Identifying The ‘Loss Leader’

The ‘loss leader‘ advertising strategy is one many people are unaware of. I recently was asked by a potential customer why my quote on a 2gig usb was more than a similar one they found at one of the big box stores. After a detailed explanation about the ‘loss leader’ effect, I did get the order. But I feel that a further explanation is needed.

Flash drives (usb drives) are perfect items for big chains to draw people into their stores. They use these items as ‘loss leaders’. Simply put, a ‘loss leader’ is any item that a company will sell at or below cost to entice customers into their stores to gaze upon the real money makers, the big ticket items like LCD tvs or computers.

The store will take out huge ads, in print or on tv, that advertises flash drives at unbelievable prices. With the seed planted, customers flock to the stores to get in on the great deal, usually with a limit of 1-2 per customer. The big chains are hoping that while they are in the store, carefully placed plasmas and other electronics will speak to them and their wallets. This is a very inexpensive form of advertising for the company and in the end, they really don’t ‘take a loss’ on their bottom line. And oh yeah, those deals on flash drives? No custom colours, no logos, no returns or no refunds.

So there really is no comparison to the flash drives you order from a promotional items distributor. Putting your logo on an item entails more than just the value of the item. It’s the value of your brand.