You have many options available to you when it comes to attracting new customers. You could offer a two-for-one sale that can bring a great deal of value to potential buyers. You could offer a free bonus. Or maybe you could try your hand at using a loss leader.
A loss leader is when you advertise one or more products at a significantly reduced price. This could be at or even below cost, so you won’t be making any money directly from the sale of this loss leader product. The idea is that this can stimulate sales in other areas that are much more profitable.
You’ll find that strategy used by a variety of retail stores, particularly around competitive shopping seasons like Christmas. By using a loss leader, these businesses are able to attract customers into their stores and, hopefully, these customers will buy items above and beyond the loss leader.
There will certainly be some people who will only buy the loss leader and you may suffer a loss on these transactions. However, in the overall scheme of things, a well-designed loss leader promotion could generate much more total revenue than a sale without one.
Minneapolis Duct Cleaning
November 6, 2009 6:03 pm
Personally, I understand the marketing behind a loss leader and I take advantage of them whenever I can. I rarely, however, use it more than once because I know that in the truest sense of the word, the retailer is losing money on it already.
Richard
November 7, 2009 8:47 am
nice post. Two-for-one sale is probably one of the oldest and most successful strategy. I use the ‘package’ version of this. I offer some products in packages (of course it’s a bit cheaper) for my costumers. I can assure you that it works perfectly!
Bratwurst Recipes
November 12, 2009 1:37 am
Very good post!
Yes, I totally agree with you; there are available many options to attract new customers. Definitely when you use “Loss Leader Pricing” you can increase traffic to your store, gaining new costumer and probably returning visits because people love bargain. Plus that you can move overstock.