Eharmony Case Summary
ShiMei Everette, Matthew Mosch, Jason Reed & Devard Wharton
eHarmony Case Analysis
Brief Introduction & Key Issues eHarmony in essence is an online personals service whose main clients are marriageminded individuals. The online client profile is an extensive relationship questionnaire along with a matching system and a guided communication system. It’s biggest competitor at the time of the article was Match. This online personals service was designed simply for people to seek out likeminded people with the same interest. It’s goal was not necessarily for you to find your mate. You were able to look for free with the hopes of you finding someone interesting and become a paying customer. It had some of the same features of EHarmony to remain …show more content…
competitive.
Match realized that it was suffering at some point to EHarmony because of what they were offering. eHarmony was offering a way for singles who were interested in a serious relationship to meet.
Match decided to create a similar company called Chemistry and price it 10% lower.
This was one issue for eHarmony. The next would be the popularity of new online social networks and free personal sites. This dilemma posed the question of “would this be the end of eHarmony. The CEO of eHarmony had to make a decision on how to continue to grow financially and keep the goals and standards in the forefront.
External Analysis (Five Forces)
Entry – The barrier to entry for other companies to enter this type of market is low. The companies would have to come in offering the same product eHarmony and Match is offering at a very competitive price. eHarmony has a strong client base and a new company would have to
ShiMei Everette, Matthew Mosch, Jason Reed & Devard Wharton
prove that it is offering the same type of service on the same scale. They must also meet government regulations for online businesses of this nature.
Rivalry – eHarmony’s main competition is Match and Yahoo! Personals. A new company again would have to offer at the least a few of the same products these companies are offering and at a considerably lower rate or for free. With the number of free social media sites that have …show more content…
popped up there is a slight rivalry. Some people will try out these new online personals just for the fact that it is free.
Substitutes eHarmony has several substitutes which include free dating sites such as
SinglesNet, Plenty of Fish and OKCupid. These sites substitute for eHarmony by offering free interactions with members. These sites attract members quickly and immediately allow members to interact after signing up.
Another substitute would be niche sites. These sites appeal to very specific interests in its members. One of the largest groups in the niche site market is the gay and lesbian market. These sites attracted as much as one tenth the traffic of heterosexual dating sites. Other sites began to follow targeting niches based on race, the first of these targeted African Americans, which included sites such as BlackPeopleMeet and BlackSingles. These sites were followed up closely with religion based sites such as JDate. There are even sites that target graduates of elite colleges and sites that targeted singles with specific health conditions.
The last, and most likely largest, substitute for eHarmony is online social networks such as
Facebook and MySpace. These sites do not use expenses advertising because they rely on friends talking about them to gain members. These sites hold an advantage over other personals sites due to the fact that the members of social media sites provide valid personal information because of
ShiMei Everette, Matthew Mosch, Jason Reed & Devard Wharton
the threat of friends seeing fraudulent information and informing other friends. This removed the threat of members posting misinformation on the site. These sites also attracted people in long term relationships who could not easily join other dating services, it allowed these members to browse through potential partners while giving their current partner the impression that they were just talking to friends. However, these sites do have several disadvantages such as private profiles, not making it easy to send a clear signal about starting a relationship and that less older people use them.
Suppliers/Buyers In this unique case, the buyers and suppliers of eHarmony are the same. These are the paying members of eHarmony, which include marriageminded individuals, about 16% of
US singles and people who are divorced and looking to remarry. This unique situation is caused by the buyers (paying members) are also supplying matches to other paying members. This situation also gives a lot of power to the suppliers/buyers because without a consistent supply of paying members, the matches for other paying members would be severely reduced.
Internal Analysis (VRIO)
There are a number of resources that eHarmony has taken advantage of over the course of its development. The implementation of these resources has allowed eHarmony to capitalize on what was a largely untapped online dating market at the time. The following three were key: a strong and innovative business strategy, a patented matching system, and a unique and driven vision by the main founder.
