Which pricing strategy involves selling selected goods below cost to attract customers?

The chosen answer, which identifies the loss leader strategy, accurately describes a pricing approach where certain products are sold at a loss, or below cost, specifically to draw in customers to the store or brand. This strategy is aimed at boosting overall sales volume by enticing customers with attractive prices on selected items, with the expectation that once drawn in, they will purchase additional items that generate a profit.

For example, a supermarket might sell bread or milk at a significantly reduced price to encourage shoppers to enter the store, where they may then buy other groceries at regular prices. This can effectively increase foot traffic and overall revenue.

The other pricing strategies listed do not share this characteristic. Price skimming involves setting high initial prices for new or innovative products and gradually lowering them over time and does not involve loss-leading practices. Promotional pricing refers to temporary price reductions to stimulate sales for a specific period or encourage specific buying behaviors, but it typically does not entail selling items below cost. Psychological pricing is focused on how pricing affects consumer perception, often involving strategies designed to make a price appear more attractive, rather than underselling items. Thus, these strategies differ fundamentally from the loss leader approach.