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Primerica Company’s Strategic Analysis Essay

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Updated: Jun 30th, 2021

Introduction

Primerica is a U.S. company that provides term life insurance to middle-class American families. It also has branches in Canada, Puerto Rico, and Guam (“About Us”). The company’s headquarters is situated in Duluth, Georgia, and it has a Canadian head office in Mississauga, Ontario (Primerica, “Corporate Responsibility Report” 8). In 2018, Primerica had 5,200 field offices, which are offices established by regional vice presidents (Primerica, “2018 Annual Report” 4).

The company has “more than 2,000 employees and over 130,000 life insurance-licensed independent sales representatives” (Primerica, “Corporate Responsibility Report” 2). This paper will give information about Primerica’s mission, products, communication with workers, and provide a SWOT analysis. An overview of the company’s activity shows that it allows people with middle incomes to improve their financial planning and establish their own businesses.

Foundation and Mission of the Company

Primerica’s history can be traced back to the previous century. In 1977, Arthur L. Williams, together with his wife and 85 colleagues, established a company called A. L. Williams & Associates (“About Us”). Williams decided to found the firm because he was convinced that term life insurance was better than whole life insurance due to higher rates of coverage and lower costs (Primerica, “Corporate Responsibility Report” 4).

He invented the company philosophy, “Buy Term and Invest the Difference” (“About Us”). It means that it is more profitable to buy cheaper term insurance because the difference between its cost and that of a more expensive whole life insurance could be invested in something useful.

The company managed to convince its customers that term insurance was exactly what they needed. By 1991, it had undergone several mergers and acquired a new name, Primerica Financial Services, which was changed to Primerica, Inc. in 2010 (“About Us”). As any successful commercial organization, the company has its vision statement: “Primerica is a Main Street Company for Main Street North America” (“We Help Families”).

It conveys the message that the firm provides its services for middle-class households in North America. To realize its vision, the company developed its mission, which is “to serve middle-income families by helping them make informed financial decisions and providing them with a strategy and tools to gain financial independence” (Primerica, “2018 Annual Report” 1). Thus, the company assists common people not only by insuring their lives but also by teaching them to manage their finances.

Primerica is quite successful in realizing its vision and mission. By the end of 2018, its employees had insured about five million lives, and their customers had created more than two million investment accounts (Primerica, “2018 Annual Report” 1). The five-year goal of the company is to further fulfill its mission by employing millennials and addressing its services to female decision-makers (Primerica, “Introduction to Primerica” 36-37).

Primerica explains its intention to hire Generation Y members by their alignment with the firm’s objectives because they are forward-thinking and willing to start their businesses (“Introduction to Primerica” 36). Targeting women is also a good strategy since they tend to participate in making financial decisions (Primerica, “Introduction to Primerica” 37). Consequently, Primerica’s goal for future development is reasonable and quite attainable.

Demand and Supply

As it was mentioned above, the main company’s product is term life insurance. Apart from that, Primerica supplies its customers with investment services, such as retail mutual funds, annuities, and managed accounts in the U.S. (Primerica, “Introduction to Primerica” 10). In Canada, it also provides its clients with the possibility of investing in segregated funds (Primerica, “Introduction to Primerica” 10).

Other products include prepaid legal services, auto and homeowners insurance, and long term care insurance (Primerica, “Introduction to Primerica” 10). The company also educates its customers about the necessity of protecting their incomes and reducing debts. For this purpose, it collaborates with third-party firms that help its clients to consolidate their debts (Primerica, “2018 Annual Report” 7). Thus, Primerica is a large supplier of a wide range of financial services.

The company’s products are in high demand among middle-income families. All people are mortal, but no one knows for sure when exactly he or she will die. Therefore, Primerica’s customers expect from term insurance provided by the company that it will ensure the financial security of their families in case of their deaths. The firm’s clients also rely on its investment services to make sure they will have enough savings to be comfortable in their old age. Since Primerica offers tools for reducing debts, customers expect that it will help them to pay off their loans and start saving for the future. Consequently, Primerica’s products meet the essential demands of the firm’s target market.