Value eHarmony has value in the sense that it’s product or service has increased its revenue significantly due to its marketing, research and development. They have been able to reach more potential consumers through radio commercials and TV spots that clearly stated what eHarmony
ShiMei Everette, Matthew Mosch, Jason Reed & Devard Wharton
was about and how their customers felt about their service. The business strategy is one that sought to use an online platform to target a niche of individuals interested in serious relationships which could lead to marriage. This strategy is held together by an integrated system of 29 personality compatibility measures, a matching algorithm, and a guided communication system that allowed members to connect with each other without being invasive has been very successful and is at the core of eHarmony’s features.
Rarity eHarmony is rare even though there are other online personals and free social media sites that some consumers will prefer to use. It’s leading competitor, Match, is trying to offer some of the same features that eHarmony is offering but with a totally different name and online site with the hopes of gaining some of eHarmony customers. eHarmony has had a good track record with its consumers and has shown proof. The personality questionnaire that is a part of assessing the compatibility measure has over 250 questions. This, along with the matching algorithm and Guided Communication features have been extensively tested, making the threepronged combination rare. Dr. Warren and his team’s experience could be considered rare due to his years of practicing counseling in the area of relationships and love.
Imitability The cost to imitate what eHarmony has will be costly to any new company trying to enter this type of market. The resources from which the business strategy and implementation stem are costly to accumulate and take time to develop. In addition, the timing of the introduction of the vision gave eHarmony first mover advantage on the niche of serious online daters, as well as faith communities. The vision was also introduced at a time when online dating was losing its stigma. Together, these things make eHarmony’s implementation almost impossible to imitate. The matching algorithm was patented in 2004, making it very expensive to
ShiMei Everette, Matthew Mosch, Jason Reed & Devard Wharton
imitate. The vision of Dr. Warren is unique, but can be imitated by companies who have the resources to quickly pull together a team that can match the experience and knowledge of Dr.
Warren and his team.
Organization eHarmony’s management team worked diligently to craft a product that would be valuable, rare and costly to imitate in order to have a competitive advantage in the online personals industry. The features of its product were carefully developed to generate a quality and healthy pool of potential matches. The companies goal was to match marriageminded people and has done so by offering a tightly integrated system. eHarmony has blended its services with an efficient but low cost marketing and advertising strategy. Its first mover advantage in the niche of marriageminded individuals makes it one of the most wellknown companies in the market with many long standing members. The patented matching algorithm gives eHarmony the security of knowing they can expand and innovate from a stable foundation that cannot be replicated by competitors. They have the structure in place to maintain the integrity of the original vision while maintaining a level of exclusivity.
Examination of the Firm’s BusinessLevel Strategy eHarmony uses a product differentiation strategy to separate itself from its competitors. It does this by offering several services that other dating sites do not offer, such as a personality profile, specialized matching algorithm, and guided communication system. However, eHarmony also differentiated itself from its competition by targeting a very select audience; marriageminded single individuals. eHarmony initially advertised these differences early on TV programs such as
Good Morning America and Politically Incorrect with Bill Maher.
An expansion of its TV and
ShiMei Everette, Matthew Mosch, Jason Reed & Devard Wharton
radio advertising allowed eHarmony to achieve 3 million registrations with 40% being active users, despite charging a premium for its services.
Strategic Recommendation and Justification
The four options for recommendations on how to proceed were all well thought out. They all would benefit the company but at what cost. As seen in the case study, eHarmony’s management team stayed within their means as far as cost was concerned. All of the options would entail some type of marketing. We are suggesting that eHarmony pursue the second option of broadening the customer base to include casual daters. This will allow them to compete in another area of dating and consider referring the customers who were previously rejected during the profile questionnaire. There are individuals who are looking for relationships but not necessarily looking to get married. This added feature would allow them to tap into this market and increase its revenue. eHarmony’s patented matching algorithm would provide a strong point of differentiation in this area. The number of singles using paid online
personals site who were actually interested in mediumterm relationships could actually benefit from eHarmony’s matching algorithm. Financially, this would cost the company to market this feature, but as in previous marketing ventures and eHarmony’s reputation they would be sure to recoup the costs.
eHarmony Case Analysis
Brief Introduction & Key Issues eHarmony in essence is an online personals service whose main clients are marriageminded individuals. The online client profile is an extensive relationship questionnaire along with a matching system and a guided communication system. It’s biggest competitor at the time of the article was Match. This online personals service was designed simply for people to seek out likeminded people with the same interest. It’s goal was not necessarily for you to find your mate. You were able to look for free with the hopes of you finding someone interesting and become a paying customer. It had some of the same features of EHarmony to remain …show more content…
competitive.
