Definition
A pricing strategy where a product is sold at a price that generates little or no profit, or even at a loss, with the goal of attracting customers to buy other, more profitable products.
Why it matters (in Poovi’s context)
Demonstrates a successful customer acquisition and sales strategy relevant to understanding competitive market tactics in any business, including insurance, where customer loyalty and cross-selling are key.
Key properties or components
- Low or no profit on the loss leader item
- Drives customer traffic
- Aims to increase sales of other products
- Requires careful margin calculation on other items
Contradictions or debates
None.