Euro Star. If this price policy is adopted it will surely put off the people who earn more in order to afford luxuries and they would surely find alternative arrangement of travels. Fair Trade and Its Principles As discussed earlier, Fair trade mainly exists in developing countries and it targets specific areas for instance, the Handicrafts, Coffee Industry, Tea Industry etc, it does so in order to make sure that the workers and the producers are benefitted and their economic stature improves by participating in Fair trade. To understand the concept better, its principles should be well understood and they are as follows: "Creating opportunities for economically disadvantaged producers, Fair trade is a strategy for poverty alleviation and sustainable development. Its purpose is to create opportunities for producers who have been economically disadvantaged or marginalized by the conventional trading system." (Key Principles of Fair trade, 5 February 2009). The most important principle of Fair trade is to ensure that there are ample opportunities provided to the producer, the sole aim of Fair trade is to ensure the well being of the workers and the producers and in this process the first is to provide opportunities to the producer because only when the producer has opportunities, it can be passed on to the workers. "Transparency and accountability, Fair trade involves transparent management and commercial relations to deal fairly and respectfully with trading partners." (Key Principles of Fair trade, 5 February 2009). Another important principle of Fair trade is to make sure transparency exists in every activity initiated by it, in the sense that every activity initiated by Fair trade should be without any fusses and problems, fair rules and policies are followed hence ensuring the economic and financial safety of the producer. Another important principle is to make sure that the producer gets complete independence, in the sense that he/she shouldn't have restrictions hampering their growth, it provides a very good platform for the growth of the producers and it also improves their marketing skills by giving them access to the market where they get to know so many things which they wouldn't have learnt had they not participated in Fair trade. Some other important principles include, Gender equality, providing a good environment, a policy of fair price etc. Fair trade is not mutually exclusive to men, it is open to men as well as women and no discrimination on the basis of gender or for that matter on the basis of anything takes place when people participate in it. The environment provided to the people who participate in Fair trade contributes a lot in their growth; the environment provided to the people is very desirable and appropriate for the producers and the workers to grow as individuals. The people who represent Fair trade also make sure that the price policy adopted is very genuine to all the members who participate in it, no double standards are followed by the committee members, it treats everyone equally regardless of their background or how strong/weak their position is in the market. Fair Trade Brands As discussed earlier there are some areas which are being specifically targeted by Fair trade for instance the coffee industry, the tea industry etc. The people around the world never mind paying a little extra money to get the tag of fair trade premium, this gives them satisfaction instead and they realize that the farmers in the developing countries are not being exploited. The concept of Fair trade branding can be better understood with the help of an example, which is as follows: "The fair trade food market has become so hot, that Tesco launched on Monday its own fair trade brand, while the rival Co-op chain is doubling its line. Tesco's new own Fair-trade brand includes orange juice, mangoes and roses, as well as the coffee, tea and chocolate it has kept in stock for many years." (How fair trade hit the Main stream). The main aim of the company is to have a customer base who have always bough the products generated by Fair trade. There are so many consumers all across the globe who prefer the products with the tag of Fair trade on it and the endeavor of the company is to make sure that the product launched by them is liked and consistently bought by those consumers. "Fair-trade Foundation, the organization which promotes better working conditions and trade terms for developing world producers, says annual fair food sales have hit the 100m mark." (How fair trade hit the Main stream). The facts are in front of everyone to see and to make the most of it, this is exactly why Tesco launched its own Fair trade product and the global reach of Fair trade provides an excellent opportunity to all the producers across the globe. The Fair trade products have become very popular and the same has been done by spending very little money on advertisements of the Fair trade brands. The consumers are more than happy to pay a little extra amount for the products generated by the producers who participate in Fair trade. The global reach of Fair trade is undeniable and it has gained popularity with in no time, the 100m mark achieved by the sales of the products is a good enough indication of the same. "Data show that Britons are avidly buying fair-trade groceries, organic foods, and sustainably farmed produce. Experts speak of a cultural shift in which foodstuffs once considered niche and expensive are now going mainstream." (Fair Trade Food Booming In Britain). Fair trade is picking up in European countries; it is immensely popular in Britain and it is expected to spread to other countries too within no time. "In late 2005, Nestle, one of the world's most controversial companies, released its own Fair-trade coffee: Partners' Blend." (How Fair is Fair Trade). This is another example of how big companies are taking notice of how well the Fair trade products are doing in the market; every company is always looking to make the most of the opportunity and there can be hardly be a better opportunity than the one presented by Fair trade. Initially Nestle considered that Fair trade is bad for the companies and decided not to be a part of it but the market forces have proved the company wrong, the company officials are quick to acknowledge their mistake and they just want to make sure that they learn something from their mistake. The product launched by them has already surpassed their expectations and the company had certainly made the most of the opportunity presented by Fair trade. Conclusion Fair trade products have become an instant hit in the market and more and more consumers are opting to buy Fair trade products. The products have shown a global reach which is the biggest advantage, more and more companies are launching their own brand of Fair trade products, this only goes to show one thing, which is that the marketing strategy for their trade brands is very sustainable. The Fair trade brands have already become instantly popular among the consumers and the brands will only get more popular as time passes by. Very little money is required to be spent in order to promote the Fair trade brands; this is very evident from the example of the companies used in the paper. The same is a clear indication that the marketing strategy for the Fair trade brands is very sustainable. References Fair Trade Food Booming In Britain. In The Christian Science Monitor. Retrieved on 1 December 2009 from: http://www.csmonitor.com/2007/0313/p01s03-woeu.html How Fair trade hit the Main stream. In BBC News. Retrieved on 1 December 2009 from: http://news.bbc.co.uk/1/hi/business/3522059.stm How Fair is Fair Trade In BBC News. Retrieved on 1 December 2009 from: http://news.bbc.co.uk/1/hi/business/4788662.stm Key Principles of Fair trade. In Manly. NSW. Retrieved on 1 December 2009 from: http://www.manly.nsw.gov.au/IgnitionSuite/uploads/docs/Key%20Principles%20of%20F air%20Trade.pdf Read More