The Sunday Times summed up the strange position that Saga (UK’s biggest company dedicated to selling to the 50+) has got itself into: “Saga floats as founder heads for the sunset, but the group is not ruling out a sale”. If you want to read the articles you will need to register on the ST site.
This press release from Saga gives the company’s side of the situation.
It looks to me that the company is using the possibility of floatation as an opportunity to contact its database of nearly 6 million households, 3m of whom will receive a letter from the company making its sales pitch for them to purchase shares in the company. A good exercise in customer stroking “we love you so much, so why don’t you write a cheque and make the owners billionaires”. Also, it is a nice way of demonstrating the interest in the company from its customers and hence a reason to add a bit more to the purchase price. Well done Saga, good marketing practice.
Last year it issued 1.9m insurance policies and sold £200m worth of holidays. It made pre-tax profits of £81.6m. The vast bulk of the profit comes from its financial services arm.
The ST journalist made this odd (and in my view wrong) comment: “Saga said it still had only about 10% of the potential market. Not only has it room to grow but it has no serious competition and is unlikely to face any”.
Sorry to spoil the story folks. Saga will suffer from its own success. It has done an admirable job in promoting the business potential of the 50+. It success has not gone unnoticed. It generates its profit from the fickle, highly price sensitive world of financial services. The brand is associated with the old-old not the new-old. A great brand to profitably milk, but a big question of how it will thrive in the world of 50+ aware competitiors.
The company is issuing a detailed pathfinder prospectus next month - it should make interesting reading. Dick Stroud: www.20plus30.com
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