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A loss leader is a sales device wherein manufacturers and/or retailers offer items at, near, or even below wholesale cost as a means to attract customers. That is, the item is offered at a loss in order to lead customers into the store. Some typical loss leaders:
- Heavily advertised, bare-bones models that attract customers so that sales reps can attempt to sell more expensive models that are more stylish and have more features. This technique is known as bait and switch.
- Heavily advertised items placed at the opposite end of the store from the main entrance. That way, customers must pass by other higher-priced items to get to the advertised item.
- Cheap ink jet printers originally sold for less than $60, but which are equipped with thimble-sized, non-refillable ink cartridges, replacements for which sell for more than $40.
- Cigarette "mini-packs": Tobacco companies used to employ attractive young women to stand in high-traffic areas -- busy street corners, entrances to popular stores, sports arenas, concert venues, etc. -- and hand out cigarette sample packs (5 to 10 cigarettes per pack) and a book of matches. (Guess how many cigarettes an average person has to smoke within a three-day period in order to become addicted.)
- Food essentials (milk, bread, eggs) at convenience stores in the hopes that you will buy more expensive items while you are there (cigarettes, lottery tickets, "impulse buys.")
- Video game consoles are typically sold for less money than they cost to manufacture (at least before the cost of manufacturing comes down), with the games that they run being where the real money is for game companies.
Some restaurants also offer "value menus" that attract people on tight budgets in hopes that they will also buy other more expensive items. However, when a corporate chain orders its locally owned franchises to sell food below cost, the local franchise owners may revolt. That's because such offers violate a basic tenet of loss leader schemes -- never have more than four loss leaders available at any location. That way, when the loss leader sells out, the sales reps can either sell the customers other items or offer "rain checks" that keep customers coming back.
 Non-retail variations
Other businesses which are not strictly retail can also practice their own variations on loss leader sales.
When the Rush Limbaugh Program was first syndicated nationally in the early 1990s, his syndicator, Premier Radio, charged large-market stations the "confiscatory ad rates" that Limbaugh brags about, while offering his program to medium- and small-market stations for free. In exchange, Premiere required that these smaller stations hand over a large portion of their local advertising time so that Premiere could fill those ad periods with their own national ad time. This allowed small stations to fire local hosts and disk jockeys, which in turn boosted their profit margins. Other conservative talk radio hosts have since copied Limbaugh's method of saturating American radio.
This loss leader model of radio syndication has served to draw customers not to a product but to a controversial philosophy. By blanketing the nation over 600 local radio stations, Limbaugh and other righty talkers have swayed millions with their wingnut bullshit, providing talking points to otherwise uninformed people, allowing them to shout down anyone who disagrees with them. Furthermore, these programs have sold the meme that most talk radio is predominantly conservative -- they control 91% of all talk programming content in the US -- because of the strength of their ideas.
The main benefit to this business model is this: It allows right-wing activists to skirt around campaign finance reform laws and the unpredictability of certain political candidates. Rather than take a chance on the effectiveness of thirty-second TV and radio ads, it's more effectual to underwrite tens of thousands of hours of propaganda per year even when there is no election pending.
As it turns out, Premiere Radio is a subsidiary of Clear Channel Communications, the dominant radio broadcasting company in the United States. In cities where Clear Channel controls two or more AM stations, Limbaugh, Glenn Beck, Dr. Laura and other righties are broadcast over the stations with the strongest signals. Meanwhile, any liberal talk radio shows that are lucky enough to get on the air are relegated to Clear Channel's weakest stations.
 TV advertising
If you've ever watched television in the United States -- especially nationally televised sporting events like the NFL, or "talking heads" current affairs shows like Meet the Press or Face the Nation -- you've probably noticed a lot of advertising for companies and organizations that the "Joe Six-Packs" in the audience would never directly patronize. Examples of these advertisers include AIG, Boeing, the American Petroleum Institute, Credit Suisse, and the Burlington Northern and Santa Fe Railway (BNSF). These entities don't pay huge sums of money to the TV networks to sell their products. Rather, they pay huge sums of money to affect the content of the network (and, in some cases, local) news shows.
Whenever any of these advertisers finds out that a pending news story is critical of it or any of its clients, that advertiser can get the story killed merely by threatening to pull its multi-billion dollar ad campaign from the network. Also, by repeatedly pushing bullshit memes -- like the benevolent defense contractor and the benefits to the environment of clean coal -- these advertising campaigns function as a means to propagandize the viewers.
Once upon a time, this was not allowed. The news divisions at the networks and local stations were not-for-profit. They were the loss leaders. This allowed them the freedom not only to produce controversial news stories and documentaries, but also to call out any entity that tried to threaten them for doing their jobs. That started to change beginning in the 1980s, when politicians began to believe that everything should be for-profit. With the discontinuation of the Fairness Doctrine, limited ownership policies and the requirement that stations broadcast programming designed to serve the public interest, American TV and radio stations became little more than propaganda machines for large corporations.
The sole benefit of this to the consumer is a person in New York can bitch with their friend in California about the same ad on television.
 See also
- American Petroleum Institute TV ads. -- These download as .wmv (Windows Media Player) or .mov (QuickTime) files.
- ↑ "Burger King pulling slice from double cheeseburger", Reuters website, 17 February 2010, accessed 17 April 2010. (Burger King ordered its US franchises to sell its Double Cheeseburger on its $1 Value Menu, even though the average national wholesale price was $1.10. Wholesale prices in expensive areas like New York City and San Francisco ranged up to $1.60.)
- ↑ The "Excellence in Broadcasting Network" is merely the Fat One's nickname for Premiere.
- ↑ Mann, Bill. "Limbaugh's Dirty Little Secret of Radio 'Success'", Huffington Post website, 12 April 2009, accessed 17 April 2010.
- ↑ Funny, according to Arbitron, there are only 291 radio markets in the US. Limbaugh's 309 or so other stations are mostly duplicate stations on the fringes of the 291 Arbitron markets, or they are located in some really isolated areas.
- ↑ "The Structural Imbalance of Political Talk Radio", Center for American Progress website, 20 June 2007, accessed 17 April 2010. Full report (40 page PDF)
- ↑ Rand Paul, for example.
- ↑ Known as MW stations outside of the Americas.
- ↑ Mann, Bill. "Here's Why the Right Wing Dominates Talk Radio Today", Huffington Post website, 21 May 2009, accessed 17 April 2010.
- ↑ In fact, liberal talkers are in a situation similar to that of Steve Martin's family in the 1984 movie, All of Me. When confronting heiress Lily Tomlin, he said: "Just because my grandfather didn't rape the environment and exploit the workers doesn't make me a peasant. And it's not that he didn't want to rape the environment and exploit the workers. I'm sure he did. It's just that as a barber, he didn't have that much opportunity."
- ↑ The four railways that merged for form Burlington Northern in 1970, plus the Atchison, Topeka and Santa Fe Railway, which merged with BN in 1996, all carried passengers before the formation of Amtrak. Now the BNSF only carries freight -- millions of tons of freight on trains that can stretch for over a mile.
- ↑ Really. How many football fans are in the market for a 747?
- ↑ Broadcasting companies were limited to 7 AM stations, 7 FM stations and 7 TV stations nationwide -- and only one of each per market -- until the late 1980s.