Situation Synopsis: Competitors have developed different approaches to attract consumers in the online dating market; some of which have been copying eHarmony’s product features and using alternative strategies to attract singles. Company’s Current Strategy: eHarmony uses a focused differentiation strategy. It focuses on singles seeking a serious relationship and long-term compatibility. It distinguished itself from other sites by using a unique matching algorithm. They have also invested substantial resources into marketing and R&D. Problem Statement: eHarmony has opened the door to their competition by declining potential customers as a way to ensure quality control. eHarmony's CEO must decide how to react to imitations of its business model, encroachment by competing models and the rise of free alternatives.
1. EXTERNAL ANALYSIS
1. General External Environment
• Age 40 and 50 year olds becoming the fastest growing segment • Age structure: 60% of eHarmony users were women
• Members reflect the geographic distribution of the US quite well
• Lawsuits for discrimination, etc.
• Privacy settings
• Average age to get married is increasing
• The marriage rate had reached its lowest point in recorded history • Cultural changes and economic factors had a substantial effect on the marriage market • Fluctuating divorce rates
• One-fifth of marriages were initiated through online encounters
• Increasingly sophisticated communication and recording technology • R&D: relationship dynamics, physical attraction, and couples • Must obtain patents for matching systems
• Competitors have expanded globally
2. Industry Situation Analysis
1.2.1 Industry Structure
The online personals industry can be segmented into 4 different categories where the 3 main players; eHarmony, Match, and Yahoo! Personals are represented by the Paid Do-it-yourself category: • Paid Do-it-yourself Sites
• Free Do-It-Yourself Sites
• Niche Sites
• Online Social Networks
1.2.2 Industry Direction and Trends
Competition is steadily increasing. Many companies within this industry try to develop new approaches in an attempt to divert customers away from market leaders such as eHarmony. Some either put up few barriers to join or allow people to join for free. The industry is expected to rise and perhaps double by 2012. Trends that may be important for this industries future include the following: • Subscribers to these sites tend to be repeat users
• 40 to 50 year olds are the fastest growing segment
• Marriage rate has reached its lowest point in recorded history • Divorce rates are constantly fluctuating
1.2.3 Industry Economics
The online personals market grew very slowly, reaching only $40 million in 2001. In 2007, as a result of changing attitudes amongst consumers, the industry increased to $900 million. Observers have predicted that the industry may double in size by 2012.
1.2.4 Industry Driving Forces
• Internet: As the number of people becoming internet savvy increases, so does the number of potential customers for online personals. • Globalization: Some competitors, for instance Match, have already branched out to markets overseas. • Industry Growth Rate: Industry expected to double by 2012. • Who buys & how it is used: Online personals are most popular for middle-aged (40-50) peoples. Used to find potential mates for those seeking various different types of relationships. • Marketing Innovation: “eHarmony is one of the few online companies that made offline marketing work and pay for itself.” Many companies end up spending large quantities on their marketing strategies but do not necessarily acquire more customers. • Changes in Societal Concerns, Attitudes & Lifestyles: More and more...