RESEARCH

ANALYSIS OF THE PERCEPTION OF POTENTIAL
CUSTOMERS ON WILLINGNESS TO PAY FOR THE BANK

SERVICES
THE CASE OF TANZANIA COMMERCIAL BANK PLC

ANALYSIS OF THE PERCEPTION OF POTENTIAL
CUSTOMERS ON WILLINGNESS TO PAY FOR THE BANK
SERVICES
THE CASE OF TANZANIA COMMERCIAL BANK PLC
By
Hamis .H. Angovi
A Research Report Submitted in Partial Fulfilment of the Requirement for The

Award of the Bachelor Degree of Business Administration in Marketing
Management (BBA-MM) of Mzumbe University
2023
CERTIFICATION
We, the undersigned, certify that we have read and hereby recommend for
acceptance a research report entitled “analysis of the perception of potential
customers on willingness to pay for the bank services: the case of Tanzania
commercial bank plc”, in partial fulfilment of the requirement for the award of the
Bachelor Degree of Business Administration in Marketing Management (BBA-MM)
of Mzumbe University.
Signature
___________________________
Major Supervisor
Signature
___________________________
Internal Examiner
Accepted for the Board of
………………………………………………………………………
DEAN/DIRECTOR/FACULTY/DIRECTORATE/SCHOOL/BOARD
i
DECLARATION
AND
COPY RIGHT
I Hamis H. Angovi, declare that this research report is my own original work and
that it has not been presented and will not be presented to any other university for a
similar or any other degree award.
Signature..............................................
Date…………………………………...
©
This research report is a copyright material protected under the Berne Convention,
the Copyright Act 1999 and other international and national enactments, in that
behalf, on intellectual property. It may not be reproduced by any means in full or in
part, except for short extracts in fair dealings, for research or private study, critical
scholarly review or discourse with an acknowledgement, without the written
permission of Mzumbe University, on behalf of the author.
ii
ACKNOWLEDGEMENT
First, I would like to express my gratitude to Almighty Allah the author of

knowledge and wisdom to enabling me to complete this work. Special thanks to my
supervisor, Dr. Jasinta Msamula, and the management of Mzumbe University,
Mbeya Campus College for their support. I also appreciate the assistance of the staff
and customers of Tanzania Commercial Bank (TCB) Mwanjelwa branch, and the
encouragement of my family, friends, colleagues and neighbors. Thank you all.
iii
DEDICATION
This work is dedicated to my beloved father Mr. Hassan Hamis Angovi and lovely
mother Mwanamkuu Saddy Amiry and my beloved sister Habiba Hassan Angovi
who spent a fortune to make me what I am today.
iv
ABBREVIATIONS AND ACRONYMS
BOT : BANK OF TANZANIA

CPV : CUSTOMER PERCEIVED VALUE
NIN : NATIONAL IDENTIFICATION NUMBER
SMEs : SMALL AND MEDIUM-SIZED ENTERPRISES
SPSS : STATISTICAL PACKAGE FOR SOCIAL SCIENCE
TCB : TANZANIA COMMERCIAL BANK
WTP : WILLINGNESS TO PAY
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ABSTRACT
The study analyzed the perception of potential customers on willingness to pay for
bank services by using a case of Tanzania Commercial Bank (TCB) Plc. The specific
objectives were to analyse the perception of potential customers related to the
influence of perceived cost on willingness to pay and to analyse the perception of
potential customers related to the influence of perceived benefit on willingness to
pay. The study used the customer perceived value and expectancy value theory. This
research used quantitative research methodology. The researcher used descriptive
research design. The units of analysis of this study were potential customers of
Group Loans offered by TCB bank. The research had a sample size of 158
respondents. The researcher used the non-probability sampling techniques
specifically the convenience sampling and purposive sampling techniques. The study
used primary data which were collected by using questionnaires. The analysis of the
data was descriptive technique using the Statistical Package for Social Science
(SPSS). The study findings on influence of cost to willingness to pay shows
customers aligns the costs with their expectations on the sense that customers will be
willing to pay no matter what cost they may incur only if the services meet their
expectations, also the study findings on influence of benefit on willingness to pay
shows several factors that may the customers perceive as benefit that leads to shaping
the customer’s perception and behaviour towards willingness to pay for bank
services. The study recommends on a reasonable payment time frame and a
streamlined and efficient Processes as they will ultimately contribute to the bank's
growth, competitiveness, and success in the banking industry.
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TABLE OF CONTENTS
CERTIFICATION.................................................................................................................i
DECLARATION...................................................................................................................ii
AND........................................................................................................................................ii
COPY RIGHT.......................................................................................................................ii
ACKNOWLEDGEMENT...................................................................................................iii
DEDICATION......................................................................................................................iv
ABBREVIATIONS AND ACRONYMS..............................................................................v
ABSTRACT..........................................................................................................................vi
LIST OF TABLES.................................................................................................................xi
LIST OF FIGURES..............................................................................................................xii
CHAPTER ONE...................................................................................................................1
INTRODUCTION.................................................................................................................1
1.0 Introduction of the Study....................................................................................................1
1.1 Background of the study.....................................................................................................1
1.1Willingness to pay and Perceived Value..............................................................................1
1.1.1 Willingness to Pay....................................................................................................1
1.1.2 Perceived Value.......................................................................................................1
1.2 Banking Sector and Bank Services.............................................................................2
1.2.1 Perception of Potential customers....................................................................................3
1.3 Statement of the Problem....................................................................................................4
1.4 Research Objectives............................................................................................................5
1.4.1 General Objective.....................................................................................................5
1.4.2 Specific Objectives...................................................................................................5
1.5 Research questions..............................................................................................................6
1.6 Significance of the study.....................................................................................................6
1.7 Scope of the Study..............................................................................................................6
1.8 Organization of the study....................................................................................................7
CHAPTER TWO..................................................................................................................8
LITERATURE REVIEW.....................................................................................................8
2.0 Introduction.........................................................................................................................8
2.1 Theoretical Literature Review.............................................................................................8
2.2.1 Customer Perceived Value (CPV) theory................................................................8
2.2.2 Expectancy-Value Theory........................................................................................9
2.3 Empirical Literature Review...............................................................................................9
vii
2.4 Research Gap....................................................................................................................10
2.5 Conceptual Definitions and Concepts...............................................................................11
2.5.1 Perception...............................................................................................................11
2.5.2 Potential customers................................................................................................11
2.5.3 Willingness to pay..................................................................................................11
2.5.4 Bank services.........................................................................................................11
2.6 Group Loans......................................................................................................................12
2.6.1 Group Loan Terms and Conditions........................................................................12
2.6.2 Loan Size................................................................................................................13
2.6.3 Purpose of Loans and Use......................................................................................14
2.6.4 Loan Repayment....................................................................................................14
2.6.5 Margin....................................................................................................................14
2.6.6 Fees and Charges....................................................................................................14
2.6.7 Collateral................................................................................................................15
2.6.8 Supervision and Examination of Group Loan........................................................15
2.6.9 Declarations............................................................................................................15
2.7 Conceptual Framework.....................................................................................................16
2.8 Operationalization of variables.........................................................................................17
CHAPTER THREE............................................................................................................18
RESEARCH METHODOLOGY.......................................................................................18
3.0 Introduction.......................................................................................................................18
3.1 Research Design................................................................................................................18
3.2 Area of Study....................................................................................................................18
3.3 Population and sample size...............................................................................................18
3.3.1 Sample size.............................................................................................................19
3.4 Sampling Techniques........................................................................................................20
3.4.1 Convenience Sampling...........................................................................................20
3.4.2 Purposive Sampling...............................................................................................21
3.5 Types of data and data collection methods.......................................................................21
3.5.1 Types of data..........................................................................................................21
3.5.2 Data collection method..........................................................................................21
3.7 Measurement of Variables................................................................................................22
3.7.1 Nominal..................................................................................................................22
3.7.2 Ordinal level...........................................................................................................22
3.8 Data Analysis....................................................................................................................23
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3.9 Ethical Consideration........................................................................................................23
CHAPTER FOUR...............................................................................................................24
PRESENTATION OF FINDINGS.....................................................................................24
4.0 Introduction.......................................................................................................................24
4.1 Demographic information.................................................................................................24
4.1.1 Age.........................................................................................................................26
4.1.2 Gender....................................................................................................................26
4.1.3 Level of education..................................................................................................26
4.1.4 Familiarity with ‘group loan’ service.....................................................................26
4.2 Perception of potential customers related to the influence of perceived cost on
willingness to pay....................................................................................................................27
4.2.1 Customer perception on group loan fees................................................................27
4.2.2 Assessment of Loan Charges Reliability...............................................................28
4.2.3 Group Loan Interest Rate Analysis........................................................................29
4.2.5 Assessment of Practicability of Group Loan Payment Time Frame......................30
4.3 Perception of potential customers related to the influence of perceived benefit on
4.3.1 Assessment of convenience of documentation requirements.................................31
4.3.2 Analysis of Unique Characteristics........................................................................32
4.3.3 Transparency and Clarity Analysis................................................................................33
4.3.4 Assessment of staff responsiveness.......................................................................34
CHAPTER FIVE.................................................................................................................35
DISCUSSION OF THE FINDINGS..................................................................................35
5.0 Introduction.......................................................................................................................35
5.1 Analysis of the perception of potential customers on the influence of perceived cost on
5.2 Analysis of the perception of potential customers on the influence of perceived benefit on
CHAPTER SIX...................................................................................................................38
SUMMARY, CONCLUSION AND RECOMMENDATIONS........................................38
6.0 Introduction.......................................................................................................................38
6.1 Summary...........................................................................................................................38
6.2 Conclusion.........................................................................................................................39
6.3 Recommendations.............................................................................................................39
6.4 Area for further studies.....................................................................................................40
6.5 Limitation of the study......................................................................................................40
ix
APPENDIX............................................................................................................................44
QUESTIONNAIRE...............................................................................................................44
x
LIST OF TABLES
Table 3.1 Number of respondents...............................................................................20
Table 4.1 Demographic characteristics.......................................................................25
Table 4.2 Customer Perception on group loan fees....................................................27
Table 4.3 Assessment of loan charges reliability.......................................................28
Table 4.4 Group loan Interest Rate Analysis..............................................................29
Table 4.5 Assessment of practicability of group loan payment time frame...............30
Table 4.6 assessment of convenience of documentation requirements......................31
Table 4.7 Analysis of unique characteristics..............................................................32
Table 4.8 Transparency and Clarity Analysis.............................................................33
Table 4.9 Assessment of staff responsiveness............................................................34
xi
LIST OF FIGURES
Figure 2.1. A Conceptual Framework........................................................................17
xii
xiii
CHAPTER ONE
INTRODUCTION
1.0 Introduction of the Study

