Loss Leader

EMM Glossary Term: Loss Leader

A product sold at a loss to obtain customers to initiate buying. One of the main purposes of a loss leader strategy is to attract attention of the buyers when they come to buy other goods. The merchant hopes that the regular buyer will get different things at the same time as the loss leader items and that the benefits made on these products will cover the loss on margin. Loss Lead characterize the conception that a product is granted for selling at a discounted worth and is planned to “lead” to the successive selling of different products, the selling of which will be earned in bigger numbers or benefits, or both. It is granted at the worth under its minimum benefit margin – unquestionably below value. The company tries to keep an ongoing study of its reports for both the loss lead and the linked products so it can track how good the plan is working, as fast as possible, through that never recording a long-term final cost.

Marketing tutors have presented that vendors should think of both straightforward and implied aftermath of significant worth breakthrough when estimating their hit on revenue. To get a very actual study one should also add aftermath over time. Wide price breakthrough may create Bulk-buy which may abolish the long-term aftermath of the policy.