Discuss how the following strategies relate to the price-discrimination principles presented in this chapter.
Wildeck, Inc. began manufacturing storage-rack protectors used to keep forklifts from damaging the corners of racks on factory floors about five years ago. However, a competitor began producing a similar product made from lighter steel that was
priced 15 percent lower. Instead of lowering its price, Wildeck introduced a "lite" version of its protectors that sold for less than the competitor's product. Customers who inquired about the lite version were told the advantages of the heavier-duty product and often ended up buying the original. This strategy helped Wildeck hold its market share and institute a 5 percent price increase.
The Union Pacific railroad developed its "blue streak" service in September 2001 that promised to get shipments from Los Angeles to Atlanta in five days. This strategy allowed the railroad to compete more directly with truckers and charge up to a 40 percent premium over regular rail service. However, the service costs increased only slightly for Union Pacific.