SWOT Analysis

Primerica has several strengths that help it to maintain its current position in the market and expand into new customer segments. The first advantage of the company is that it provides its services for the underserved market of middle-income families while its competitors target their products at the wealthy population (Primerica, “Corporate Responsibility Report” 4). Since the number of households earning from $30,000 to $100,000 per year constitutes about half of U.S. households, the firm is sure to maintain its leadership in the insurance business (Primerica, “Corporate Responsibility Report” 4).

Another strength of the company is a strong distribution network. Primerica employs about 130,000 independent contractors, which are exclusive to this company and help it to reach most of its target market (“Introduction to Primerica” 16). These advantages ensure the firm’s prosperity and ability to remain competitive.

Along with strengths, the company possesses some weaknesses that need to be improved. Some company’s part-time sales representatives are not as productive as they are expected to be, and some of them do not want to spend time on getting licensed (Primerica, “2018 Annual Report” 5). It may result in the loss of profit and shatter customers’ confidence in the company. Furthermore, Primerica seems to have no strong unique selling proposition. Thus, although its products sell well, the lack of a clearly stated competitive advantage may lead to the emergence of new competitors.

Primerica has several opportunities that may strengthen its position in the market. As it was already mentioned, the company can employ ambitious millennials and target its services at female decision-makers. These measures will help the firm to handle its weakness related to unproductive sales representatives. Another opportunity is to market the company’s products to the minority population that will constitute about 40% by 2020 (Primerica, “Introduction to Primerica” 38). Hence, Primerica has great chances to extend its target audience and maintain its leadership in the insurance niche.

There are also certain threats that can hinder the company’s growth. Primerica is concerned about potential legislation that may impose restrictions on its distribution model since it would force it to restructure its sales force (“2018 Annual Report” 28). Another risk is that customers’ mortality rates may appear to be higher than the company expects (Primerica, “2018 Annual Report” 31). In this case, the firm will have to pay more death benefits than it intended, which will result in significant losses.

Company’s Marketing and Communication with Employees

Primerica’s distribution network involving a large number of sales representatives defines the way it markets its products. The company uses a warm market approach, which implies that its individual contractors sell insurance to their relatives or acquaintances (Primerica, “Introduction to Primerica” 20). It allows the sales force to have face-to-face meetings with their potential clients in an informal situation (Primerica, “Introduction to Primerica” 20). Such a method increases the likelihood that the approached person will become the company’s customer. As for branding, the firm utilizes a recognizable logo consisting of three intertwined rings of red, white, and blue colors, and the company’s name next to them. This logo is placed on all marketing materials and other products related to Primerica.

The organization uses a variety of tools to communicate with its employees. These instruments include quarterly officer meetings and annual hall meetings (Primerica, “Corporate Responsibility Report” 6). To keep workers well informed of the corporate goals, the company sends them video messages from the CEO, newsletters, and email blasts (Primerica, “Corporate Responsibility Report” 6).

Primerica also cares about its employees’ job satisfaction and conducts annual surveys to monitor this indicator (“Corporate Responsibility Report” 8). Annually, the company holds town hall meetings in its head offices in Georgia and Mississauga, during which workers can inform others of the existing issues and suggest their ideas for future development (Primerica, “Corporate Responsibility Report” 9). Thus, Primerica fosters effective communication among its employees, with each of them being able to express his or her concerns and contribute to the firm’s improvement.

Conclusion

To sum up, Primerica is a company that holds the financial independence of middle-income families as its priority. Its mission is beneficial for the community because the firm helps people to manage their money, make reasonable investments, and reduce debts. It also provides employment for individuals who can subsequently transform their job into their own business. Thus, it is a good place to work and invest money.

Works Cited

“About Us.” Primerica. Web.

Primerica. 2018 Annual Report. 2019. Web.

—. Corporate Responsibility Report. 2018. Web.

—. . 2017. Web.

“We Help Families Prepare for the Future.” Primerica. Web.

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