Friday, December 6, 2013

What is a Loss Leader?

Definition of Loss Leader

A Loss Leader is a sale item that a store offers for sale at a loss in order to attract a large number of people to the store.  The store stands to benefit from the increased amount of traffic at the store by selling other items at a profit.

For example, a grocery store could run ads that offer a box of cereal that normally sells for $4 for only $1.  The store will lose money on each box of cereal at this price, but people who come in for the cheap cereal are likely to buy other things as well, or even do all of their grocery shopping while they are there.

Loss leaders may be used to stimulate interest in Doorbuster sale events.

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