Shopping on line can be easy, simple and save you lots of money. It can also take a lot of your time, frustrate you, and result in unwanted purchases. Now the same can be said for regular high street shopping, but with the vast opportunity presented by the Internet it will pay you to spend a few minutes reading this and understanding how to better optimize your Loss Leader shopping experience:

1. Compare - without doubt the biggest advantage that the Loss Leader offers shoppers today is the ability to compare thousands of Loss Leader at a time. This is a great thing, but not necessarily all the time! Too much can be daunting at times so take advantage of the great comparison sites and where possible let them do the hard work for you.

2. Research - if it has been said it will be on the internet. Ignorance is no longer a justifiable reason for buying the wrong thing. Take the time to research in detail everything that you could possible want to know about

3. Testimonials - don't know anybody that has bought a Loss Leader? Wrong! If the Loss Leader is good the internet will let you know. Use the Internet as a friend and get testimonials before you buy.

4. Questions - Got a question about Loss Leader then search the Forums, FAQ's, Blogs etc. Don't be afraid to ask .....

5. Reputation - Never heard of the company selling Loss Leader? Don't worry, no reason why you should know every company in the world, but you know someone that does! Use the internet to find out what people are saying about Loss Leader and build up a picture of their reputation for sales, returns, customer service, delivery etc.

6. Returns - still worried that even after all of the above your Loss Leader wont be what you want? Check out the returns policy. There is so much competition now that someone, somewhere is bound to offer the terms that you are comfortable with.

7. Feedback - happy with your Loss Leader then let people know, after all you are depending on others people input in your buying decision, so why not give a little back.

8. Security - check for the yellow padlock on the Loss Leader site before you buy, and the s after http:/ /i.e. https:// = a secure site

9. Contact - got a question about Loss Leader, or want to leave a comment then check out the sites contact page. Reputable companies have them and respond.

10. Payment - ready to pay for your Loss Leader, then use your credit card or PayPal! Be aware of companies that don't accept them, there may be genuine reasons but given the huge amount of choice you have when buying online there is no reason at all not to buy via credit card or PayPal.

In marketing, a loss leader (also called a key value item in the United Kingdom) is a type of Pricing strategies where an item is sold below cost in an effort to stimulate other, profitable sales. It is a kind of sales promotion. Sales of other items in the same visit One use of a loss leader is to draw customers into a store where they are likely to buy other goods. The vendor expects that the typical customer will purchase other items at the same time as the loss leader and that the profit made on these items will be such that an overall profit is generated for the vendor. Marketing academics have shown that retailers should take both the direct and indirect effect of substantial price promotions into account when evaluating their impact on profitability.Van den Poel Dirk, Jan De Schamphelaere, Geert Wets (2004), "Direct and Indirect Effects of Retail Promotions," Expert Systems with Applications, 27 (1): 53-62. To make a very precise analysis one should also include effects over time since deep price promotions may induce stockpiling, which may invalidate the effect of such product associations, typically discovered by association rule learning analysis.Vindevogel B., Dirk Van den Poel, and Geert Wets (2005), "Why promotion strategies based on market basket analysis do not work?". Expert Systems with Applications, 28 (3): 583-590.

An example would be a supermarket selling sugar or milk at less than cost to draw customers to that particular supermarket chain.

When automobile dealerships use this practice, they usually offer at least one vehicle below cost and must disclose all of the features of the vehicle (including the VIN). If the loss leader vehicle has been sold, the salesperson has no choice but to try to sell another vehicle at regular price. If someone is not the first person at the dealership when there is a "1 only at this price" vehicle for sale,it is not likely that he or she would find the car at that price near the end of the day. Loss leader vehicles are typically new vehicles and they are almost always base models that do not bring much profit to the dealership. However, at the end of the month, provided sales have been good, the manufacturer may choose to give give the dealership bonus money. If the dealership is a certified dealership, e.g., Ford "Blue Oval Certified," part of their advertising funding will come directly from Ford. This bonus/ad money will often be used to pay for the loss of profits with the loss leader. Loss leaders help generate lots of foot traffic at vehicle dealerships.

Characteristics of loss leaders

• A loss leader may be placed at the back of a store, so that purchasers must walk past racks of other displayed goods which have higher profit margins.
• A loss leader item is usually a product that customers purchase frequently—thus they are aware of the usual price and that the offered price is a bargain.
• Items offered as loss leaders are often very limited in number, which discourages stockpiling by customers. A retailer must subscribe to this method of selling on a regular basis in order to compel customers to make repeat visits.

Sales of related items over time This is also known as the razor and blades business model, referring to the most famous example. Razor handles are sold at a loss, but sales of disposable razor blades are very profitable. American businessman King C. Gillette famously invented this business model, in which safety razors were sold or even given away as loss leaders so that his company could profit by selling disposable razor blades.

This practice is commonly used with video game console makers that sell their console units at very low margins, or even at a loss, to achieve a higher market share. They rely on profits from software sales where the markups are considerably higher. They also receive profits from third party software companies for licensing fees. Microsoft has used this technique with the Xbox and Xbox 360. Sony has done the same with the PlayStation 3 (PS3) and, to a lesser extent, with the PlayStation 2 and PlayStation Portable. This also translates to higher prices that are charged for the games and for original console accessories such as game controllers. Furthermore, the price of a game developed for multiple platforms (for example, Xbox 360, PS3, and Personal computer) is typically the same across all of those platforms, even if one or more of the platforms is not actually a loss leader (in this example, the PC; however, Nintendo's Wii is also sold at profit, unlike its console brethrenhttp://www.gamasutra.com/php-bin/news_index.php?story=11103).

