What is Price Mix? A Strategic Guide for Indian Marketers

Introduction

Let’s admit it—setting the right price is one of the trickiest decisions in marketing. Price your product too high, and you risk losing customers. Too low, and you might devalue your offering or leave profit on the table. This is where the price mix comes into play—a powerful lever in your marketing toolkit that directly influences your revenue, brand positioning, and competitive edge.

In today’s fiercely competitive Indian market—where a consumer may compare 10 options before making a purchase—mastering the price mix isn’t optional; it’s essential. Whether you’re a startup founder in Bangalore, a marketing manager in Mumbai, or an eCommerce strategist in Delhi, understanding how to strategically design your pricing can be the difference between thriving and merely surviving.

This guide will break down what the price mix really means, why it matters, the core objectives behind pricing in marketing, various strategies you can apply, real-life examples, and answers to the most common questions Indian marketers have.

Let’s dive in and decode the power of the price mix.

What is Price Mix?

The price mix refers to the strategic combination of pricing decisions that a company employs to market its products or services. It’s one of the four critical components of the marketing mix—Product, Price, Place, and Promotion. The price mix encompasses various elements, including pricing strategies, discount structures, payment terms, and credit policies, all tailored to meet specific marketing objectives and customer expectations.

For instance, a company like Flipkart may use competitive pricing during festive sales to attract price-sensitive customers, while Apple maintains premium pricing to reinforce its brand’s luxury image.

Importance of Price Mix

In the complex world of marketing, price is more than just a number—it’s a powerful signal, a revenue driver, and often the deciding factor in a buyer’s journey. The price mix doesn’t work in isolation; it interacts closely with product quality, promotional efforts, and place (distribution). In India’s highly competitive and price-sensitive market, understanding the importance of the price mix in marketing is crucial for crafting an effective go-to-market strategy.

1. Direct Impact on Revenue and Profitability

Unlike the other Ps in the marketing mix that incur costs, price is the only element that generates revenue. Even a minor tweak in price can significantly impact your profit margins and overall revenue.

For example, increasing your price by just 1% (without losing customers) can increase your operating profit by 8%–11%, according to a McKinsey study.

Especially in Indian sectors like FMCG or retail, where margins are tight, getting the price mix right can be the difference between thriving and barely surviving.

2. Helps Position Your Brand in the Market

Your pricing strategy speaks volumes about your brand. Are you premium and exclusive? Affordable and accessible? Value-driven? The price you set conveys this message before a customer even tries your product.

Example: FabIndia positions itself with a premium-yet-ethical pricing model to reflect quality craftsmanship, while DMart follows a low-price strategy to attract mass buyers.

3. Influences Consumer Perception and Buying Decisions

In India, pricing has a psychological impact. A product priced at ₹999 often sells better than one priced at ₹1,000—even though the difference is negligible. This is called psychological pricing, a key aspect of your price mix.

Consumers often equate price with quality, especially in categories like electronics, beauty, and luxury goods. On the flip side, overly cheap pricing can lead to perceptions of low quality.

4. Drives Competitive Advantage

The Indian digital and offline marketplaces are highly competitive. Having the right price mix can help you stand out—even if your product or service is similar to that of your competitors.

Example: Ola and Uber constantly tweak their pricing algorithms to offer better value and outbid each other for the same user base.

5. Supports Other Marketing Functions

The pricing strategy must align with your product offering, promotional messages, and distribution methods. For instance, a luxury skincare brand advertising exclusivity can’t afford to have discount-store-level pricing.

Think of the price mix as the “anchor” for your marketing plan—it has to balance your positioning, promotional budget, and sales goals.

6. Enables Target Market Segmentation

Price helps brands cater to different segments. You can create tiered pricing or introduce value packs, which are common in Indian markets to appeal to both price-conscious and premium audiences.

