How does this differ from the “product cross-subsidization”
In your marketing class you may have learned about a “loss leader”—a product sold below cost in order to attract customers in the expectation that they will also purchase other products that are profitable. How does this differ from the “product cross-subsidization”
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Pricing Market Strategies
Every business needs to attract consumers to try its products before it can acquire a stable market share within the existing conditions. Therefore, some retailers could be ready to take a momentary loss on the products sold by setting the prices therein relatively lower than is the case within the market, a strategy known as the loss-leader approach (In & Wright, 2014). In contrast, some retailers could set their prices at a level relatively higher than that set by other retailers, in the product cross-subsidization approach, which implies that consumers end up having less price incentive to purchase their goods.
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