This chapter provides an overview of the study by discussing the context in which it
is situated. It includes background of the study, statement of research problem,
research objectives, research questions, significance of the study and scope of the
study.
1.1 Background of the study

1.1Willingness to pay and Perceived Value
Willingness to Pay (WTP) and perceived value are interconnected concepts that hold
significant importance in economics and marketing as they contribute to
comprehending consumer behavior and pricing tactics.
1.1.1 Willingness to Pay

Willingness to Pay (WTP) is defined as the utmost monetary or price limit a
consumer is willing to allocate for a particular product or service (T. T., Hogan,
2018). It reflects the individual's subjective evaluation and is shaped by various
factors, including personal preferences, perceived advantages, income, and the
availability of alternatives in the market (Kotler, P., Armstrong, G., & Cunningham,
2019). Businesses frequently employ WTP analysis to establish optimal pricing
strategies that can maximize revenue and profit while simultaneously meeting
consumer demand.
1.1.2 Perceived Value

Perceived Value refers to the consumer's subjective perception of the benefits they
receive from a product or service in relation to its cost or price (Kotler, P., & Keller,
2019). It encompasses subjective assessments of quality, usefulness, and overall
desirability of the offering. Perceived value goes beyond objective attributes and is
influenced by marketing strategies, brand reputation, and the emotional connection
the consumer has with the product or service.
1
1.2 Banking Sector and Bank Services
The banking sector refers to the industry that provides financial services to
customers, including deposit taking, lending, investing, and other related services.
Banks are a central part of the banking sector and are often the most visible providers
of financial services. The banking sector plays a vital role in the economic growth of
developing countries, and maintaining high levels of customer satisfaction is crucial
for banks to remain profitable and retain customers. The banking sector has evolved
significantly over time, adapting to changes in technology, regulation, and customer
needs. The evolution of the Banking sector has gone through various milestones and
the key milestones are; Early banking ( 2000 BC - 14 th Century), Industrial
Revolution (18th - 19th century), Central banks (17th - 20th century), Globalization
(20th century) and Technological innovation (late 20th century - present) (Wood, G.,
& Dark, 2018).
The development of new technologies such as ATMs, online banking, and mobile
banking has transformed the banking sector in recent years. These innovations have
made banking more convenient and accessible, although they have also created new
opportunities for fraud and cybersecurity threats but there is more to gain from the
current milestone of banking sector that we are in (Rodrigues, L., & Baesens, 2019).
The evolution of banking sector in Tanzania started in 1905 where the first
Commercial banking was introduced in the country, after the Deutsch-
Ostafrikanische Bank opened its office in Dar es Salaam. This bank had a concession
from the German Government to issue its own notes and coins, which helped the
bank to meet the demand for coins in exchange for its notes. A temporary mint was
set up in Tabora. In 1911, another German bank, namely the Handelsbank fuer
Ostafrika, opened a branch in Tanga. There also was an official savings bank. Later
on the Bank of Tanzania was established. The Bank of Tanzania is the Central Bank
of the United Republic of Tanzania established by the Bank of Tanzania Act of 1965,
It became operational on 14th June 1966. Various amendments to the Bank of
Tanzania Act have been made leading to the Bank of Tanzania Act of 1978 and the
Bank of Tanzania Act of 1995. Presently, the Bank of Tanzania operates under the
Bank of Tanzania Act, 2006.
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Over the years, banks have evolved to provide a wide range of services, including
savings and current accounts, loans, credit cards, and investment products, among
others. However, the banking sector faces stiff competition, and banks must
continually assess their service offerings to remain competitive. This study
specifically focuses on group loans offered by Tanzania Commercial Bank Plc
(TCB). Group loans are a form of microfinance that involves lending money to a
group of people who are jointly liable for the repayment of the loan. This form of
lending has become increasingly popular in developing countries as a way of
providing credit to individuals who would not otherwise have access to traditional
banking services. The success of group lending programs depends on a variety of
factors, including the willingness of customers to participate in such programs and
their ability to repay the loans.
1.2.1 Perception of Potential customers

One of the key factors that banks must consider is the willingness of potential
customers to pay for their services. Willingness to pay (WTP) refers to the maximum
amount that an individual is willing to pay for a product or service. Several factors
can influence a potential customer's WTP for bank services, including their income
level, age, education level, and personal financial situation. Studies have shown that
younger customers tend to have a higher WTP for mobile banking services, while
older customers place more value on branch locations and personal interaction with
bank staff (Chen & Lu, 2019). Additionally, customers with higher levels of
education tend to have a higher WTP for digital banking services (Liu, J., & Li,
2021). Additionally, there are differences in customer perception regarding
willingness to pay for banking services in developed and developing countries.
According to a recent study by (Izogo et al., 2021), customers' perception of bank

services is a significant determinant of their willingness to pay for those services.
The study found that customers who perceive bank services as reliable and
trustworthy are more willing to pay for those services. Similarly, a study by (Carlos
Fandos Roig et al., 2006) found that customers' perceptions of service quality,
convenience, and value for money are critical factors that influence their willingness
to pay for bank services.
3
Tanzania Commercial Bank has a long history, tracing back to 1925 when the British
Colonial government established the Tanganyika Post Office Savings Bank through
an ordinance. After the government began financial sector reform, the Tanzania Post
Office Savings Bank was transformed into a separate entity through the Tanzania
Postal Bank Act of 1991. In 2015, the act was repealed, and the bank was
incorporated under the Companies Act as TPB Bank PLC. The bank changed its
name to Tanzania Commercial Bank in July 2021 after merging with TIB Corporate
Bank, Tanzania Women’s Bank, and Twiga Bancorp to improve financial stability
and consolidate state-owned banks. Today, Tanzania Commercial Bank offers a full
range of financial services and has a strong financial base built on its longstanding
relationships with its clients. The bank offers various types of accounts, including
current accounts, savings accounts, fixed deposit accounts, and foreign currency
accounts. It also provides loans and credit facilities for personal, business, and
agriculture purposes. Additionally, TCB offers services such as internet banking,
mobile banking, and ATM services. One of the loans that TCB bank offers is Group
Lending. Tanzania Commercial Bank has adopted group lending as one of its key
strategies for promoting financial inclusion and expanding access to credit in
Tanzania. Group lending is a model of lending where a group of borrowers is
collectively responsible for repaying a loan, and each member of the group acts as a
guarantor for the other members.
1.3 Statement of the Problem

