Loss Leader Strategy
- A business strategy in which a business offers a product or service at a price that is not profitable for the sake of offering another product/service at a greater profit or to attract new customers. This is a common practice when a business first enters a market; a loss leader introduces new customers to a service or product in the hope of building a customer base and securing future recurring revenue.
The loss leader strategy is more than just a nifty business trick - it is a successful strategy if executed properly.
A classic example is that of razor blades. Companies like Gillette essentially give their razor units away for free, knowing that customers will have to buy their replacement blades, which is where the company makes all of its profit.
Another example is Microsoft's Xbox video game system, which was sold at a loss of more than $100 per unit to create more potential to profit from the sale of higher-margin video games.
Investment dictionary. Academic. 2012.
Look at other dictionaries:
Loss leader — A loss leader or leader [ [http://www.bartleby.com/61/46/L0084600.html Leader] , The American Heritage Dictionary of the English Language: Fourth Edition , Houghton Mifflin Company, 2000.] (also called a key value item in the United Kingdom) is a … Wikipedia
strategy — /strat i jee/, n., pl. strategies. 1. Also, strategics. the science or art of combining and employing the means of war in planning and directing large military movements and operations. 2. the use or an instance of using this science or art. 3.… … Universalium
Military strategy — This article is about real and historical warfare. For the computer game genre, see Real time tactics. Warfare Military history Eras Prehistoric … Wikipedia
nuclear strategy — ▪ military Introduction the formation of tenets and strategies for producing and using nuclear weapons. Nuclear strategy is no different from any other form of strategy in that it involves relating military means to political ends. In this … Universalium
Workforce Strategy Center — (WSC) is a nonprofit organization that works with federal, state and local workforce development and economic development agencies and community colleges to align policies and practices to help workers advance in a changing economy. The… … Wikipedia
Spotlight: Latin America's New Economic Strategy — ▪ 1995 In the 1990s the great majority of Latin American countries changed rapidly from the kind of economic strategy that many of them had been following since the Great Depression of the 1920s and 30s: away from state led development… … Universalium
Michael Collins (Irish leader) — Michael Collins Collins at the funeral of Arthur Griffith, (16 August 1922), six days before his own death. Chairman of the Provisional Government In office January 1922 – 22 August 1922 … Wikipedia
Console manufacturer — A console manufacturer is a company that manufactures and distributes video game consoles. It is also known as a first party video game publisher. Historically, some of the most recognized console manufacturers include: Atari – first console… … Wikipedia
Pricing strategies — for products or services include the following: Contents 1 Competition based pricing 2 Cost plus pricing 3 Creaming or skimming 4 Limit pricin … Wikipedia
Pricing — is one of the four p s of the marketing mix. The other three aspects are product, promotion, and place. It is also a key variable in microeconomic price allocation theory.Price is the only revenue generating element amongst the 4ps,the rest being … Wikipedia