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A fast food outlet advertises a large soft drink for only 20 cents, knowing that customers will also buy additional items from the menu once they are in the store - HSC - SSCE Business Studies - Question 17 - 2012 - Paper 1
Question 17
A fast food outlet advertises a large soft drink for only 20 cents, knowing that customers will also buy additional items from the menu once they are in the store. ... show full transcript
Worked Solution & Example Answer:A fast food outlet advertises a large soft drink for only 20 cents, knowing that customers will also buy additional items from the menu once they are in the store - HSC - SSCE Business Studies - Question 17 - 2012 - Paper 1
Step 1
What pricing strategy is this?
Answer
The pricing strategy being employed by the fast food outlet is known as a Loss Leader strategy.
Explanation
In this strategy, a product is sold at a price that is lower than its market cost to stimulate customer traffic. By pricing the soft drink at only 20 cents, the outlet aims to attract customers into the store with the hope that they will purchase additional items at normal prices.
This tactic is widely used in retail to entice customers, making them more likely to buy other, more profitable products during their visit.