Loss Leader Strategy

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Loss Leader Strategy

A business strategy whereby a company sells a product at a loss in order to sell the customer associated products for a profit. This is common when a company is new and wishes to build brand loyalty and other goodwill. For example, a grocery store may sell its bread for a loss and advertise its low price for bread in order to attract customers, who will likely then buy that same store's milk, eggs, and cheese. A loss leader strategy can be very profitable if executed properly. See also: Pricing strategy.
References in periodicals archive ?
Intuit's strategy is to allow the channel to use TurboTax as a loss leader, to drive traffic into stores, and still maintain some margin for retailers on sales of the higher-end deluxe product.
This has rendered carbonates a loss leader in the supermarket channel, and it looks like bottled water is heading in that direction as well.
This is manifested in wanting to ban happy hours in pubs and stopping supermarkets selling loss leader cases of beer and half price bottles of wine or discounted spirits.
The other issue is the continual supermarket selling of alcohol as a loss leader.
Mr Mills said: "Chicken is used as a loss leader in supermarkets, and when they run promotions they dictate the price to us and we cannot object because they enjoy a monopoly.
However, to make such arrangements work, the carrier and the TPA must view each other as a real partner--not as the loss leader of the relationship.
This class action suit may not halt the practice, but our intention is to make it a loss leader for Chrysler,' said Doug Abrams, lead attorney in the law suit" as originally issued.
There are pubs a week closing as supermarkets continue to lower drink prices and use alcohol as a loss leader.
Undoubtedly the DVD is a loss leader, designed to attract shoppers into the store in the hope they will spend more on other items.
The Pops could be seen as a loss leader, bringing far more money into the city than the cost of support
We are not a national company so there is no way we could run it as a loss leader.
If the present trend of shops using milk as a loss leader continues, many farmers will find it hard to invest in their future - because of the lack of income - and will doubt whether there is a future for them in milk production.