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Use (Repeat after me:)

When to Use Loss Leader Pricing

Early morning shoppers Christmas eve

Move Overstock

Brand Awareness

Increased Traffic

Razor Blades

Implementation

If you have merchandise that needs to be sold, either because it is due to expire, or you just need the shelf space, pricing the items exceptionally low can make them simply run off the shelves and can help make up at least a portion of the cost.

Consistent loss leader pricing can build your brand as a loss-leader that will continue to draw customers, even for products that are not on sale.

when a business first enters a new market

when you have products at the end of their life cycles

for a business-to-business product

e-commerce situations

iPhone contract

Advantages

Disadvantages

  • Sales increase
  • New stores
  • Merchandise elimination
  • Marketing

Conclusion

Risk of loss

Stockpiling

Pricing perception

What does it all mean?

Loss leaders are goods or services offered at steep discounts in order to attract new customers to a store.

1. Using a loss leader can be detrimental to relationships with suppliers

2. Make sure your business will be able to absorb the financial

3. Make sure you have enough of your chosen product in stock.

4. Place your loss leaders somewhere obvious

5. Change your loss leader or its merchandising every so often

6. Remember to draw attention to your loss leaders

People say...

The intent of this pricing strategy is to not only have the customer buy the sale item, but other products that are not discounted.

...that this is an aggressive cost setting strategy

...that loss leaders are "door busters"

(loss leader pricing places the price of stuff at levels lower than necessary to make a profit, hoping they'll sell you other stuff by getting you in the door)

Loss leader pricing strategy

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