Loss Leader for Dummies

Loss leader refers to a marketing strategy that businesses commonly use to attract customers by offering products or services at a price lower than their actual cost. It's like when you see a store selling a popular toy or video game at a really low price, like almost too good to be true. It may seem odd, right? Why would a store sell something for less money than they paid for it? Well, that's where the term "loss leader" comes into play.

Think of a loss leader as a super tempting offer. The business knows that if they can grab your attention by showcasing a really awesome deal, you'll be drawn into their store. It's kind of like shining a bright light in a dark room - your attention is immediately directed to that light. Similarly, the store wants to catch your attention by offering a product at a price that seems impossible to resist. Once you're in the store, the hope is that you'll not only buy the loss leader product but also end up buying other items at their regular prices. It's like the store is saying, "Hey, want this really cool thing at a ridiculously low price? Well, while you're here, maybe you'll also find some other amazing things."

So, in simple terms, a loss leader is a super cheap product that businesses use to attract customers, with the intention of making up for the loss they incur on that item by selling other products at their usual prices. It's like a store baiting you with an incredible deal to get you to spend more money overall. The store may not make much (or any) profit on the loss leader, but they hope to make up for it with all the other items you'll purchase alongside it.