Small business owners face difficulties in accessing financial resources from banks
due to factors such as strict creditworthiness requirements, high interest rates, and
regulatory constraints have hindered the growth and development of small
businesses. Policymakers, regulators, and researchers have shown increased interest
in understanding the functioning of financial markets that finance small businesses
(Molina, C. A., & Penas, 2020). Past research has found that small business owners
have challenges obtaining external capital, and even when they are successful, they
receive it at very high interest rates (Storey, 2016)
The Tanzanian government has implemented policies since 1990 to support the small
business sector by providing financial resources to small businesses. The government
4
provides guarantees to banks to finance small business owners and has created ways
to facilitate lending, such as group lending (Olomi, 2018). Tanzania Commercial
Bank is one of the largest commercial banks in Tanzania, with a presence in all
major towns and cities across the country. The bank offers a wide range of products
and services, including savings and current accounts, loans, mortgages, insurance,
and investment services. In recent years, Tanzania Commercial Bank has been
actively targeting small and medium-sized enterprises (SMEs), which are a
significant driver of economic growth and development in Tanzania.
To cater to the needs of SMEs, Tanzania Commercial Bank has launched a new
product of group loans, which allows SMEs to access credit facilities in groups. The
group lending approach is based on the principle of joint liability, where all members
of the group are responsible for ensuring that the loan is repaid on time. This
approach is particularly beneficial for SMEs with limited collateral or credit history,
as it provides them with an opportunity to access credit based on their collective
strength. Therefore, this study focuses on analysis of the willingness of potential
customers to pay for bank services, particularly group loans offered by TCB bank.
1.4 Research Objectives

The research has two types of objectives: the general objective and the specific
objectives.
1.4.1 General Objective

The general purpose of this study is to analyse the perception of potential customers
on willingness to pay for the bank services, using TCB Bank Mwanjelwa branch in
Mbeya, Tanzania as a case.
1.4.2 Specific Objectives

The study has two specific objectives; these are:
i. To analyse the perception of potential customers related to the influence of

perceived cost on willingness to pay.
ii. To analyse the perception of potential customers related to the influence of
perceived benefit on willingness to pay.
5
1.5 Research questions
This research has two research questions. These research questions are as follows;
i. How does customers’ perceived cost influence willingness to pay for banking
services?
ii. How does customers’ perceived benefit influence willingness to pay for
banking services?
1.6 Significance of the study

This study aimed to analyse customer perceptions of the value of banking services
offered by TCB Mwanjelwa branch in Mbeya, Tanzania. The focus is on
understanding customers' preferences and behaviours related to banking services,
leveraging the extensive customer base of TCB Mwanjelwa to gain valuable insights.
The research intends to help TCB Bank and other financial institutions comprehend
the factors influencing customers' willingness to pay for banking services, leading to
improved service offerings and increased customer satisfaction. Additionally, this
investigation can offer insights into effective pricing techniques to attract and retain
customers, enabling banks to develop competitive and profitable pricing strategies.
Ultimately, the study aims to benefit both banks and customers by tailoring services
to meet customer needs and expectations while ensuring customers receive excellent
value for their money.
1.7 Scope of the Study

The branch offers of TCB Mwanjelwa were the main focus of this study's analysis of
the variables influencing potential customers' willingness to pay for banking
services. The goal of the study is to pinpoint crucial elements that influence
consumers' willingness to pay, such as consumer preferences, price sensitivity,
perceived value, and service quality. Potential consumers' responses to
questionnaires will be used to gather data for the research, which will then utilize
statistical methods to analyse the information and spot patterns in consumer opinions
and behaviour.
6
1.8 Organization of the study
The study consists of six chapters. The first chapter is the introduction and
background information of study. The second chapter presents the literature review,
the third chapter discusses the research methodology, the fourth chapter presents and
analyses the research findings, the fifth chapter presents the discussion of findings
and the sixth chapter presents conclusions and recommendations.
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CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction
This chapter presents conceptual definitions, a review of the theoretical and
empirical literature, identification of the research gap, a summary of the gap, and a
conceptual framework for the study.
2.1 Theoretical Literature Review

In today's competitive banking industry, understanding customers' willingness to pay
for bank services is crucial for financial institutions to effectively price their
offerings and design tailored marketing strategies. This literature review aims to
explore the theoretical foundations related to the perception of potential customers
and their willingness to pay for bank services
2.2.1 Customer Perceived Value (CPV) theory

Customer Perceived Value (CPV) is a marketing concept that focuses on how
customers subjectively assess the benefits and costs of a product or service. It
recognizes that customers evaluate value based on their own perceptions and
preferences. CPV theory suggests that customers determine the value of a product by
considering its functional attributes (quality, performance, features) and non-
functional attributes (brand reputation, customer service, emotional appeal). They
also evaluate the costs associated with obtaining and using the product, including
price, time, effort, and psychological factors.
According to CPV theory, customers mentally compare the perceived benefits and
costs to determine the overall value of a product. If the perceived benefits outweigh
the perceived costs, customers are more likely to perceive high value and are more
inclined to make a purchase (Sweeney, J. C., & Soutar, 2001).
The customer perceived value includes components such as perceived benefits

(functional and non-functional), perceived costs (monetary and non-monetary), value
proposition, and customer value perception. By understanding CPV theory,
marketers can enhance the perceived value of their offerings through various
8
strategies. Ultimately, CPV theory emphasizes the importance of customer-centricity
and how customers' value perceptions influence their purchasing decisions (Kim, G.,
& Moon, 2009).
2.2.2 Expectancy-Value Theory

Expectancy Value Theory is a psychological theory that suggests that an individual's
willingness to engage in a behaviour, such as paying for a product or service, is
influenced by two key factors: their expectation of the outcomes associated with the
behaviour and the value they assign to those outcomes. High expectations of success
and perceiving the outcome as valuable lead to greater motivation, while low
expectations and perceiving the outcome as low in value result in lower motivation.
The theory has been widely applied in various domains, including education, career
development, health behavior, and consumer decision-making (Wigfield, A., &
Eccles, 2022).
The theory proposes that individuals make a decision to engage in a behavior or

pursue a goal by weighing the perceived value or importance of the outcome against
their expectations of success. In other words, individuals are motivated to engage in
activities or pursue goals when they believe that they are capable of succeeding and
when they perceive the outcome as desirable or valuable.
2.3 Empirical Literature Review

According to a study conducted by Alam, M. S., Talukder, S., & Kabir, (2020) in
Bangladesh, titled “To investigate the relationship between customer perception and
willingness to pay for bank services”. Customer perception has a significant impact
on customers' willingness to pay for bank services. The study found that factors such
as service quality, convenience, and reputation play crucial roles in shaping customer
perception. Higher levels of service quality positively influence customer perception,
while convenience and a positive reputation enhance customers' willingness to pay.
The findings emphasize the importance of these factors in influencing customer
perception and suggest that improving service quality, convenience, and reputation
can lead to increased customers' willingness to pay for bank services.
9
Also on the recent study conducted by Maulana, A., (2021) on “Factors influencing
customers' willingness to pay for bank services”. The review identified key
determinants such as service quality, convenience, reputation, trust, perceived value,
financial literacy, customer satisfaction, and personal characteristics. Customers'
WTP was found to be influenced by factors such as higher service quality,
convenience, trust, reputation, and perceived value. Additionally, customer
satisfaction and financial literacy played significant roles in shaping customers'
WTP. The study emphasized the importance of understanding these factors to design
effective pricing strategies and enhance customer satisfaction in the banking sector.
These studies collectively emphasize the importance of understanding customer

perception and the underlying factors that drive customers' willingness to pay for
bank services. By considering and improving aspects such as service quality,
convenience, reputation and perceived value, banks can strategically cater to
potential customers' perceptions, thereby fostering a positive willingness to pay for
their services.
2.4 Research Gap

Most of the researches reviewed under this chapter have focused on the customer’s
perception relationship to willingness to pay and factors influencing the customer’s
willingness to pay for the bank services. On many researches that have been done
they both failed on showing on the perception of a customer on group loans services
that have recently been adopted by the commercial banks of Tanzania specifically
Tanzania Commercial Bank. The studies conducted thus far have primarily focused
on societies that differ from Tanzania in terms of literacy levels, technological
advancement, and population demographics, also no researches have been conducted
in Tanzania to cover the Tanzanian financial institutions who have adopted the
service also on how the customers are perceiving it. Therefore, the researcher
anticipates that the outcomes of this study will hold significant value by shedding
light on how customers perceive group loans and their willingness to engage with
such services.
10
2.5 Conceptual Definitions and Concepts
2.5.1 Perception
Perception is a complex and dynamic process that helps us understand and navigate
our surroundings(Goldstone, R. L., & Gerganov, 2020) or is the process of receiving,
interpreting, and assigning meaning to sensory information from our
environment(Pavlovic, D., & Jeremic, 2018). Our brains organize and filter this
information, and our perceptions are influenced by individual differences, cultural
norms, expectations, and context. Sensation, attention, and interpretation are
different aspects of perception that researcher’s study. Perception is closely related to
memory, learning, and decision-making, and our perceptions of the world around us
can affect these processes.
2.5.2 Potential customers

