Influence Of Pricing Strategies On Performance Of Tour Operator Companies In Tanzania: A Case Of Arusha City

ABSTRACT

Tourism industry in Tanzania continues to draw attention from various stakeholders.

Different tour operator companies applied different pricing strategies to ensure their

good performance. This study aimed to examine the pricing strategies used by tour

operator companies in Tanzania and how these strategies influence their

performances. A total number of 121tour operator companies in Arusha city were

involved in this study. The descriptive research design which is cross sectional was

used and semi structured questionnaires tools were used. The results revealed that

tour operator companies in Tanzania use Odd even pricing strategies mostly.

Location pricing strategies though was not as popular as other pricing strategies; cost

plus pricing and competition based pricing were also applied though not much used.

On the influence of pricing strategies on performance, it is found that many pricing

strategies have positive correlation with performance of tour operator companies in

different performance variables namely profit, Return on Asset (ROA) and Return on

Investment (ROI) and contribute significantly to performance. It‟s only few

strategies that have negative correlation with performance of tour operators, and

these prestige pricing, leader pricing and segment pricing. Time pricing, odd even

pricing, discount pricing, special event pricing, penetration pricing and market price

skimming have been proved to be statistically significant at 0.05 level of

significance. The study concludes that companies have to weigh their situations and

address their pricing objectives with several pricing strategies as they can influence

performance of their companies. Study recommends that tour operators should

continue to employ the strategies proved to significant in this study and effective

pricing decisions by tour operators so as to keep on increasing performance.