What is a 'loss leader' in marketing?

A 'loss leader' in marketing refers to a product that is sold at a low price, often below its market cost, to attract customers with the aim of increasing overall sales volume and drawing them into the store or business. The strategy relies on the idea that once customers come in for the discounted item, they are likely to purchase additional products at regular prices, thereby compensating for the initial loss incurred on the loss leader item.

This tactic is commonly utilized by retailers to boost foot traffic, gain market share, or cross-sell higher-margin products. For example, grocery stores may sell milk or bread at a reduced price to bring in customers, knowing that they will likely buy other items that contribute to overall profitability.

The other choices do not accurately represent the concept of a loss leader. Options about selling products at high prices or focusing solely on product quality do not involve the strategic price reductions that characterize loss leaders. Also, the notion of restricting customer access to competitors does not align with the intent of attracting customers through price incentives.