Question

The owner of a neighbourhood hardware store has decided to sell a set of three padlocks for $5. he hopes the below-cost price for the locks will attract current and new customers who will also buy regularly priced items. the owner is encouraging store patronage through which of the following?

a. variable maintenance
b. psychological pricing
c. price maintenance
d. loss-leader pricing

Answer 1

The hardware store owner is using loss-leader pricing to attract customers in the hopes that it will increase sales of other regularly priced items.

Step-by-step explanation:

The owner of a neighbourhood hardware store who sells a set of three padlocks for $5, below the cost price, to attract customers is using loss-leader pricing. This strategy hopes to increase store patronage by offering a product at a loss to encourage the purchase of other regularly priced items. This approach is different from practices like predatory pricing, which aims to eliminate competition, or psychological pricing, which targets consumer perceptions.