Potential customers are individuals who have not yet purchased a particular product
or service but have the capability and willingness to do so (Dholakia, U. M., &
Durham, 2018). These individuals may be aware of the product or service, have a
need for it, and possess the financial resources to make a purchase. Identifying and
targeting potential customers is a crucial part of marketing strategy, as it allows
businesses to expand their customer base and increase sales.
2.5.3 Willingness to pay

Willingness to pay is the maximum amount of money that a consumer is willing to
spend on a particular product or service, given their level of satisfaction and the
options available to them (Srinivasan, K., & Park, 2018). It is a concept used in
economics and marketing research to understand how consumers value a product or
service, and it can be used to inform pricing decisions (Kumar, V., Shah, D., & Li,
2018). By determining a consumer's WTP, a company can set prices that maximize
profits and appeal to a broader customer base.
2.5.4 Bank services

Bank services refer to financial products and services offered by banks, such as
loans, deposits, credit cards, and insurance (Al Mamun, M. A., Hossain, M. M., &
Rahman, 2021). These services can include various types of loans, such as personal
11
loans, business loans, and mortgages, as well as deposit accounts, such as savings
accounts and checking accounts. Banks may also offer credit cards, debit cards, and
other payment cards to their customers, along with insurance products such as life
insurance, car insurance, and home insurance. Additionally, some banks provide
investment services, such as brokerage accounts and mutual funds, to help customers
grow their wealth.
2.6 Group Loans

Group loans are a form of microfinance that involves lending money to a group of
people who are jointly liable for the repayment of the loan (Armendariz, B., &
Morduch, 2010). This lending approach has gained significant attention and
popularity as a means to provide financial services to individuals who have limited or
no access to traditional banking systems. In group lending, individuals come together
and form a group, often with 5 to 30 members, to jointly apply for a loan from a
financial institution or microfinance institution. The group members act as each
other's guarantors, creating a social collateral that replaces traditional forms of
collateral typically required by conventional lenders. This joint liability serves as an
incentive for group members to ensure that each member repays their share of the
loan. Group loans are commonly used to support income-generating activities, such
as small businesses, agricultural projects, or other entrepreneurial ventures.
In Tanzania group loans have gained significant attention to some of commercial

banks such as CRDB and TCB, although TCB are the most known in offering this
kind of loan. The Group Loan or Group lending as it termed in TCB Bank has gained
serious attention as the TCB bank have differentiated themselves from other banks
such as CRDB on its terms and conditions of offering the service.
2.6.1 Group Loan Terms and Conditions

These are basically the lending principles or the canons of good lending but drawn in
a way to accommodate the bank's lending policy and the environment in which it
operates. The Tanzania Commercial Bank Plc does not solicit customers to make
applications for loans but only considers loan applications from qualified
businessmen and women for expansion of their businesses. These Terms and
12
conditions are set so as help to give out the group loans to members who are
qualified (Plc, 2023). The applicants will have to comply with the following
requirements:
Eligibility
i The applicant must be of 18 years of age,
ii All applicant must have a TCB account,
iii The Group must comprise of 5 – 10 people.
iv All applicant must have National Identification Number (NIN)
v The applicants must have sufficient experience in the field and have been
open for business,
vi All applicants must have their businesses on physical locations,
vii All applicant must not have any other loan from any financial institution,
viii The applicant being the owner-operator of the business must be proficient in
what she/he does, a skilled craftsperson, efficient producer, or able salesperson,
ix The applicants must have a good reputation in the community, be honest,

hardworking and financially reliable, and must know each other.
2.6.2 Loan Size

The first loan for any group in Tanzania Commercial Bank Plc will be from a
minimum of Tshs. 100,000/= to a maximum of Tshs. 500,000/=. The actual size of
each loan will depend on the size of the enterprise and the borrower's debt service
capacity as evaluated by the Loan officer. A second loan to a borrower who has
proved to be reliable in payment of loan installments may be up to 2 times the first
loan, but still within a maximum of Tshs. 750,000/=. Third loans will be within a
maximum of 1,000,000/= increased to1.5 times the value of the second loan. The
actual size of a repeat loan will depend on the Loan Officer's evaluation of the
13
business prospects of the enterprise, but will also include assessment of retained
earnings in the business from the first loan (Plc, 2023).
2.6.3 Purpose of Loans and Use

The Loans that are provided by the Tanzania Commercial Bank Plc are provided
specifically to finance the already started businesses and not for startups. Clients will
be cautioned on the risk of diversion, which could result in failure of the business.
When the borrower has repaid the loan and need to apply for another new loan, the
Loan officer will check on whether the enterprises achieved the projected increase in
activity and if profits were retained in the enterprise. This covenant stipulates that the
loan received shall be used for the purpose applied for only. Any diversion of funds
will be considered as an act of default and will cause the bank to restrict future loans.
2.6.4 Loan Repayment

The initial loan term will be four months. After the borrower has successfully repaid
first loan, a loan term may be considered to be increased for the second loan. The
third loan and afterwards loans repayments also will be considered for increasment
of repayment time. All group loans will be paid in regular installments. The
installments will be due once a month, on the monthly anniversary date or by the
previous business day of that date. Initially, no grace period will be offered.
2.6.5 Margin
Tanzania Commercial Bank offers these group loans to members of the group with
an interest of 3% flat on the amount loaned will be charged on the loans.
2.6.6 Fees and Charges

No establishment fees, insurance charges or commissions will be charged separately
on the loan to avoid confusing borrowers. All operating costs of the Bank in making
loans are included in the interest rate charged on the loans.
14
2.6.7 Collateral
Loan collateral or security agreement and collateral of an equal or greater value to
the loan appear to be of great importance in lending to small business and medium
size firms (Saunders & Schmeits, 2001) amount will secure all loans. However, the
bank has put that every loan applicant must deposit on his/ her account an initial
deposit that would at least cover for a single repayment and that deposit will sit as
security of the loan. The bank accepts the following forms of collateral; guarantees
backed by tangible assets, chattel mortgages, legal mortgages, liens on bank balances
and life policies. In spite of the fact that the bank’s ability to realize such collateral
may be limited due to involved costs, still collateral, will be required to reduce the
bank's risk exposure and also demonstrate the borrower's good faith.
2.6.8 Supervision and Examination of Group Loan

The bank has the right to arrange and the group has the duty to comply with any
request for information, clarification and examination of the business.
2.6.9 Declarations
The borrower has to declare explicitly that:
a) The borrower will provide in a truthful manner all information required by the
bank and faithfully comply with the requirements of the bank's lending policy,
b) The loan received will be used solely for the purpose against which it was sought
and the bank has the right to see to it,
c) If the loan is not paid as agreed, in an event of default, the bank will have the
following rights;
i. Use the money set as security for repayment of the installation of the loan for a
specific month.
ii. Sell any and all collaterals in connection with the loan by contract or publicly
for and in the name of the bank on its own initiative. The right of the bank may
extend to borrower's stock and trade account receivable and all other sources of
income until the loan is fully repaid.
iii. Use the appropriate authorities for execution of its rights.
15
2.7 Conceptual Framework
A conceptual framework refers to a collection of fundamental concepts and

principles drawn from a specific area of study, which are employed to organize and
guide subsequent actions or research endeavours (Jones, A., Smith, B., & Johnson,
2021). When clearly expressed, a conceptual framework possesses significant
potential as a tool to help researchers comprehend and interpret the findings of their
study. This study's framework holds the capacity to offer meaningful insights into the
research findings. The independent variables are those that are not affected or
influenced by the variables on the study other factors being constant, under this study
the independent variable was perception of potential customer while the dependent
was customer’s willingness to pay for the bank services. The study's specific goal
was to examine the perception of potential customer’s willingness to pay for the bank
services particularly Group loans. This is because numerous commercial banks have
adopted this newly loans known as Group Loans. The relationship between
Customers perception and willingness to pay for the bank services as seen in Figure
2.1
16
Figure 2.1. A Conceptual Framework
Independent Variable Dependent Variable
Perception of Potential Customers
PERCEIVED COST
 FEES
 CHARGES
 INTEREST RATE
 TIME
WILLINGNESS TO
PAY
PERCEIVED BENEFITS
 CONVENIENCE
 VALUE ADDED
 TRUST
 SERVICE QUALITY
Source: Author’s own construct from literature (2023).
2.8 Operationalization of variables