Match realized that it was suffering at some point to EHarmony because of what they were offering. eHarmony was offering a way for singles who were interested in a serious relationship to meet.
Match decided to create a similar company called Chemistry and price it 10% lower.
This was one issue for eHarmony. The next would be the popularity of new online social networks and free personal sites. This dilemma posed the question of “would this be the end of eHarmony. The CEO of eHarmony had to make a decision on how to continue to grow financially and keep the goals and standards in the forefront.
External Analysis (Five Forces)
Entry – The barrier to entry for other companies to enter this type of market is low. The companies would have to come in offering the same product eHarmony and Match is offering at a very competitive price. eHarmony has a strong client base and a new company would have to
ShiMei Everette, Matthew Mosch, Jason Reed & Devard Wharton
prove that it is offering the same type of service on the same scale. They must also meet government regulations for online businesses of this nature.
Rivalry – eHarmony’s main competition is Match and Yahoo! Personals. A new company again would have to offer at the least a few of the same products these companies are offering and at a considerably lower rate or for free. With the number of free social media sites that have …show more content…
popped up there is a slight rivalry. Some people will try out these new online personals just for the fact that it is free.
Substitutes eHarmony has several substitutes which include free dating sites such as
SinglesNet, Plenty of Fish and OKCupid. These sites substitute for eHarmony by offering free interactions with members. These sites attract members quickly and immediately allow members to interact after signing up.
Another substitute would be niche sites. These sites appeal to very specific interests in its members. One of the largest groups in the niche site market is the gay and lesbian market. These sites attracted as much as one tenth the traffic of heterosexual dating sites. Other sites began to follow targeting niches based on race, the first of these targeted African Americans, which included sites such as BlackPeopleMeet and BlackSingles. These sites were followed up closely with religion based sites such as JDate. There are even sites that target graduates of elite colleges and sites that targeted singles with specific health conditions.
The last, and most likely largest, substitute for eHarmony is online social networks such as
Facebook and MySpace. These sites do not use expenses advertising because they rely on friends talking about them to gain members. These sites hold an advantage over other personals sites due to the fact that the members of social media sites provide valid personal information because of
ShiMei Everette, Matthew Mosch, Jason Reed & Devard Wharton
the threat of friends seeing fraudulent information and informing other friends. This removed the threat of members posting misinformation on the site. These sites also attracted people in long term relationships who could not easily join other dating services, it allowed these members to browse through potential partners while giving their current partner the impression that they were just talking to friends. However, these sites do have several disadvantages such as private profiles, not making it easy to send a clear signal about starting a relationship and that less older people use them.
Suppliers/Buyers In this unique case, the buyers and suppliers of eHarmony are the same. These are the paying members of eHarmony, which include marriageminded individuals, about 16% of
US singles and people who are divorced and looking to remarry. This unique situation is caused by the buyers (paying members) are also supplying matches to other paying members. This situation also gives a lot of power to the suppliers/buyers because without a consistent supply of paying members, the matches for other paying members would be severely reduced.
Internal Analysis (VRIO)
There are a number of resources that eHarmony has taken advantage of over the course of its development. The implementation of these resources has allowed eHarmony to capitalize on what was a largely untapped online dating market at the time. The following three were key: a strong and innovative business strategy, a patented matching system, and a unique and driven vision by the main founder.
