Coupon marketing has highly evolved from what it used to be 20 years ago. With online coupon networks and social media sites entering the scene, the different methods of marketing coupons have increased in manifolds. It is much more complicated than ever before with jargons that are difficult to understand. In this article, UK coupons and deals website Wikigains explains the meaning of one such coupon-marketing concept called the loss leader.
The loss leader is a coupon strategy used in diverse aspects of advertising and marketing media. In layman terms, loss leaders refers to products or services that are often sold below wholesale prices to the suppliers or businesses. It is a strategy used to encourage more sales.
Depending on the items, their location, uses, and other factors, there may be different types of loss leaders. While some of them may be associated to a specific product and purpose, others may help in generating more sales.
Wikigains says store coupons are often used as loss leaders to clear old or unmoving stock. These are the items that stores sell at highly reduced prices to stimulate shoppers to purchase. The idea behind using loss leaders is that after customers arrive at the store, they will also be encouraged to buy some other items too.
Loss leaders strategy is also used to encourage the sale of products with a high-dollar coupon. So, when a customer buys an item using a high-dollar coupon, he also needs to purchase some associated products that do not have coupons. For example, a coupon for a battery operated toy that does not have batteries.
Ink Jet Printers – The Best Known Example Of Loss Leaders
Ink-jet printers have established themselves as the biggest examples of loss leaders. They have become so cheap that the manufacturer is almost giving them away to the customers. When you purchase a complete printer, you get two ink cartridges at the price of one.
The starter pack usually contains nominal amount of ink which runs out pretty fast but you get the printer at a “throwaway” price. The concept behind using loss leaders is to make the customer come back again to buy the highly priced ink cartridges. Customers get stimulated to replace their old printers with Ink Jet printers because they are cheaper than purchasing ink cartridges.
Benefits Of Using Loss Leaders
If a store owner uses loss leaders correctly, this can not only attract new customers but also bring back the old ones. The steep discounts are often difficult to resist by people who are loyal to other brands. Although this may result in an initial loss, the strategy may lead to huge profits at the end.
According to coupon experts at Wikigains, loss leaders also make your online store popular among customers as you come across as a brand that reduces prices in a difficult economy.
Wikigains warns of downsides of Loss Leaders
“Lack of preparation may turn out to be the biggest disadvantage of loss leaders. You must ensure that you have enough stock available to supply to a huge demand”.
“If you drastically lower the prices and mark the items too low, you may not be able to recover the money. You should also lead customers to buy non-discounted items or else you may end up incurring losses” says Alex Papaconstantinou of Wikigains.com.