The operationalization of variables involves measuring of both independent and
dependent variables. Independent variables of the study are perceived cost and
perceived benefits. Perceived cost was analysed by asking respondents to rate their
perception of fees, charges, interest rate, and time on scales of agree, disagree, or
neutral. Perceived benefits was analysed by measuring respondents' perception of
convenience, value added, trust, and service quality on scales ranging from
inconvenient to highly convenient. Willingness to pay as dependent variable was
measured by factors of both Perceived cost which are fees, charges, interest rate and
time and Perceived benefit factors which are convenience, value added, trust and
service quality.
17
CHAPTER THREE
RESEARCH METHODOLOGY
3.0 Introduction
This chapter presents methods which were used to explain research design, method
of data collection, area of study, and sampling procedure.
3.1 Research Design
This research study used a descriptive research design focusing on TCB Bank plc as
a case. This approach allowed for an analysis of the subject of interest which focused
on the perception of potential customers on willingness to pay for bank services. By
adopting a descriptive research design, the researcher was able to draw descriptive
conclusions. The use of TCB Bank as the case enhance an understanding customers'
perceptions on factors which influence their willingness to pay for bank services i.e.
group loans.
3.2 Area of Study
This study was conducted at TCB bank’s branch located at Mwanjelwa, Mbeya -
Tanzania. This specific case was chosen due to TCB Bank's notable success in
providing financial assistance to small and medium enterprises (SMEs) through
group loans, hence the researcher was in the better place to understand and analyse
how customers perceived the service and what made them be willing to opt for such
services as it led to good performance of TCB bank. The primary emphasis of this
study was on TCB Bank's group loans, as the bank has established itself as a market
leader in this particular loan category.
3.3 Population and sample size
Study population refers to the group of individuals or elements that the researcher
selects to be part of the study (Creswell, 2014). It is the specific group from which
data is collected and analysed to draw conclusions and make inferences about a
broader population. Therefore, the target population of this study included: Bank
customers of TCB Bank Plc who have accounts and small business owners who are
18
likely to be the potential customers of the bank and are to be the potential lenders
seeking loans for their business. The population size for this study was 260 people.
3.3.1 Sample size

A sample is a small proportion of the population that is selected for observation and
analysis (Leary, 2011). Research was carried out at the TCB Bank Plc Mwanjelwa
Branch in Mbeya Region selecting a sample size of 158 respondents from the
targeted population size of 260 people. The selection of the sample size of this
researched was made possible by the use of a sampling formula which is used to
calculate the sample size from the population given known as Yamane formula.
The sample size for this study was calculated by using the Yamane formula that was
developed in 1973.
N
n= 2
1+ N ( ⅇ )
Where;
n = sample size
N = is the population size
e = the margin error point of 0.05
260
n= 2
1+260 [ 0 . 05 ]
260
n=
1+260 (0.0025)
260
n=
1.65
n=157.57
19
Therefore, according to the Yamane formula, the calculated sample size for a
population size of 260 with a 5% margin of error is approximately 157.57 Since
sample sizes cannot be fractional, the researcher typically rounded up to the nearest
whole number, resulting in a recommended sample size of 158.The table 3.1 shows
the distribution of population selected by the researcher.
Table 3.1 Number of respondents

S/N CATEGORY SAMPLE SIZE
1 Students 93
2 Small business owners 50
3 Employees 15
TOTAL 158
3.4 Sampling Techniques

Sampling techniques involve the systematic selection of a subset of subjects from a
larger population to ensure that the chosen individuals represent the entire group
(Kothari, 2021). Probability sampling methods include simple random sampling,
stratified sampling, systematic sampling, cluster random sampling and multistage
sampling. Non probability sampling methods consist of purposive sampling,
convenience sampling and quota sampling. The study used two non-probability
sampling procedures namely convenience sampling and purposive sampling
techniques.
3.4.1 Convenience Sampling
Convenience sampling is a non-probability sampling technique where participants
are selected based on their easy accessibility and proximity to the researcher. In this
method, the individuals who are readily available and willing to participate are
included in the sample, without any random selection process (Kothari, 2021). This
procedure was applied in this research because of its nature which allowed the
20
researcher to use any individual who was available and was ready to participate on
the research.
3.4.2 Purposive Sampling
Purposive sampling, also known as judgmental or selective sampling, is a non-
probability sampling technique where researchers intentionally select specific
individuals or elements from a population based on their expertise, knowledge, or
specific characteristics related to the research objective (Ghauri, P. N., & Gronhaug,
2019). This procedure was applied in this research because it needed respondents
who are likely to have relevant information or experiences related to bank services
and group loans.
3.5 Types of data and data collection methods
3.5.1 Types of data
This study used primary data. The researcher gives priority to the objective nature of
primary data, as it has not been interpreted by any previous researchers.
3.5.2 Data collection method
The initial data collection involved primary sources directly obtained from the field,
specifically from TCB staff and customers. Questionnaires were the chosen method
to gather this primary data. The researcher utilized a self-administered approach,
distributing questionnaires comprising closed ended questions in the form of Likert
scale questions. Questionnaires serve as a collection of researcher-prepared questions
designs to acquire data and insights from respondents, making them a valuable tool
in research studies. Researchers create both open-ended and closed-ended questions
within the questionnaire to compare respondent comments and gauge their
perceptions (Smith, 2018). The study utilized questionnaires that aimed to gather
both quantitative and qualitative data. To achieve this, a combination of structured
and semi-structured questionnaires consisting of closed and open-ended questions
were utilized.
21
3.7 Measurement of Variables.
This refers to the procedure of attributing numerical or categorical values to the
characteristics, attributes, properties, or variables under investigation in a research
study (Creswell, 2014). To obtain numerical data, variables are measured using
standardized scales. The resulting numerical values can then undergo statistical
analysis, such as descriptive statistics, correlation analysis, regression analysis, or
hypothesis testing. In this particular study, the researcher employed descriptive
statistics.
3.7.1 Nominal
Nominal measurements refer to a type of categorical data in which values are
assigned to different categories or groups without any inherent order or magnitude.
These categories are typically represented using labels, names, or codes. These
values are used to differentiate substances or entities based on specific
classifications, such as sex or orientation. For example, in this study, the code “0” is
assigned to represent female orientation, while the code “1” represents male
orientation.
3.7.2 Ordinal level

Ordinal measurements refer to a type of measurement scale in which variables are
ordered or ranked according to some criterion or attribute. Unlike nominal
measurements that only categorize variables into distinct groups, ordinal
measurements provide information about the relative positions or preferences among
the categories. In ordinal estimation, the number of items is arranged in a specific
relationship or order. This arrangement is based on the relative positions or rankings
of the items, indicating different proportions or levels along the scale. Each
perception or observation may have a distinct position or value on the ordinal scale.
3.7.3 Interval level
Interval measurement is a type of measurement scale in which numerical values are

used to represent and quantify variables. In this level of measurement, the intervals
or differences between values are meaningful and consistent. Additionally, the scale
has a defined zero point, but it does not represent a true absence or lack of the
measured attribute. As an example, an age range of 25 to 34 years could be utilized.
22
3.8 Data Analysis
Data collected were analysed on quantitave manner after being collected from the
field and undergone some thorough preparations through coding and editing of the
data. This process involved checking of data collection forms for omission, legibility
and consistency as well as discarding the incomplete responses which have missing
data. All the data were summarized, coded and analysed descriptively with the help
of Statistical Package for Social Science (SPSS) Software. Through the use of this
technique, the data was thoroughly examined and presented in a way that allowed the
researcher to make an accurate interpretation of the findings.
3.9 Ethical Consideration

