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 ?
4-75-201 through 4-75-211, Wal-Mart was found to be illegally selling at loss leader predatory prices.
Alcohol is in real terms, much cheaper than it was two decades ago and some supermarkets seem intent on using it as a loss leader.
They do this as a loss leader to get people into the store but pubs cannot compete because we depend on sales of beer for our livelihood, so it cannot be a loss leader for us.
Using potatoes as a loss leader and reducing their price strips value out of the supply chain, analysts and potato industry leaders have warned retailers.
Why should they get away with selling it as a loss leader to entice the gullible into their shops?
Shops do not sell alcohol as a loss leader, they profit on sales of it.
The Pops could be seen as a loss leader, bringing far more money into the city than the cost of support
As a result, they stand to see significant time and cost savings--a welcome development in a line of business that, for years, was considered a loss leader in the property/casualty segment.
Lefcourt says, ``When you're about to mourn the fact that TV's given up, 'Arrested Development' stays on the air, almost to make a point - it's like a loss leader to Fox.
Dairy farmers have long complained that big chains use milk as a loss leader.
There was a steady erosion of mom-and-pop stores -- about 1,000 of them went bankrupt in 1995 alone; anyone who didn't use music as a loss leader was getting killed.
The free ISP model is regarded as a loss leader marketing tool by many of the larger operators, a method to steer subscribers into e-commerce sites.