Eharmony Strategic Analysis

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Strategic Analysis of eHarmony
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CONTENTS

EXECUTIVE SUMMARY4
ANALYSIS & EVALUATION:4
EXTERNAL ANALYSIS:4
ECONOMY:4
DEMOGRAPHICS:4
INCOME DISTRIBUTION:4
ETNIC MIX:5
GEOGRAPHIC DISTRIBUTION:5
AGE STRUCTURE:5
SOCIAL AND CULTURAL TRENDS:5
GLOBILIZATION:5
TECHNOLOGICAL TRENDS:5
GOVERNMENT INTERVENTION:6
BUSINESS TRENDS:6
MICRO LEVEL ANALYSIS:6
BUSINESS CYCLE:6
MAJOR PLAYERS IN THE INDUSTRY:7
DIRECT COMPETITORS:7
INTERNAL ANALYSIS:7
OPERATIONS MANAGEMENT:7
COST CONTROL7
RISK:8
CUSTOMER MANAGEMENT:8
WHO EHARMONY WANTS TO ATTRACT:8
HAVE THEY SEGMENTED THE MARKET:8
HAVE THEY FIGURED OUT WHO THEY DON’T WANT TO ATTRACT?8
MARKETING AND SALES8
LOYALTY PROGRAMS8
GETTING CUSTOMERS TO BUY MORE9
INNOVATION:9
DO EHARMONY HAVE GREAT R&D PARTNERS?9
TESTING METHODS9
SOCIAL AND LEGAL:9
ISSUES AND SOLUTIONS?9
ANALYSE OVERHEAD:9
TOP MANAGEMENT9
EFFECTIVE IT SYSTEM10
PORTER’S 5 FORCE ANALYSIS:10
Exhibit 1: Competitive Analysis10
Exhibit 2: Analysis of Internal and External Environment12 ISSUES and/or PROBLEMS:13
EXHIBIT 3 - ALTERNATE ANALYSIS:13
Exhibit 4: Comparative Option Analysis15
RECOMMENDATIONS:16
EXHIBIT 5 - ACTION PLAN:17

To: eHarmony
From: Best Consultants
Subject: Proposed strategy for eHarmony to respond to the growing competitors.

EXECUTIVE SUMMARY
The online dating industry is one of the few Internet content segments that has survived the late 1990s “boom to bust” phenomenon and is growing at an unprecedented rate while providing significant economic returns for its incumbents. Among these companies, none is better positioned to gain sustainable market dominance than eHarmony. The following analysis examines the online dating industry and eHarmony’s current strategic position, potential threats and opportunities for competitive advantage and the recommendation for the future growth. Despite the Company’s current position, the threat of disintermediation and encroachment by new competitors remains a constant risk for any online business. eHarmony needs to protect its market share and financial performance by enhancing its differentiation advantage, expanding globally and preempting positional disintermediation.

ANALYSIS & EVALUATION:
EXTERNAL ANALYSIS:

ECONOMY:
* The online Personal market was growing very slowly, reaching $40 million in 2001. * By 2005, the situation changed dramatically, with 16 million people to have visited at least once. * In 2007 the industry grew to $900 million. There was downward trend in the number of people visiting dating sites, but the number of paying subscribers increased leading to this growth in the industry. * Observers believe that industry will double in size in 2012.

DEMOGRAPHICS:
* Initially younger groups came on dating sites.
* Soon 40 -50 year olds became fastest growing market segment. Nearly 20% in this group pay membership. * The dating website is facing a growth mainly in US, UK, Europe and in the middle east. * Of those people who ever used personals website, 45% had never been married, 31% were divorced, separated or widowed; and 23% were married. * More than 5% of the 94 million U.S. singles were paying members of an online personals site, allowing the industry to grow to $900 Million in 2007. INCOME DISTRIBUTION:

* 14% of people who visits personals website have a household income less than $30,000 * 13% of people who visits personals website have a household income between $30,000 to $49,000 * 10% of people who visits personals website have a household income between $50,000 to $74,999 * 9% of people who visits personals website have a household income greater than $75,000

ETNIC MIX:

* 10% of people who visits personals website are Whites.
* 13% of people who visits personals website are Blacks.
* 14% of people who...
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