Inkjet printers are also often sold to retail customers below their true value and could also be viewed as loss leaders. Some of the printers, especially the entry-level models, are sold at a loss-leading price which seems apparently affordable to most consumers, but they pay the regular price for ink cartridges and specialty papers supplied by the manufacturer.

Dealers who normally use "fruitshop" style trading methods--stocking small quantities of a variety of products, cannot compete with loss leaders by negotiating to buy larger quantities of consumables at a lower price because they would still have to sell at a loss to be competitive.

Loss leaders can be an important part of companies' marketing and sales strategies.

References

In marketing, a loss leader (also called a key value item in the United Kingdom) is a type of Pricing strategies where an item is sold below cost in an effort to stimulate other, profitable sales. It is a kind of sales promotion. Sales of other items in the same visit One use of a loss leader is to draw customers into a store where they are likely to buy other goods. The vendor expects that the typical customer will purchase other items at the same time as the loss leader and that the profit made on these items will be such that an overall profit is generated for the vendor. Marketing academics have shown that retailers should take both the direct and indirect effect of substantial price promotions into account when evaluating their impact on profitability.Van den Poel Dirk, Jan De Schamphelaere, Geert Wets (2004), "Direct and Indirect Effects of Retail Promotions," Expert Systems with Applications, 27 (1): 53-62. To make a very precise analysis one should also include effects over time since deep price promotions may induce stockpiling, which may invalidate the effect of such product associations, typically discovered by association rule learning analysis.Vindevogel B., Dirk Van den Poel, and Geert Wets (2005), "Why promotion strategies based on market basket analysis do not work?". Expert Systems with Applications, 28 (3): 583-590.

An example would be a supermarket selling sugar or milk at less than cost to draw customers to that particular supermarket chain.

When automobile dealerships use this practice, they usually offer at least one vehicle below cost and must disclose all of the features of the vehicle (including the VIN). If the loss leader vehicle has been sold, the salesperson has no choice but to try to sell another vehicle at regular price. If someone is not the first person at the dealership when there is a "1 only at this price" vehicle for sale,it is not likely that he or she would find the car at that price near the end of the day. Loss leader vehicles are typically new vehicles and they are almost always base models that do not bring much profit to the dealership. However, at the end of the month, provided sales have been good, the manufacturer may choose to give give the dealership bonus money. If the dealership is a certified dealership, e.g., Ford "Blue Oval Certified," part of their advertising funding will come directly from Ford. This bonus/ad money will often be used to pay for the loss of profits with the loss leader. Loss leaders help generate lots of foot traffic at vehicle dealerships.

Characteristics of loss leaders

• A loss leader may be placed at the back of a store, so that purchasers must walk past racks of other displayed goods which have higher profit margins.
• A loss leader item is usually a product that customers purchase frequently—thus they are aware of the usual price and that the offered price is a bargain.
• Items offered as loss leaders are often very limited in number, which discourages stockpiling by customers. A retailer must subscribe to this method of selling on a regular basis in order to compel customers to make repeat visits.

Sales of related items over time This is also known as the razor and blades business model, referring to the most famous example. Razor handles are sold at a loss, but sales of disposable razor blades are very profitable. American businessman King C. Gillette famously invented this business model, in which safety razors were sold or even given away as loss leaders so that his company could profit by selling disposable razor blades.

This practice is commonly used with video game console makers that sell their console units at very low margins, or even at a loss, to achieve a higher market share. They rely on profits from software sales where the markups are considerably higher. They also receive profits from third party software companies for licensing fees. Microsoft has used this technique with the Xbox and Xbox 360. Sony has done the same with the PlayStation 3 (PS3) and, to a lesser extent, with the PlayStation 2 and PlayStation Portable. This also translates to higher prices that are charged for the games and for original console accessories such as game controllers. Furthermore, the price of a game developed for multiple platforms (for example, Xbox 360, PS3, and Personal computer) is typically the same across all of those platforms, even if one or more of the platforms is not actually a loss leader (in this example, the PC; however, Nintendo's Wii is also sold at profit, unlike its console brethrenhttp://www.gamasutra.com/php-bin/news_index.php?story=11103).

Inkjet printers are also often sold to retail customers below their true value and could also be viewed as loss leaders. Some of the printers, especially the entry-level models, are sold at a loss-leading price which seems apparently affordable to most consumers, but they pay the regular price for ink cartridges and specialty papers supplied by the manufacturer.

Dealers who normally use "fruitshop" style trading methods--stocking small quantities of a variety of products, cannot compete with loss leaders by negotiating to buy larger quantities of consumables at a lower price because they would still have to sell at a loss to be competitive.

Loss leaders can be an important part of companies' marketing and sales strategies.

References

Loss leader - Wikipedia, the free encyclopedia
A loss leader or leader [1] (also called a key value item in the United Kingdom) is a product sold at a low price (at cost or below cost) [2] to stimulate other, profitable sales.

The Loss Leader
Using a loss leader pricing strategy to gain a competitive advantage ... Marketing and Sales - Advertising, PR, Mail, SWOT, Branding and Research - FULL ARTICLE LIST

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Internet Marketing Dictionary - Loss Leader ... Internet Marketing Dictionary > Loss Leader A lead product which is sold at a loss, to build customer confidence.

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loss leader - Hutchinson encyclopedia article about loss leader
Good which is deliberately sold below the cost of production in order to persuade customers to buy other products. For example, a supermarket may sell bread below cost in order to ...

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