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Loss Leader strategy- businesses thought to use in increasing numbers

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When people talk about pricing strategies, one of the most mentioned is the ‘loss leader strategy.’ This involves pricing a product low enough to get customers through the door. Once there, the customers will likely spend more on higher ticket items. Essentially, the business sacrifices the loss leader to encourage customers to shop with them. But how effective is the strategy?

Loss Leader to Develop Loyal Customers

The loss leader strategy can be used to develop loyal customers to incentivize them to use a certain brand. Nightclubs and bars that offer happy hours do so as a loss leader strategy, with very little profit being made on each item. Instead, the customer becomes a loyal patron and may visit at other times.

They may also stay beyond the happy hour or spend enough due to the cheap prices to make up for the loss leader of the original happy hour offering. The goodwill gesture that can be seen in the reduced prices will be more likely to foster positive attitudes towards a brand or business, which will then cultivate a stronger relationship.

Loss Leader to Incentivize Against Competitors

Moreover, the online entertainment industry utilizes the strategy to get customers to try the product or service instead of those of a competitor. Customers can then indulge in more of what the entertainment site has to offer. As we can see, some new casinos in the USA offer no deposit bonuses as a loss leader to attract new customers. These range from no deposits to free spins and can be tailored to specific games. This means that they offer an incentive for customers to use them, and once on the site, the customer can engage with the online casino games they have on offer. The welcome bonus gives them a foot in the door to then try out the other aspects the site has to offer.

Loss Leader to Sell Higher Ticket Items

One of the main reasons for using the strategy in retail is to get customers through the door so they then purchase other higher priced items. Milk is a common loss leader product as most retailers make little on the milk – but without it, many customers wouldn’t step foot in the store and would go elsewhere.

Losing money on these items is necessary for a business who might be charging more for other higher priced items. By giving away something like milk for a low price the retailer can focus on upselling other products. If someone is coming to a store for one item, they are likely to go somewhere it is cheapest. As most people attest to, one item rarely means one time.

The loss leader strategy can be useful for a business. As part of a wider strategy, it can help incentivize customers to use the brand or business, can help foster stronger relationships with customers, or could be used as a ploy to sell more expensive items. Ultimately businesses who use this strategy understand that by sacrificing something to get the customer’s attention, they could end up with far more profit than if they had relied on the customer arriving without any incentive.

The idea of Bigtime Daily landed this engineer cum journalist from a multi-national company to the digital avenue. Matthew brought life to this idea and rendered all that was necessary to create an interactive and attractive platform for the readers. Apart from managing the platform, he also contributes his expertise in business niche.

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Business

Vurbl Makes Noise with Investor Lineup and $1 million in Pre-Seed Funding

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A new audio streaming platform is coming to town. Vurbl is set to shake things up as the company goes head to head with other popular platforms like Apple and Spotify. The goal of the platform is to become the “YouTube of Audio.”

Vurbl is a creator-first, free streaming audio platform for all audio types, including user generated audio. Similar to YouTube, Vurbl allows content creators to upload, earn subscribers and monetize their work. Vurbl will provide listeners that are looking to connect with  new voices and information with personalized playlists and stations across 40 categories. 

Recently, Vurbl’s CEO and co-founder, Audra Everett Gold, completed its pre-seed round closing at $1.3 million. The round was led by AlphaEdison, a knowledge-driven VC firm that invests in early-stage companies. Vurbl also attracted other investors including Halogen Ventures, TEN13, Angelist and other businesses  within the audio, advertisement and entertainment industries.

Nick Grouf, managing partner at AlphaEdison stated, “We believe Vurbl is opening up an entirely new audio market for listeners, creators and brands. This platform has the potential to change the way we consume audio on the internet and the timing is spot on. If anyone can pull this off this enormous opportunity, it’s the team at Vurbl.”

Gold launched Vurbl at the beginning of the year and once COVID-19 hit, the team opt-ed to work from home to stay safe and healthy. Gold and her team then doubled-down to develop Vurbl’s platform. Gold single handedly embarked on a journey to gain investor interest and secured funding during the pandemic mostly by way of Zoom calls.

The pre-seed funds are being used to develop and launch the Vurbl platform with over 25 million pieces of audio and podcasts. This will span across hundreds of categories and subcategories creating a sanctuary for content curators and listeners.

Gold is confident in the market demand for a streaming platform like Vurbl and stated, “Audio is scattered all over the internet in hard to find places, much of it costs money or is not findable, is not easy to playback, etc. We see millions of audio queries on Google and YouTube that reflect demand for audio of all types. The vast majority of these searches return subpar audio results or no audio results at all.”

Vurbl is uniquely positioned to win over audio aficionados with its promise of value added services and attractive revenue share program for creators.

Vurbl is set to launch its web-based platform experience in Q4 2020 with millions of discoverable audio, playlists and human-curated audio stations. The company also plans to announce additional updates including the launch of new mobile apps, a downloadable desktop app, and connected in-home devices for listeners to enjoy audio streams anytime and anywhere.

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