Question

is it acceptable to lose profit on one product, if that product is vital to the sale of an extremely profitable product? Why?

Answer 1

In General, if you have unprofitable products/segment in your business, removing them from your portfolio will increase the overall profitability of your business.

However, if a product is being sold at loss but it is expected to generate sale of any other product which is profitable then we should continue selling the loss making product

But profit making product should be capable recover losses of loss making product.

One use of such a strategy is to draw customers into a store where they are likely to buy other goods. Such product is generally a product that customers purchase frequently because it attracts customers more times to come at a store and vendors assumes that if a customer is coming in a store then he will also buy some other products so it never give him overall loss.

We can take example of bread, milk or Perishable fruits/vegetables which can attract customers to come at a supermarket if they are sold at a lesser price. These items are strategically placed far from the entrances of the store to enhance the impact of this strategy.