Example: Netflix’s India pricing strategy includes a mobile-only plan for ₹149/month, appealing to youth and Tier 2 audiences, while premium tiers target families and binge-watchers.

7.  Adapts to Market Conditions

Price is flexible. It can be adjusted in response to inflation, demand-supply shifts, competitor moves, or changes in consumer behavior. A well-designed price mix gives businesses agility in fast-changing markets like India’s.

Objectives of Pricing in Marketing

Pricing isn’t just about slapping a number on a product and hoping it sells. Behind every price tag lies a well-thought-out strategy designed to meet multiple marketing and business goals. Especially in the Indian market—where consumer expectations, competition, and spending habits vary wildly—the objectives of pricing in marketing play a crucial role in shaping brand success.

Let’s break down the core objectives that marketers aim for when deciding on their pricing strategy.

1. Profit Maximization

Let’s start with the most obvious goal—making money. Every business aims to earn more than it spends. Strategic pricing helps maximize profits without alienating customers.

• For high-demand or niche products, companies may use premium pricing to boost margins.
  
• In competitive markets, brands might rely on volume sales and economies of scale to achieve profitability.
  

Example: Apple uses premium pricing on iPhones to maintain its high-profit margins. In contrast, Indian brands like Boat focus on competitive pricing to drive sales volumes.

2. Market Penetration

If you’re a new player or launching a new product, one major objective could be to capture market share quickly. Here, pricing is used as a weapon to attract attention and encourage trial.

This is known as penetration pricing—setting a low price initially to win over customers and establish presence before gradually increasing it.

Example: Jio’s entry into India’s telecom space disrupted the market with free and ultra-cheap plans to rapidly gain subscribers.

3. Survival in Competitive Markets

When the going gets tough—due to recession, price wars, or industry slowdowns—pricing strategies may focus simply on survival. The goal is to cover basic costs and keep the brand afloat.

This approach often involves cost-plus pricing or discounted rates to stay relevant without significant profits.

Example: Many local kirana brands and startups in India adopt this strategy during eCommerce festivals when facing heavy competition from giants like Amazon and Flipkart.

4. Consumer Perception Management

Pricing shapes how customers see your brand. A high price might signal exclusivity and quality, while a low price could imply mass-market affordability.

So, one objective is to position the brand correctly in the minds of consumers using price as a psychological tool.

Example: Forest Essentials in India prices its skincare products high to position itself as an Ayurvedic luxury brand, differentiating from brands like Himalaya or Biotique.

5. Achieving Sales Volume Targets

Sometimes, the aim is to move inventory fast—maybe due to seasonality, product upgrades, or short shelf life. In such cases, companies may adopt volume-based pricing, bundling, or attractive offers.

This objective is common in retail, FMCG, electronics, and fashion sectors.

Example: Big Bazaar’s “Wednesday Bazaar” or Flipkart’s “Big Billion Days” use aggressive pricing to boost sales volume and clear stocks.

6. Matching or Beating Competitors

In saturated or commoditized markets, competitive pricing becomes key. The goal is to stay in the game by pricing in line with or lower than your competitors.

This is especially critical in online marketplaces where consumers compare prices before buying.

Example: MakeMyTrip and Goibibo often use similar pricing for hotel and flight bookings, relying on added value like cashback or no-cost EMIs to gain an edge.

7. Catering to Different Market Segments

In a diverse country like India, pricing must cater to varying income levels, regions, and consumer needs. Tiered pricing helps businesses serve both budget-conscious and premium customers.

Example: Samsung offers smartphones from ₹6,000 to ₹1,00,000+, targeting students, professionals, and tech enthusiasts through smart pricing tiers.

8. Encouraging Product Line Usage

If a brand has multiple offerings, pricing can be used to drive adoption across the product line. This is called product line pricing—offering basic models at low rates and advanced features at premium prices.

Example: Adobe offers free access to basic tools and charges higher prices for the full Creative Cloud suite—a tactic that nurtures upgrades.

