The loss leader concept can be used to bring customers into a physical store location or to access a website - in either case, selected merchandise that is much more profitable will be positioned near the loss leader product, so that buyers have every opportunity to make additional purchases.Ĭorrect merchandising is a key part of the use of loss leaders, so that buyers must walk past many other items in a store before finding the loss leader item. The resulting combined sale transaction is assumed (or hoped) to be profitable. This is done on the assumption that buyers will purchase other products at the same time that are considerably more profitable. Loss leader pricing is the practice of selling a small number of products either at or below cost.
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