Which term best describes the strategy of temporarily pricing a product below its production cost?

The strategy of temporarily pricing a product below its production cost is known as a Loss Leader Strategy. This approach is often used by businesses to attract customers to their store or website, with the hope that while consumers are drawn in by the low price of the loss leader product, they will purchase additional items that are sold at regular prices. The initial loss incurred on the loss leader allows the business to increase overall sales volume and potentially profit from higher-margin products.

Loss leader pricing is particularly effective in competitive markets, where businesses aim to quickly draw in customers and increase their market share. It's important to maintain customer loyalty and encourage repeat business, as the strategy is not meant to be sustainable in the long term for individual products due to the losses it incurs.

In contrast, promotion pricing generally refers to reducing the price of a product for a limited time as part of a marketing campaign, but this is not necessarily below production cost. Penetration pricing is used to enter a market by setting an initially low price to gain market share, but it doesn't consistently imply pricing below production cost. Competitive pricing focuses on setting prices based on competitors' pricing strategies, without necessarily incurring losses.