The loss leader product is that consumer good which has a lower price than its market value.
Difference between loss leader product and bait pricing
The marketing technique of loss leader products is used in the Large-scale retail trade (GDO) (and not only) to attract consumers and encourage the multiple purchase of product units.
A kind of decoy that promotes the sale of related products.
The bait price is the amount given to that product, often branded, which is the trick to encourage higher than average purchases of that good.
Advantages and strategies of the loss leader product
It won't be important how many units are sold of the individual promotional item (there will most likely be an economic loss on the part of the producer), but, in addition to the probable increase in foot traffic at the point of sale, it will also be possible to conduct experiments on launching new products, new
packaging or an innovative line of the brand.Examples of loss leader products
The loss leader product tends to be used primarily to increase subsequent sales of complementary products.
Complementary products are those that are needed to use the loss leader product itself.
The classic example of a complementary product is the razor which requires blade refills. Other loss leader products include online subscriptions (Netflix, magazine hosting and so on) that have a very aggressive one-time price and a monthly increase.
The loss leader product aims, therefore, to increase customer loyalty towards a specific brand.
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