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 ?
After my years working in retail, I know certain products are discounted as loss leaders in an effort to get people into the store and keep them coming back.
Many stores employ "loss leaders" during the back-to-school shopping rush.
One expert said: "Supermarkets used to use bread, milk and beans as loss leaders to tempt shoppers in.
OPERATION Transformation yesterday called on the next generation of weight loss leaders to step up to the plate.
Superstores have loss leaders, why can't either bus company run a bus that actually passes the cemetery, especially at the weekend?
With supermarkets using Easter eggs as loss leaders to get customers through the door, it's now cheaper than ever to stock up on sweet treats not just for the kids, but for the whole family.
"They are selling them as loss leaders and there is no way we can compete with that because they are selling them for less than they cost.
There's a real uptick after sales were in the doldrums for months, but the loss leaders may not last.
While 'loss leaders' may be considered an acceptable marketing technique, it is certainly not acceptable that it should be the producers, and not the retailers, who incur the loss.
Outside the "loss leaders", many items are no cheaper than elsewhere.
But the National Institute for Health and Clinical Excellence believe that if supermarkets cannot entice customers with cut-price booze, they will use food as "loss leaders" instead.
Mr Grayling called for new powers for communities to restrict the number of licensed premises and curb late-night opening, and for an end to loss leaders on supermarket alcohol sales.