Factors determining oil dealers selection decision: the case of corporate customers in Tanzania.

Abstract

Service sector is one, among others, which contributes to the economy of both developing and developed countries. Its contribution is not only limited to financial earnings, but also to the performance of other sectors, thus determining their performance. Trade liberalisation in Tanzania and other developing countries has made service sector more competitive. This is due to the fact that foreign service providers entered the market with new or same services but in a more professional manner with increased efficiency. In a free market economy, marketing of undifferentiated products such as oil is much more competitive, thus demanding strategic marketing techniques to win customers. This study focused on finding out the main factors that determine oil dealer selection decision by corporate customers in Tanzania in this era of petroleum liberalisation sub-sector. The questionnaire was administered to corporate customers and data were collected. The Determinant Attribute Analysis was applied to rank seven decision criteria in the order of their importance as well as their determinance. The Chi-square test was applied to test the hypotheses. The study found that the top four determining factors in the oil dealer selection decisions are: availability of credit facility, full service offering, assurance of supply, and product quality. Brand reputation, customer loyalty, and advertising were considered as least factors. Except for customer loyalty, all other selection criteria were found to have a significant association with decision making in selecting an oil dealer. When parastatal and non-parastatal companies were compared, the study revealed that there is an association in ranking between the two groups. Also, liberalisation of oil trade caused price fluctuations and increased goods and service quality. This implies that for oil dealers to be selected/retained and for them to maximise profit, they should adopt standardised promotional campaigns to win more customers.