Both leader pricing and bait pricing involve advertising a product at a very low price, typically far below what it would normally sell for in the market and often even below what you paid to get it.
The difference is that under leader pricing, you actually do sell that product---often even taking a loss when doing so---while under bait pricing, you avoid actually selling the product by claiming it is "unavailable" whenever someone asks for it.
In both cases, businesses are reducing prices to sell a product, not to make more money on that product, but to make more money on other products; they assume (often correctly) that once you get people into your store they'll be more likely to buy whatever products you sell, including those that have high profit margins. The marketing mix is therefore a combination strategy between the leader product (or bait offer) and the more profitable products you hope to actually sell.
Both tactics can be considered unfair anti-competitive practices, and bait pricing especially is illegal in most jurisdictions.
No comments:
Post a Comment