9. Customer Retention and Loyalty

Sometimes the goal isn’t just to attract new customers but to retain existing ones. Brands use loyalty pricing models, subscription discounts, or long-term value packs.

Example: OTT platforms like SonyLIV or Zee5 offer annual plans at a lower monthly rate compared to short-term subscriptions to encourage long-term retention.

10. Clearing Inventory or Managing Supply Chain

Price can also be used to solve internal operational challenges. If inventory levels are too high, or if there’s seasonal excess, pricing helps clear it out fast.

Example: Fashion brands like Pantaloons and H&M use end-of-season sale (EOSS) pricing to move unsold stock and make room for new collections.

Pricing Strategies

Pricing strategies are the tactical approaches businesses use to set the right price for their products or services within their overall price mix. These strategies are influenced by various factors such as target audience, market demand, competition, brand positioning, and overall marketing objectives.

A well-planned pricing strategy ensures that a business not only recovers costs and earns profit but also strengthens its market presence, attracts customers, and sustains long-term growth. Let’s explore the major types of pricing strategies commonly used in marketing:

1. Cost-Based Pricing

Cost-based pricing involves setting the product price by adding a markup to the cost of production. This markup covers overhead costs and includes a profit margin.

• Key Focus: Internal cost structure
• Types: Cost-plus pricing, markup pricing
• Advantage: Easy to calculate and ensures cost recovery
• Limitation: Ignores customer perception and market demand

2. Value-Based Pricing

Value-based pricing focuses on the perceived value of the product or service in the eyes of the customer, rather than just the cost incurred in production.

• Key Focus: Customer’s willingness to pay
• Advantage: Can command higher margins if value is well communicated
• Limitation: Requires deep customer insight and brand credibility

3. Competition-Based Pricing

In this strategy, businesses set prices based on the pricing patterns of their competitors. The goal is either to match, beat, or strategically position pricing around competitors’ offerings.

• Key Focus: Market competition
• Advantage: Useful in price-sensitive markets
• Limitation: May trigger price wars and lower margins

4. Penetration Pricing

Penetration pricing involves setting a low initial price to enter the market and attract a large volume of customers quickly. Once market share is gained, the price may be gradually increased.

• Key Focus: Quick market entry and volume
• Advantage: Builds customer base rapidly
• Limitation: May affect brand perception and profit margins

5. Skimming Pricing

Price skimming is when a company introduces a product at a high price to target early adopters who are willing to pay more, then gradually reduces the price over time.

• Key Focus: High initial profitability
• Advantage: Maximizes revenue from early buyers
• Limitation: May limit mass-market adoption initially

6. Psychological Pricing

This strategy uses consumer psychology to influence purchase decisions. A common tactic is setting prices slightly below a round number (e.g., ₹999 instead of ₹1,000) to create a perception of better value.

• Key Focus: Consumer behavior and perception
• Advantage: Creates an illusion of affordability
• Limitation: Less effective for high-involvement or luxury purchases

7. Premium Pricing

Premium pricing positions a product or service as high-end or exclusive by setting a deliberately high price. This approach relies on branding, quality, and perceived prestige.

• Key Focus: Brand equity and exclusivity
• Advantage: Builds brand image and profit margins
• Limitation: Requires strong brand loyalty and quality assurance

8. Bundle Pricing

Bundle pricing combines multiple products or services and offers them at a combined price that is lower than the total of individual prices. This encourages higher volume purchases.

• Key Focus: Increasing perceived value
• Advantage: Boosts average order value and product exposure
• Limitation: May reduce profitability if not carefully managed

9. Dynamic Pricing

Dynamic pricing uses algorithms and data to adjust prices in real-time based on market demand, customer behavior, and other variables. This is often used in e-commerce, travel, and hospitality sectors.

