Influence of Pricing Strategies on Firm Performance of Motor Vehicle Insurance: A Case of Selected Companies in Mwanza City, Tanzania
This study examined the influence of pricing strategies on the performance of motor vehicle insurance companies in Mwanza City, Tanzania. Specifically, the study assessed the influence of value-based pricing strategies, behavioural-based pricing strategies, and regulation-based pricing strategies on firm performance. The study was guided by Contingency Theory and adopted a quantitative research approach using a cross-sectional research design. Data were collected from 136 respondents using structured questionnaires and analysed using descriptive statistics, Pearson correlation analysis, and multiple linear regression analysis. The descriptive findings indicated a high level of agreement regarding the application of the three pricing strategies. Pearson correlation results revealed positive and statistically significant relationships between behavioural-based pricing strategies and firm performance (r = 0.224, p = 0.009), regulation-based pricing strategies and firm performance (r = 0.360, p < 0.001), and value-based pricing strategies and firm performance (r = 0.339, p < 0.001). The regression results further showed that regulation-based pricing strategies had the strongest positive and statistically significant influence on firm performance (B = 0.364, β = 0.260, p = 0.004), followed by value-based pricing strategies (B = 0.268, β = 0.236, p = 0.007). Behavioural-based pricing strategies also recorded a positive coefficient (B = 0.152), although the reported significance statistic requires verification from the original SPSS output. The study concludes that pricing strategies are important determinants of the performance of motor vehicle insurance companies, particularly when pricing practices are aligned with customer value, behavioural considerations, regulatory requirements, and prevailing market conditions. The study contributes to the existing literature by providing empirical evidence on the relative influence of different pricing strategies on firm performance within the motor vehicle insurance sector in Tanzania, an area that has received limited context-specific empirical attention. More specifically, the identification of regulation-based pricing as the strongest predictor demonstrates that compliance-oriented pricing is not merely a regulatory requirement but also an important strategic factor associated with firm performance. The findings further extend the application of Contingency Theory by demonstrating that the effectiveness of pricing decisions depends on their alignment with customer characteristics, regulatory requirements, and market conditions. Practically, the study provides evidence that can guide insurance managers and regulators in developing pricing approaches that balance customer value, regulatory compliance, market competitiveness, and organisational performance. The study recommends that insurance companies strengthen transparent, fair, customer-oriented, and technology-supported pricing practices, while regulators should promote pricing frameworks that balance consumer protection, market stability, innovation, and firm competitiveness.
Keywords: Pricing Strategies, Value-Based Pricing, Behavioural-Based Pricing, Regulation-Based Pricing, Firm Performance, Motor Vehicle Insurance, Tanzania.
