Characteristics of loss leaders
A loss leader may be placed in an inconvenient part of the store, so that purchasers must walk past other goods which have higher profit margins.
A loss leader is usually a product that customers purchase frequently—thus they are aware that its unusually low price is a bargain.
Loss leaders are often scarce, to discourage stockpiling. The seller must use this technique regularly if he expects his customers to come back.
The retailer will often limit how much a customer can purchase.
Some loss leader items are perishable and cannot be stockpiled.
Some loss leaders, rather than being advertised as bargains, are high-end products offered below profit margin to enhance the company's prestige and/or to attract "lookers" who may buy other less expensive but more profitable merchandise.
Some examples of typical loss leaders include milk, eggs, rice, and other inexpensive items that grocers would not want to sell without other purchases.
Examples