March 22, 2012 by RBDenterprise 1 Comment Retail store marketing, are loss leaders a good pricing strategy? Loss leader pricing is a strategy used by retailers where they price and advertise an item at or well below cost in order to attract buyers into their store. Think about it this way, you see an ad for a Bluetooth headset you need at a store where you usually don’t shop, and the price is amazingly low. Consumers are always looking for the lowest price products, but they also are so used to convenience, that store hopping to get the lowest price on everything they buy is inconvenient, or with the price of gas cost prohibitive. October 18, 2012 by RBDretail Leave a Comment In the world of wireless sales, finding ways to increase your success is something that everyone is doing. Loss leader pricing is a strategy where retailers price and advertise an item at or well below cost in order to attract buyers into their store. In practice, a store will price an accessory ridiculously low, and customers will find other accessories, headsets or new phones while they are in the store. Consumers are always looking for the lowest priced products, but they also are used to convenience. Move Overstock: In the case of the Eyecare Professional selling eyeglass frames (at wholesale) to sell lenses and add ons. Discontinuing a Product Line or Product is Not Longer Available: Nothing is worse than having 3-5 styles of a particular brand.
Brand Awareness: You are losing sales on branded product due to competition and or the Internet.
Change Image: Maybe you lost some patients because they think (thought) you were too expensive. Make sure you and staff know and understand the retail strategy to move product and focus on profitable items. If your company has a high quality product, with longer life than your competition’s, then it’s essential that your salespeople don't capitulate to customer price threats. When a customer says “your price is too high,” what they really mean is that reducing expenses is important to them. The above video provides insight into the critical steps salespeople should use in business-to-business negotiation. One way to help your customer save money is by using a consignment inventory agreement.
Extended Payment Terms: If the customer isn’t willing to prepay, or is simply not interested in prompt payment, then it might be worthwhile to offer extended terms on invoices. Use “Loss-Leader” Product Lines: Take the time to look at some of those “me-too” product lines within your company. One of the best examples of a loss-leader pricing strategy is the one adopted by Sony with its PS2 and PS3 gaming consoles. If your company is selling a high quality product that deserves its price tag, then take the time to empower your salespeople on the ins and outs of selling the product. If you take the time to come up with some innovative ways to save your customers money other than lowering your price, then you’ve protected your product’s market position, and solved your customer’s going concerns.


One of the more important strategies sales must employ is defending business as the incumbent supplier. January 20, 2015 by RBDenterprise Leave a Comment Loss leaders, items sold at a huge discount to increase traffic into your retail store, work to drive regular sales. Loss leader pricing is a strategy used in retail stores where they price and advertise an item at or well below cost in order to attract buyers into their store. Think about it this way, you see an ad for a Bluetooth headset you need at a retail store where you usually don’t shop, and the price is amazingly low. Consumers are always looking for the lowest priced products, but they also are so used to convenience, that store hopping to get the lowest price on everything they buy is inconvenient, or with the price of gas cost prohibitive. If your business depends on continued business, or the products you sell are not consumables that need to be replaced with regularity, consider that even if you take a loss on the first sale, establishing the relationship with the customer at the time of the first sale will bring them back and then you can make up the difference on future sales.
Some product manufacturers will not allow you to use loss leader pricing, and in some states it’s illegal to sell below cost.
The Houston Chronicle is the premier local news provider for the country's 4th largest city. Currently the nation's sixth-largest newspaper, the Houston Chronicle is a multimedia company publishing print and online products in English and Spanish that reach millions of people each month. Say you find you have an overstock or need to increase brand awareness and traffic and someone suggests using the loss leader pricing strategy, is this a technique you should consider for your retail store?
This is done in the hopes of increasing traffic and that customers will purchase regular priced items at the same time.
So you go and while you’re there, you realize you need ink for your printer and an SD card for your camera.
If your business depends on continued business, or the products you sell are not consumables that need to be replaced with regularity, consider using a loss leader – even if you take a loss on the first sale, establishing the relationship with the customer at the time of the first sale will bring them back and then you can make up the difference on future sales. The strategy is to bring them in or increase traffic, in the hopes that customers will purchase regular priced items at the same time. The other items are at regular price, or maybe even at a price that is higher than customers would pay somewhere else, but they will buy out of convenience. Going from store to store to get the lowest price on each item they want to buy is inconvenient, or with the price of gas, cost prohibitive. If your business depends on continued business, and realistically most are, or the products you sell are not consumables that need to be replaced with regularity, consider that even if you take a loss on the first sale, establishing the sales relationship with the customer at the time of the first sale will bring them back and then you can make up the difference on future sales. Also check with legal counsel or your state’s business regulation division as it is illegal to sell below cost in some states.
Chances are they are employing Loss Leader Pricing to drive consumers into their store. Loss leaders are goods or services offered at deep discounts (sometimes below cost) in order to attract new customers to a store. Your loss would only be the profit margin on frames and you could more than make up for it on the lens margins. I believe using Loss Leader pricing at certain times of the year (particularly at the last quarter) can increase sales, decrease inventory  and bring in new traffic, especially now going into our last couple of months and a good way to get people to use their flex benefits! Once a salesperson and the customer agree that price alone isn’t the driving factor, they are then able to move forward on more proactive means of saving the customer money.


In this case, it's a price threat that points to another more important issue: The customer needs to control expenditures. The moment your customer expresses a concern about price, you should immediately attack the situation head-on. In this case, the company will provide the customer with net-10 day terms and a 1% discount on its invoices.
Quantify its value in a way that speaks directly to the customer’s concerns about saving money.
This is not the best method to use, but if the sale is extremely important to your company, and you can’t risk losing to the competition, then keep your pricing as is (to protect your market position) and offer extended terms.
The company intentionally sold these products to lose money in order to secure high profit on the sales of games and software.
The ink and SD card are at a price that is higher than you’d pay where you usually shop but you think “well I’m here already” or “with what I saved on the Bluetooth it’s worth it” and buy it there instead of waiting. The loss in profit on that item is made up for by the regular or higher price items they buy when in the store along with the discounted item.
Wireless sales can be tricky, but using some great strategies to increase store traffic will also lead to increased sales. Loss Leader comes from the idea that an item is sold at a loss in order to lead the customer to another better selling or profitable item. By cutting the price, you should be able to move stock, reduce inventory, increase cash flow, and make room for new product plus saving time and money by not returning frames. Loss leaders can be used as a marketing tool, Facebooked, Tweeted and more to increase your talk factor.
Moving customers away from a product's price, and onto reducing costs, is one way to ensure that your company maximizes its gross profit on sales.
If the customer needs them, then throw them in as part of the order – at a much lower price of course. Send me an email.Please subscribe to my blog's feed or follow me on YouTube, Linkedin or Twitter. The loss in profit on that item is made up for by the regular or higher price items they buy when in the retail store along with the discounted item. Also, when advertising, be sure to add “while supplies last” to avoid being held to the price past the advertisement or having to give rain checks. The loss in profit on the loss leader item is made up for by the regular or higher priced items they buy when in the store along with the discounted item. More importantly, it sends signals to customers that they can get a higher quality product for the price of a lower quality one. Most customers will come to understand that, if and only if, the salesperson gets them thinking about other ways to save money.



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