Eharmony Case Analysis Essay

* eHarmony founded by Dr. Clark Warren and his son-in-law, Greg Forgatch, in 1998* Officially launched in 2000* First communicate commercial in 2002* First TV commercial in 2003* They target serious relationship and marriage-minded individuals, offering a unique match-making yield* They offer a tightly integrated organization that encompasses a Personality Profile, which feeds into a patented matching algorithm, which then leads to a Guided Communication system* In 2007 Match.com launched chemistry to directly compete against eHarmony* Direct competitor Match/Chemistry, Yahoo Personals* Indirect competition paid do-it-yourself sites, free do-it-yourself sites, niche sites, online social networks ending Dilemma* With the advance from direct competition and increased popularity of free personal sites and online social networks would eHarmony eventually fold amongst all of the recent competitor actions or would they be able to choose a merchandiseing strategy that will help them in novate and prosper?AnalysisContradictions* On varlet 13 it says that in 2004 a Yahoo Personals Premier subscription costs $34.95 a month which is $15 more than Yahoos regular service making it $19.95. However, when looking at reveal 10 it has Yahoo Personals listed with a $29.99 cost per month which contradicts what page 13 says. Exhibit 9 even has a higher cost listed, $23.91 per month, than the stated page 13 price of $19.95. * Why does exhibit 9, 10, and 11 have prices in 2008 dollars when the case was set in October 2007?Missing Facts or Details* 2004 eHarmony had 3 jillion registration * .40 = 1.2 meg active users * No info for 2007 to compare to the competitors* eHarmony was able to convert these 1.2 million active users into paying customers 3 times more efficaciously than the industry standard * No info on what the industry standard is to find out the total number of paying members to compare to the competitors * 2004 Technology crosswalk Ventures and Sequoia Capital in vested in the company * No info on how much or what eHarmony planned to do with the money * 94 million U.S. single * .05 = 4,700,000 paying members of online personal sites * 2005 Match receipts enhancement = $250 million on 1.2 million paying members * 2007 projected revenue = $349 million* Chemistry demographics missing* 2007 Yahoo revenue = $6.9 billion * .025 = $172.5 million revenue for Personals * No information in Exhibit 10 for Yahoo Personals Premier even though the case brings it up * No current data for Exhibit 1 or 2. (Exhibit 1 only goes to 2001 while Exhibit 2 goes to 2000) * No international data for web users. (Exhibits 6 and 7 only show American statistics) * No breakdown to show how many users have 1, 3, 6, or 12 month subscriptions for each site * No mention of eHarmonys revenue or yearly budget* Size of eHarmonys securities industry share compared to their competition?Personal Insight* I discover that a significant rate of achiever is due to eHarmonys cris scrossing and the use of an advertize campaign that appealed to a broad audience. They went from 300,000 registered members in 2002 to 3 million users in 2004 because of this. To me, this shows the mass appeal eHarmony has. Their triple-crown campaign, which featured happy couples that found love by using their services, gave people a hope that this could happen to them as well. I think this hope of falling in love and getting marriage is a large priority of women. Accordingly, they account for eHarmonys largest users at 60% and generate 2/3 of visits to the website.Kotler Text Teachings* Core Competency Refers to areas of special technical and production expertise. * eHarmony targets serious relationship and marriage-minded individuals, offering a unique match-making product * They use this to differentiate their brand name image and services from their competition. * Value Proposition A set of benefits that the company offers to customers to satisfy their needs. * eHarmony offe rs a tightly integrated system that encompasses a Personality Profile, which feeds into a patented matching algorithm, which then leads to a Guided Communication system * eHarmony needs to hold open this evolving in order to keep growing and maintaining profitability. * Industry A group of firms that offer a product or class of products that are close substitutes for one another. * eHarmonys success has brought competition into this industry creating a surge in market growth.* Niche Market A customer group seeking a distinctive mix of benefits. * eHarmonys niche is targeting serious relationship and marriage-minded individuals along with faith communities (with an emphasis in women) * Porters Threat of Substitute Products A segment is unattractive when there are actual or potential substitutes for a product. * eHarmony needs to be wary of this. Especially now that Match has introduced its reinvigorated dating site, Chemistry. * Porters Differentiation Strategy The pedigree conce ntrates on uniquely achieving superior performance in an important customer benefit area value by a largepart of the market. * eHarmony achieves this by doing in-house R&D, using a unique matching algorithm, and other processes mentioned in the facts * Competitive Advantage A companys ability to perform in one or more ways that the competitors cannot or will not match.* eHarmony acquired this by heavy use of off-line advertising and by leveraging Dr. Warrens 35 years of professional counseling experience, focus groups, and in-house R&D, Something their competition has tried to emulate but has been unsuccessful. * Sustainability The business must be sufficiently committed and willing to devote enough resources to create an enduring positioning. * This is where the importance of eHarmonys commitment to one of the decision options becomes a factor. They could look at a lower-level brand extension to bring in revenue from users who are unwilling to pay the premium fee. They could also l ook at using their strong brand equity to venture into untapped markets, i.e. international and gay. Another possibility is expand internationally which has a potential to expand globally adding long-term success.Decision Options1. Defend eHarmonys leading position in the online matchmaker market by reducing barriers and promoting Fast Track Pros ConsIncrease in paying customers Time consuming match-making process Increase in revenue Losing out on other niche marketsDecrease Chemistry from being successful Higher subscription prices Keep core competency Lacking continuous innovationKeep competitive advantage Possible backlash from members2. Enter into the medium-term relationship market to increase paying members (casual daters) Pros ConsIncreased customer base Increased competitionIncreased revenue Reduce core competencyKeep differentiation with copyrighted algorithm Lower fees due to less serious relationship % Increase market share No medium-term relationship experience3. Growin g a new business based off of inborn R&D focusing on bring out life stages, and building a network of free eHarmony-branded websites revenue mostly coming from advertising. Pros ConsIncreased advertising revenue Increase costs to build a network websites Strengthen brand image Unpredictable revenue since sites are free Reduce short-term competitive threats No market research conducted on key life stages subject matter Potential for brand extensions Possible brand dilution Increase in brand awareness Potential for diversification growth 4. Rapid geographic expansionPros ConsStrong European market Have to act quicklyUntapped market segments Competition already internationally active Potential for higher profit No global brand equity yet Reduce single market dependency No international relationship market research conducted Strengthen brand image index not understand foreign preferencesMy Decision* My decision is to go with option 3 Growing a new business based off of internal R& D focusing on key life stages, and building a network of free eHarmony-branded websites revenue mostly coming from advertising.Reasons* Long-term success can be accomplished by eHarmony extending its brand by using these innovative websites focusing on key life stages and differentiating itself from its competition, i.e. Chemistry. * This will allow eHarmony to stimulate the market and reduce the chances of Chemistry becoming successful. * eHarmony has a strong brand equity that will keep their members loyal to them as they transition through thesekey life stages. * There is also a great chance that other brands will want to pair up with eHarmony increasing their brand portfolio. * Example Gerber cosset Food for couples going through the parenting stage. * With revenue gained from these sites, eHarmony can re-invest it back into them. Funds can then be utilize to improve its core competency strengthen their brand image. * This will also strengthen their brand portfolio, increase advertising, and support more R&D.* Additional R&D can be used to study the niche market for gays and lesbians. * With sufficient research eHarmony could then use its brand equity to start a new website targeting this niche demographic. * As eHarmony continues to become their cores services and grow in market share it is unlikely that their direct competition, Match/Chemistry and Yahoo Personals, will be able to compete.