Value eHarmony has value in the sense that it’s product or service has increased its revenue significantly due to its marketing, research and development. They have been able to reach more potential consumers through radio commercials and TV spots that clearly stated what eHarmony
ShiMei Everette, Matthew Mosch, Jason Reed & Devard Wharton
was about and how their customers felt about their service. The business strategy is one that sought to use an online platform to target a niche of individuals interested in serious relationships which could lead to marriage. This strategy is held together by an integrated system of 29 personality compatibility measures, a matching algorithm, and a guided communication system that allowed members to connect with each other without being invasive has been very successful and is at the core of eHarmony’s features.
Rarity eHarmony is rare even though there are other online personals and free social media sites that some consumers will prefer to use. It’s leading competitor, Match, is trying to offer some of the same features that eHarmony is offering but with a totally different name and online site with the hopes of gaining some of eHarmony customers. eHarmony has had a good track record with its consumers and has shown proof. The personality questionnaire that is a part of assessing the compatibility measure has over 250 questions. This, along with the matching algorithm and Guided Communication features have been extensively tested, making the threepronged combination rare. Dr. Warren and his team’s experience could be considered rare due to his years of practicing counseling in the area of relationships and love.
Imitability The cost to imitate what eHarmony has will be costly to any new company trying to enter this type of market. The resources from which the business strategy and implementation stem are costly to accumulate and take time to develop. In addition, the timing of the introduction of the vision gave eHarmony first mover advantage on the niche of serious online daters, as well as faith communities. The vision was also introduced at a time when online dating was losing its stigma. Together, these things make eHarmony’s implementation almost impossible to imitate. The matching algorithm was patented in 2004, making it very expensive to
ShiMei Everette, Matthew Mosch, Jason Reed & Devard Wharton
imitate. The vision of Dr. Warren is unique, but can be imitated by companies who have the resources to quickly pull together a team that can match the experience and knowledge of Dr.
Warren and his team.
Organization eHarmony’s management team worked diligently to craft a product that would be valuable, rare and costly to imitate in order to have a competitive advantage in the online personals industry. The features of its product were carefully developed to generate a quality and healthy pool of potential matches. The companies goal was to match marriageminded people and has done so by offering a tightly integrated system. eHarmony has blended its services with an efficient but low cost marketing and advertising strategy. Its first mover advantage in the niche of marriageminded individuals makes it one of the most wellknown companies in the market with many long standing members. The patented matching algorithm gives eHarmony the security of knowing they can expand and innovate from a stable foundation that cannot be replicated by competitors. They have the structure in place to maintain the integrity of the original vision while maintaining a level of exclusivity.
Examination of the Firm’s BusinessLevel Strategy eHarmony uses a product differentiation strategy to separate itself from its competitors. It does this by offering several services that other dating sites do not offer, such as a personality profile, specialized matching algorithm, and guided communication system. However, eHarmony also differentiated itself from its competition by targeting a very select audience; marriageminded single individuals. eHarmony initially advertised these differences early on TV programs such as
Good Morning America and Politically Incorrect with Bill Maher.
An expansion of its TV and
ShiMei Everette, Matthew Mosch, Jason Reed & Devard Wharton
radio advertising allowed eHarmony to achieve 3 million registrations with 40% being active users, despite charging a premium for its services.
Strategic Recommendation and Justification
The four options for recommendations on how to proceed were all well thought out. They all would benefit the company but at what cost. As seen in the case study, eHarmony’s management team stayed within their means as far as cost was concerned. All of the options would entail some type of marketing. We are suggesting that eHarmony pursue the second option of broadening the customer base to include casual daters. This will allow them to compete in another area of dating and consider referring the customers who were previously rejected during the profile questionnaire. There are individuals who are looking for relationships but not necessarily looking to get married. This added feature would allow them to tap into this market and increase its revenue. eHarmony’s patented matching algorithm would provide a strong point of differentiation in this area. The number of singles using paid online
personals site who were actually interested in mediumterm relationships could actually benefit from eHarmony’s matching algorithm. Financially, this would cost the company to market this feature, but as in previous marketing ventures and eHarmony’s reputation they would be sure to recoup the costs.