• Key Focus: Real-time market responsiveness
• Advantage: Maximizes revenue based on demand cycles
• Limitation: Can confuse or alienate customers if not transparent

10. Geographic Pricing

This strategy involves setting different prices for the same product in different geographical locations based on local costs, market demand, and purchasing power.

• Key Focus: Regional pricing customization
• Advantage: Allows better market segmentation and relevance
• Limitation: Can create inconsistencies in brand perception

Price Mix Examples

To truly understand how the price mix in marketing works in the real world, let’s explore how brands across industries—and especially in the Indian market—cleverly use pricing to gain a competitive edge, build customer loyalty, and drive profits.

Here are a variety of examples that highlight how price mix strategies are applied in different sectors:

1. FMCG Sector: Patanjali vs. HUL

Scenario: Patanjali disrupted the Indian FMCG market with aggressive pricing and a “swadeshi” positioning.

• Patanjali’s Price Mix Strategy: Low pricing strategy to attract middle-class and rural consumers who were looking for Ayurvedic, chemical-free products at affordable prices.
• HUL’s Response: Adjusted pricing for select product lines like herbal variants in the Ayush brand, while also offering smaller SKUs (like sachets) to match affordability.

2. Smartphone Industry: Xiaomi vs. Apple

Scenario: Two smartphone brands at opposite ends of the spectrum.

• Xiaomi’s Price Mix: Focuses on value-for-money pricing, offering feature-packed phones at budget-friendly rates, especially targeting Tier-2 and Tier-3 cities in India.
• Apple’s Price Mix: Positions itself as a premium, aspirational brand with high prices justified by brand value, innovation, and status appeal.

3. Food & QSR: Domino’s Pizza India

Scenario: Domino’s India has long used combo pricing and tiered options to attract both price-sensitive and premium customers.

• Price Mix Strategy:
  • Combo offers for families and groups.
  • Value range pizzas starting at ₹49 or ₹99 to pull in budget-conscious customers.
  • Premium pizzas priced higher for those willing to spend more for exotic toppings or cheese bursts.

4. Aviation: IndiGo vs. Vistara

Scenario: Price-sensitive Indian travelers have a mix of budget and luxury preferences.

• IndiGo’s Price Mix: Follows low-cost pricing with an à-la-carte model where extras like meals or seat selection are add-ons.
• Vistara’s Price Mix: Uses value-based pricing, including meals, premium economy, and loyalty perks.

5. Personal Care: Dove vs. Santoor

Scenario: Dove (HUL) and Santoor (Wipro) cater to different consumer segments.

• Dove’s Price Mix: Premium pricing with focus on skin nourishment and brand trust, often supported by dermatologist endorsements and elegant packaging.
• Santoor’s Price Mix: Affordable pricing targeting price-conscious homemakers, often using value packs and bundling.

6. Streaming Services: Netflix vs. Amazon Prime Video vs. JioCinema

Scenario: The Indian OTT space is a hotbed of creative pricing models.

• Netflix: Introduced a mobile-only plan for ₹149/month to penetrate deeper into the Indian market, while still offering premium plans.
• Amazon Prime Video: Combines streaming with Prime delivery services, creating a bundled pricing strategy.
• JioCinema: Offers free streaming, monetizing via ads and partnerships, especially during live sports events.

7. EdTech: BYJU’S, Unacademy, and Coursera

Scenario: The online learning boom led to varied price mixes depending on the learner’s goals.

• BYJU’S: High pricing for personalized learning packages, with financing and EMI options.
• Unacademy: Subscription-based model with tiered plans for different exams (e.g., UPSC, SSC, CAT).
• Coursera: Offers a freemium model, where basic courses are free, and certification or advanced access requires payment.

8. E-Commerce: Amazon India

Scenario: To stand out in a competitive online retail market, Amazon India plays smart with its price mix.

• Pricing Tactics:
  • Dynamic pricing based on demand.
  • Lightning deals and limited-time offers.
  • Exclusive discounts for Prime members.

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