Loss leaders are high volume, high profile brands or products that are sold by retailers with the intention to attract customers into their premises, with the hope that those customers will end up buying other goods as well, once inside.

Definition: Loss leaders are high volume, high profile brands or products that are sold by retailers with the intention to attract customers into their premises, with the hope that those customers will end up buying other goods as well, once inside. Examples could be steeply discounted electronics, or consumer goods, or garments. A zero percent loan for cars is a loss leader example for the dealer.

Description: Loss leader brands or products are sold at very slim margins or at a loss, with the conscious understanding that other products in the retail outlet will make up for the loss. A mix of loss leader pricing and usual pricing could make up the overall margins. Loss leaders can be used by smaller retailers against the giant national chains to maintain their market share. It can also be used as a price segmentation tool.