To guarantee ethical behaviour during the study, every participant received clear
information about the study and willingly gave their informed consent. The
information provided by the participants was treated as confidential and solely
intended for academic purposes. This approach minimized any potential risks for the
participants. Additional ethical considerations involved briefing the participants on
the research's objectives, their significance in the research process, and the
expectations placed upon them. Furthermore, measures were taken to prevent
plagiarism and data fabrication, maintain privacy, and ensure the anonymity of the
participants.
23
CHAPTER FOUR
PRESENTATION OF FINDINGS
4.0 Introduction
This chapter presents findings of the study on the perception of potential customers
on willingness to pay for bank services based on two specific research objectives
which focused on the The analysis of the perception of potential customers related to
the influence of perceived cost on willingness to pay; and, analysis of the perception
of potential customers related to the influence of perceived benefit on willingness to
pay.
4.1 Demographic information
The study had four (4) demographic characteristics which were age, gender, level of
education and familiarity with the ‘group loan’ service. Table 4.1 indicates research
findings which are linked to demographic charaserictics of the respondents.
24
Table 4.1 Demographic characteristics
FREQUENCY PERCENTAGE %
Age 18-24 75 47.5%

25-34 45 28.5%
35-44 28 17.6%
45-54 05 3.2%
55 and ABOVE 05 3.2%

Total 158 100%
Gender Male 65 41.1%

Female 93 58.9%
Total 158 100%
Education level Primary 10 6.3%
Secondary 25 15.8%
Diploma 30 19.0%
Degree 90 57.0%
Masters 03 1.9%
Others 0 0.0%
Total 158 100%
Familiarity with the Very familiar 10 6.3%

service
Familiar 60 38.0%
Neutral 15 9.5%
Unfamiliar 33 20.9%
Very unfamiliar 40 25.3%
Total 158 100%
Source field data 2023
25
4.1.1 Age
The data collected from the respondents reveals a diverse distribution across different
age groups. The largest proportion of participants falls within the 18-24 years’
category, comprising 47.5% of the total respondents. Following closely, the 25-34
years’ age group constitutes 28.5% of the participants. The remaining respondents
are distributed across various age brackets, including 35-44 years (14.3%), 45-54
years (7.2%), and 55 years and above (2.5%).
4.1.2 Gender
Regarding the gender representation among respondents, the data indicates a higher
percentage of female participants. Female respondents make up 58.9% of the total,
while male respondents account for 41.1%.
4.1.3 Level of education
The data showcases the educational background of the respondents, revealing a range
of qualifications. Among the participants, the highest proportion holds a degree,
accounting for 57.0% of the sample. Following that, 19.0% of respondents have
diplomas. The other educational categories include secondary education (14.3%),
primary education (8.9%), and those with postgraduate degrees (0.3%).
4.1.4 Familiarity with ‘group loan’ service
The data collected also includes information on the respondents' familiarity with the
'group loan' service offered. Approximately 38.0% of the respondents indicate that
they are familiar with the service. On the other hand, a substantial proportion
(25.3%) of the participant’s express being very unfamiliar with the 'group loan'
service. The remaining respondents fall between being somewhat familiar (18.1%)
and slightly unfamiliar (18.6%) with the service.
In conclusion, the data provides a detailed overview of the demographic

characteristics of the respondents. It highlights the diverse representation of age
groups, with a substantial proportion falling within the 18-24 years and 25-34 years’
categories. The data also emphasizes a higher percentage of female participants
compared to male participants. Additionally, the educational background of the
26
respondents varies, with the majority holding degrees. Lastly, the respondents'
familiarity with the 'group loan' service shows varying degrees, with a significant
proportion being unfamiliar with it
4.2 Perception of potential customers related to the influence of perceived cost

on willingness to pay
Perception of potential customers related to the influence of perceived cost on

willingness to pay was analysed in light of four aspects which are; group loan fees,
loan charges, interest rate and timeframe for loan repayment.
4.2.1 Customer perception on group loan fees

Table 4.2 Customer Perception on group loan fees
Frequency Percent
STRONGLY DISAGREE 25 15.8
DISAGREE 15 9.5
NEUTRAL 5 3.2
AGREE 33 20.9
STRONGLY AGREE 80 50.6
Total 158 100.0
The study findings on customer’s perception on group loan fees indicates that 25
respondents, accounting for 15.8% of the total, strongly disagree with the fees
associated with the group loan, 15 respondents, representing 9.5% of the total,
disagree with the fees, 5 respondents, making up 3.2% of the total, have a neutral
stance regarding the fees, 33 respondents, accounting for 20.9% of the total, agree
with the fees and 80 respondents, representing 50.6% of the total, strongly agree with
the fees.
Therefore, the data above indicates that the majority of respondents strongly agreed
with the group loan fees while a smaller percentage expressed disagreement or had a
neutral stance. This indicates that a significant portion of the respondents perceive
the group loan fees positively.
27
4.2.2 Assessment of Loan Charges Reliability
Frequency Percent
DISAGREE 10 6.3
NEUTRAL 19 12.0
AGREE 19 12.0
Total 158 100.0

Table 4.3 Assessment of loan charges reliability
The study findings on Assessment of Loan Charges Reliability indicates that 90

respondents, accounting for 57.0% of the total, strongly disagree with the reliability
of the loan charges,10 respondents, representing 6.3% of the total, disagree with the
reliability,
19 respondents, making up 12.0% of the total, have a neutral stance regarding the
reliability of the loan charges, 19 respondents, accounting for 12.0% of the total,
agree with the reliability and 20 respondents, representing 12.7% of the total,
strongly agree with the reliability of the loan charges.
This indicates that the majority of respondents have a negative perception on the
charges that are involved with the group loans.
28
4.2.3 Group Loan Interest Rate Analysis
Frequency Percent
DISAGREE 10 6.3
NEUTRAL 5 3.2
AGREE 40 25.3
Total 158 100.0

Table 4.4 Group loan Interest Rate Analysis
The study findings on Group Loan Interest Rate Analysis indicates that 25
respondents, accounting for 15.8% of the total, strongly disagree that the interest rate
on group loans offered by TCB is reasonable, 10 respondents, representing 6.3% of
the total, disagree with the reasonableness of the interest rate, 5 respondents, making
up 3.2% of the total, have a neutral stance regarding the reasonableness of the
interest rate, 40 respondents, accounting for 25.3% of the total, agree that the interest
rate on group loans offered by TCB is reasonable and 78 respondents, representing
49.4% of the total, strongly agree with the reasonableness of the interest rate.
This indicates that the majority of respondents have positive perceptions and agree
on the interest rate that is charged by the bank on the group loans implying that they
are willing to pay for the product.
29
4.2.5 Assessment of Practicability of Group Loan Payment Time Frame
Table 4.5 Assessment of practicability of group loan payment time frame
Frequency Percent
DISAGREE 45 28.5
NEUTRAL 20 12.7
AGREE 33 20.9
Total 158 100.0
The study findings on Group Loan Interest Rate Analysis indicates that 30
respondents, accounting for 19.0% of the total, strongly disagree that the time offered
for group loan payment is reasonable, 45 respondents, representing 28.5% of the
total, disagree with the reasonableness of the time offered for loan payment, 20
respondents, making up 12.7% of the total, have a neutral stance regarding the
practicability of the time offered for loan payment, 33 respondents, accounting for
20.9% of the total, agree that the time offered for loan payment is reasonable and 30
respondents, representing 19.0% of the total, strongly agree with the practicability of
the time offered for loan payment. This indicates that the majority of respondents
disagree with the payment time that is structured by the bank on the group loans.
In summary, the findings on the perception of potential customers the influence of

perceived cost on willingness to pay indicates mixed perceptions among the
respondents regarding group loan fees, loan charges reliability, interest rates, and
loan payment time. While a majority of respondents show positive perceptions
towards group loan fees and interest rates, there are concerns regarding the reliability
of loan charges and the reasonableness of the payment time. These findings highlight
the importance of addressing customer concerns and expectations in order to enhance
customer satisfaction and improve the overall loan products and services provided by
the bank.
30
4.3 Perception of potential customers related to the influence of perceived
benefit on willingness to pay
Perception of potential customers related to the influence of Perceived benefit on

willingness to pay was analysed in light of four aspects which are; Convenience of
documentation, unique characteristics, transparency & clarity and staff
responsiveness.
4.3.1 Assessment of convenience of documentation requirements

Table 4.6 assessment of convenience of documentation requirements
Frequency Percent
DISAGREE 5 3.2
NEUTRAL 28 17.7
AGREE 68 43.0
Total 158 100.0
The study findings on assessment of convenience of documentation requirements

indicates that 5 respondents (3.2%) disagreed with the documentation requirements,
indicating that they found them unreasonable and inconvenient. 28 respondents
(17.7%) had a neutral stance on the documentation requirements, neither agreeing
nor disagreeing strongly, 68 respondents (43%) agreed with the documentation
requirements, suggesting that they found them reasonable and convenient, 57
respondents (36.1%) strongly agreed with the documentation requirements,
indicating a high level of satisfaction with their reasonableness and convenience.
Therefore, the data indicates that the majority of respondents have positive views
regarding the convenience of documentation requirements. The combined percentage
of those who agree and strongly agree is 79.1%, indicating a general satisfaction with
the convenience of the documentation process.
31
Frequency Percent
DISAGREE 6 3.8
NEUTRAL 15 9.5
AGREE 50 31.6
Total 158 100.0

