Question

During the summer months, the local drug store displays everything needed to make s'mores at the front of the store in a campfire display. The store owner runs a special on one of the items every week. Even though he only runs a sale on one item, he manages to make a big profit on all of the items on the display. Which marketing technique can be attributed to him profiting from the sales of all of the items on the display?
A
Predatory pricing
B
Misleading Advertising
C
Bait advertisement
D
Loss leading

Answer 1

Answer:

D: Loss leading

Explanation:

Loss leading or the loss leaders is the concept where we decree the price of certain well known and popular products to such a level that customers are amazed. We even start selling that product below its cost as well. The basic logic behind loss leaders is to increase the store traffic and therefore increasing the sales. For example, if everyone is selling eggs at $2 per dozen, and you get it at $1.5 from the whole seller then you can either sell it at the same amount on which you purchasing it from the whole seller, at $1.5 or even below than this at £1.3. People knows that eggs are usually sols at $1.5 but your concept of loss leading will attract them towards your store, and besides purchasing eggs at $1.3, they will also but many other high profit margins products as well.