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Originally Posted by geoffwood
They did get $10, but I got $20 worth of merchandise, and it shipped for free. they might have broken even, but I doubt they made a profit.
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There are loss leaders, indeed, but unless you know their actual margins, I'll bet on them making a profit, just a smaller one.
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offering discounts doesn't attract the kind of customers you need, it attracts people that are price conscious and who chase discounts. Acquiring customers with great service and by word of mouth is much harder, but ultimately far more successful.
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There are far fewer people who DON'T shop for discounts than who do, and while the individuals who don't might spend more, the total market leans toward the discount shopper. That's why even the highest-tier brands have discount brands and are CONSTANTLY running sales.
Here's a recent NPR story on this very topic
http://www.npr.org/2011/12/16/143856...ll-of-the-hunt