4.3.2 Analysis of Unique Characteristics
Table 4.7 Analysis of unique characteristics
The study findings on analysis of unique characteristics indicates that 2 respondents

(1.3%) strongly disagreed with the documentation requirements, indicating that they
found them highly unreasonable and inconvenient, 6 respondents (3.8%) disagreed
with the documentation requirements, suggesting that they found them unreasonable
and inconvenient,15 respondents (9.5%) had a neutral stance on the documentation
requirements, neither strongly agreeing nor disagreeing, 50 respondents (31.6%)
agreed with the documentation requirements, indicating that they found them
reasonable and convenient and 85 respondents (53.8%) strongly agreed with the
documentation requirements, indicating a high level of satisfaction with their
reasonableness and convenience.
Overall the data indicates that the majority of respondents hold positive views
regarding the unique characteristics being analyzed. The combined percentage of
those who agree and strongly agree is 85.4%, indicating a general agreement on the
presence of unique characteristics.
32
Frequency Percent
DISAGREE 10 6.3
AGREE 83 52.5
Total 158 100.0

4.3.3 Transparency and Clarity Analysis
Table 4.8 Transparency and Clarity Analysis

The study findings on Transparency and clarity analysis indicates that 2 respondents
(1.3%) strongly disagreed with the level of transparency and clarity, indicating that
they found it highly insufficient, 10 respondents (6.3%) disagreed with the level of
transparency and clarity, suggesting that they found it insufficient, 83 respondents
(52.5%) agreed with the level of transparency and clarity, indicating that they found
it satisfactory and 63 respondents (39.9%) strongly agreed with the level of
transparency and clarity, indicating a high level of satisfaction with its adequacy.
Overall, the findings indicate that the majority of respondents hold positive views
regarding the transparency and clarity being analyzed. The combined percentage of
those who agree and strongly agree is 92.4%, indicating a general agreement on the
presence of transparency and clarity.
33
4.3.4 Assessment of staff responsiveness
Frequency Percent
DISAGREE 20 12.7
NEUTRAL 19 12.0
AGREE 32 20.3
Total 158 100.0

Table 4.9 Assessment of staff responsiveness
The study findings on assessment of staff responsiveness indicates that15

respondents (9.5%) strongly disagreed with the TCB staff's responsiveness and
support in the group loan process, indicating a high level of dissatisfaction, 20
respondents (12.7%) disagreed with the TCB staff's responsiveness and support,
suggesting that they found it lacking, 19 respondents (12%) had a neutral stance on
the TCB staff's responsiveness and support, neither strongly agreeing nor
disagreeing, 32 respondents (20.3%) agreed with the TCB staff's responsiveness and
support, indicating that they found it satisfactory and 72 respondents (45.6%)
strongly agreed with the TCB staff's responsiveness and support, indicating a high
level of satisfaction.
Overall, the findings indicate that the majority of respondents hold positive views
regarding staff responsiveness. The combined percentage of those who agree and
strongly agree is 65.9%, indicating a general agreement on the staff's responsiveness.
In summary, the findings suggest that potential customers generally hold positive
perceptions regarding the influence of perceived benefit. They perceive convenience
in documentation requirements, recognize unique characteristics, appreciate
transparency and clarity and have a positive perception of staff responsiveness.
These positive perceptions indicate a favourable influence of perceived benefit on the
potential customers' overall perception of the product or service.
34
CHAPTER FIVE.
DISCUSSION OF THE FINDINGS

5.0 Introduction
This chapter presents discussion of findings on the perception of potential customers

on willingness to pay for bank services.
5.1 Analysis of the perception of potential customers on the influence of

perceived cost on willingness to pay.
The findings of the analysis of potential customers' perceptions on the influence of
perceived cost on their willingness to pay reveals a diverse range of viewpoints.
While some customers view the costs associated with group loans favourably, others
express dissatisfaction or concerns.
The findings highlight the significance of aligning perceived costs with customers'
expectations. When potential customers perceive the fees and interest rates of group
loans to be reasonable, it positively impacts their willingness to pay. Conversely,
when there are concerns or disagreements regarding the reliability of loan charges or
the reasonableness of the payment time frame, it can affect customers' willingness to
engage with the loan offering.
These findings align with the study conducted by Alam, M. S., Talukder, S., &
Kabir, (2020) in Bangladesh, titled "To investigate the relationship between customer
perception and willingness to pay for bank services." According to their research,
customer perception plays a significant role in customers' willingness to pay for bank
services, which highlighted the importance of addressing customer concerns and
improving service quality to enhance customer perception and willingness to pay for
bank services.
According to the report many customers were justified by the fees on group loans as
TCB Bank has done some improvements on the loan services, the TCB bank
emphasizes quick approvals and personalized support to the customers who are
taking group loans in which to the customers this is wat they seek and when they see
it is as a worth the fees incurred but also they had concerns about hidden fees,
35
unclear terms and conditions, about the group loan offered by the TCB bank and in
how group loan charges are calculated and communicated and the reasonableness
time frame for payment of the loan.
To enhance customers' willingness to pay, TCB Bank should carefully consider

customer perceptions and address any issues or concerns. This involves ensuring
transparency in cost-related aspects, building trust in loan charges reliability and
offering payment time frames that are perceived as reasonable by the potential
customers.
By actively addressing customer concerns and aligning perceived costs with

customer expectations, TCB bank can better meet customer needs, enhance customer
satisfaction, and ultimately increase their competitiveness in the market.
5.2 Analysis of the perception of potential customers on the influence of

perceived benefit on willingness to pay.
The findings of the analysis of potential customers' perceptions on the influence of
perceived benefit on their willingness to pay reveals the significance of convenience,
perceived value, trust and transparency and service quality as factors that shapes the
customer’s perception and behaviour towards willingness to pay for bank services
TCB group loan in particular. The findings from the study align with the study
conducted by Maulana, A., (2021) on factors influencing customers' willingness to
pay for bank services. Several key factors emerged as significant in shaping
customers' perceptions and behaviours.
Convenience was identified as a crucial factor in both studies. Customers value

streamlined and efficient processes that minimize inconvenience. The positive
perception of convenience in the analysis of documentation requirements of TCB
bank group loans indicates that customers found them reasonable and convenient.
This aligns with Maulana's study, which emphasized convenience as a determinant of
customers' willingness to pay for bank services.
36
Furthermore, perceived value, Trust, transparency, and service quality were another
important factors highlighted in both studies. According to the report it demonstrates
that the unique characteristics that are within the TCB Group loan provide the
customers with the assurance of perceived value in the group loan, leading to a
positive perception overall as when customers perceive a high value in the services
or processes offered by a bank, they are more likely to be satisfied and willing to
pay. Also it identified that service quality, particularly staff responsiveness, plays a
crucial role contributing to the overall service quality experience to the customers,
leading to higher satisfaction levels and a greater likelihood of customers being
willing to pay for services.
Overall, the findings from this study demonstrates the importance of convenience,
perceived value, trust, and service quality in shaping customers' perceptions and
behaviours in the banking sector. Understanding and addressing these factors may be
essential for designing effective strategies and enhancing customer satisfaction.
37
CHAPTER SIX
SUMMARY, CONCLUSION AND RECOMMENDATIONS
6.0 Introduction
This chapter presents the summary, conclusion and recommendations of the study.
6.1 Summary
In recent years’ small business have faced difficulties in accessing financial
resources from banks due to factors such as strict creditworthiness requirements,
high interest rates, and regulatory constraints have hindered the growth and
development of small businesses. This is certainly still the case up to now but luckily
there are some initiatives that the Government and banks have taken, the provision of
group loans is the initiative that has been initiated in recent years so as to cater out
the difficulties that the small businesses face. The TCB Bank is one among the
commercial banks in Tanzania which highly put into action the group loan program
as it has established itself as the sole highly provider of such loans.
The findings of the study shed light on the perception of potential customers
regarding the influence of perceived cost and perceived benefit on their willingness
to pay for bank services, with a specific focus on the TCB Bank's group loan
program. The study revealed that customers' willingness to pay is influenced by their
alignment of costs with their expectations. If the services meet their expectations,
customers are generally willing to pay regardless of the incurred costs also identified
several factors that customers perceive as benefits, which shape their perception and
behaviour towards willingness to pay for bank services.
Based on these findings, improving on aligning costs with customer expectations,

