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 ?
As I am currently not allowed to have all these machines and games at the back of my joint and must rely solely on my prices, not only to be competitive but also to produce a margin, I am unable to offer any loss-leader attractions.
Engagements are not priced on a loss-leader concept, at least not for very long.
He added: "Many reasons for this are outside landlords control, like increases in excise duty and beer being sold in supermarkets as a loss-leader.
The drinks industry has come under repeated fire for selling alcohol as a loss-leader.
ALCOHOL no doubt has a major role in fuelling anti-social behaviour and downright yobbery, aided by supermarkets off-loading beer as a loss-leader in the same way they used to flog cheap bread.
loss-leader, with 100 per cent of the pool returned to punters.
Supermarkets regularly have loss-leader products to entice people into their stores.
The suit is ongoing, but in the meantime, the return of loss-leader pricing has left the industry with an even more pressing problem on its hands: Cheap rates offered on Backstreet Boys and Limp Bizkit hits by Best Buy and others (Wal-Mart sold the Backstreet LP at $11.
Already there are reports from retailers that the merchandise is yet again serving as a loss-leader.
Angry pig farmers have accused supermarkets in the Irish Republic of killing their industry and driving them into bankruptcy through loss-leader offers.
It had aimed to use the games as a loss-leader to drive subscriptions.
Sundays are not a loss-leader but there is not an enormous profit, though more than with normal midweek days.