addressing concerns related to fees and terms, and improving transparency in cost-
related aspects were identified as the main effective mechanism that may ensure
customers are satisfied with service provided and increase their willingness to pay.
The findings in the field also revealed that the bank should also emphasize
convenience, perceived value, trust, transparency, and service quality in its offerings.
By doing so, the bank can enhance customer satisfaction, loyalty, and willingness to
38
pay. Additionally, the TCB Bank should continue to invest in its group loan program
to support SME projects and capitalize on the positive impact it has on businesses.
By leveraging these findings, the TCB Bank can position itself as a trusted and
preferred choice for potential customers, driving its growth and success in the
banking industry.
6.2 Conclusion
The study investigated the perception of potential customers regarding their
willingness to pay for bank services, focusing on the influence of perceived cost and
benefit. Utilizing descriptive statistics, the study revealed that customers are willing
to pay for bank services if they meet their expectations, irrespective of the cost
incurred. Various factors perceived as benefits shape customers' perceptions and
behaviours towards paying for bank services. Additionally, the study highlighted the
significance of TCB Bank's group loan program in financing SME projects, with
diverse viewpoints expressing overall satisfaction and the potential for acquiring
more customers in the future. Overall, aligning customer expectations, emphasizing
benefits and the effectiveness of the group loan program contribute to customers'
willingness to pay for bank services and TCB Bank's growth potential
6.3 Recommendations
The following recommendations are tailored to the current circumstances
surrounding customers' perceptions and their willingness to pay for bank services.
These suggestions aim to address the specific factors influencing customers'
perceptions and enhance their willingness to invest in bank services.
The study recommends that there is a reasonable payment time frame. Ensuring that
the payment time frame for the group loan program is perceived as reasonable by
potential customers is essential as it will increase their willingness to engage with the
loan offering. TCB bank should consider the customer’s financial capabilities and
provide flexible payment options that align with their needs.
The study also recommends a streamlined and efficient Processes: TCB Bank should
continuously work towards improving convenience in the loan application and
approval processes. Minimize paperwork and reduce unnecessary bureaucratic
39
procedures. Implement efficient digital solutions that simplify the application and
disbursement processes, making it convenient for customers to access and manage
their loan.
By implementing these recommendations, TCB Bank can effectively address

customer concerns, enhance customer satisfaction, and increase customers'
willingness to pay for their bank services, particularly the group loan program. This
will ultimately contribute to the bank's growth, competitiveness, and success in the
banking industry.
6.4 Area for further studies

This study used the TCB Bank as its case study and looked at The analysis of
potential customers on willingness to pay for bank services particularly group loans.
The study covered only one bank, therefore there is a need to conduct a research at
the national level to find more issues related to perception of customers on
willingness to pay for bank services by looking on areas such as Conducting a
comparative analysis of customer perceptions and willingness to pay across different
banks or financial institutions. This would provide a broader perspective on how
different institutions' offerings and strategies impact customer behaviour and
willingness to pay.
6.5 Limitation of the study

During the research, the researcher encountered several limitations, including
respondents' busy schedules resulting in low cooperation, limited customer
knowledge about banking services, and difficulty in accessing comprehensive
information due to reluctance in disclosing confidential details by TCB bank
managers and employees. Another limitation was the study's focus on only one
region, limiting information from potential customers across the country. To address
these limitations, the researcher chose to interview a specific customer group at the
Mwanjelwa branch, ensuring confidentiality.
40
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43
APPENDIX
QUESTIONNAIRE
SECTION A :Introduction
Dear respondents,
My name is Hamis Hassan Angovi a student at Mzumbe University-Mbeya Campus
College pursuing the Bachelor of Business Administration in Marketing
Management (BBA-MM). I humbly ask you to give me input of my research by
giving your response in this questionnaire of my research titled “Analysis of the
Perception of potential customers on Willingness to Pay for bank services”.
Please be informed that information you provide will be strictly kept confidential and
solely for academic purposes only. Hence your correct responses will enable the
researcher to achieve the intended objective. I thank you in advance.
SECTION B
Demographic information of the respondents
Instruction (Put a tick [√] to the answer)
1. Your gender
a) Male
b) Female
2. Age of respondent
a) 18-24 years old
b) 25-34 years old
c) 35-44 years old
d) 45-54 years old
e) 55 years old or above
44
3. What is your educational background?
a) Primary
b) Secondary
c) Diploma
d) Bachelor's degree
e) Master's degree
f) Other (please specify) ______________
4. What is your occupation?
a) Employed full-time
b) Employed part-time
c) Self-employed
d) Student
e) Other (please specify) ______________
5. How would you describe your level of familiarity with the service category being
studied?
a) Very familiar
b) Familiar
c) Neutral
d) Unfamiliar
e) Very unfamiliar
45
SECTION C:
Questions related to the specific Objectives of the study
a) To analyse the perception of potential customers related to the

influence of perceived cost on willingness to pay.
Please indicate on the scale provided below by ticking the extent to which you agree
with the following statements: 1=Strongly Disagree, 2=Disagree, 3=Neutral,
4=Agree, and 5=Strongly Agree.
Cod Questions 5 4 3 2 1
e
X1 Are the fees associated with the group loan

reasonable and justifiable?
X2 Do the charges imposed on the group loan

service reliably reflect the true cost of the
loan?
X3 The interest rate on group loans offered by

TCB is reasonable.
X4 The time offered for group loan payment is

reasonable.
46
b) To analyse the perception of potential customers related to the
influence of perceived benefit on willingness to pay.
Please indicate on the scale provided below by ticking the extent to which you agree
with the following statements: 1=Strongly Disagree, 2=Disagree, 3=Neutral,
4=Agree, and 5=Strongly Agree.
Code Questions 5 4 3 2 1
X1 The documentation requirements for group

loans were reasonable and convenient.
X2 The group loan offered by TCB has unique

features that set it apart from other
financing institutions.
X3 The terms and conditions of the group loan

offered by TCB Bank are transparent and
clear.
X4 The staff of TCB was responsive and

helpful throughout the group loan process
47
48

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ANALYSIS OF THE PERCEPTION OF POTENTIAL

CUSTOMERS ON WILLINGNESS TO PAY FOR THE BANK

THE CASE OF TANZANIA COMMERCIAL BANK PLC

THE CASE OF TANZANIA COMMERCIAL BANK PLC

A Research Report Submitted in Partial Fulfilment of the Requirement for The

Accepted for the Board of

First, I would like to express my gratitude to Almighty Allah the author of

BOT : BANK OF TANZANIA

Figure 2.1. A Conceptual Framework........................................................................17

1.0 Introduction of the Study

1.1 Background of the study

1.1.1 Willingness to Pay

1.1.2 Perceived Value

1.2.1 Perception of Potential customers

According to a recent study by (Izogo et al., 2021), customers' perception of bank

1.3 Statement of the Problem

1.4 Research Objectives

1.4.1 General Objective

1.4.2 Specific Objectives

i. To analyse the perception of potential customers related to the influence of

1.6 Significance of the study

1.7 Scope of the Study

2.1 Theoretical Literature Review

2.2.1 Customer Perceived Value (CPV) theory

The customer perceived value includes components such as perceived benefits

2.2.2 Expectancy-Value Theory

The theory proposes that individuals make a decision to engage in a behavior or

2.3 Empirical Literature Review

These studies collectively emphasize the importance of understanding customer

2.4 Research Gap

2.5.2 Potential customers

2.5.3 Willingness to pay

2.5.4 Bank services

2.6 Group Loans

In Tanzania group loans have gained significant attention to some of commercial

2.6.1 Group Loan Terms and Conditions

ii All applicant must have a TCB account,

iii The Group must comprise of 5 – 10 people.

iv All applicant must have National Identification Number (NIN)

vi All applicants must have their businesses on physical locations,

ix The applicants must have a good reputation in the community, be honest,

2.6.2 Loan Size

2.6.3 Purpose of Loans and Use

2.6.4 Loan Repayment

2.6.6 Fees and Charges

2.6.8 Supervision and Examination of Group Loan

A conceptual framework refers to a collection of fundamental concepts and

Source: Author’s own construct from literature (2023).

2.8 Operationalization of variables

3.1 Research Design

3.2 Area of Study

3.3 Population and sample size

3.3.1 Sample size

N = is the population size

e = the margin error point of 0.05

Table 3.1 Number of respondents

2 Small business owners 50

3.4 Sampling Techniques

3.7.2 Ordinal level