eHarmony Industry Analysis
eHarmony is an online dating site, allowing people with similar values to find each other, by using detailed analysis and guided communication. The unique value proposition comes from the extensive relationship questionaire, matching system and guided communication between parties. As the founder of eHarmony, Dr. Warren, states, with those capabilities, their aim is to change the world (1).
We will analyze the industry of eHarmony. For the analysis we will uses five forces. Five forces gives great idea about the competion level in the industry. Hence profitability and success in the industry is directly related to the five forces.
Let us first start with “Threat Of Entry”. Overall there are around 850 personal sites on the internet. Every year 850 more sites enter the industry. Although it seems the threat of entry is high, almost all of the new entrants fail the business and leave the industry. This is due to the capital requirements and brand name. Every new comer has to invest a lot to enter the market, because a new entrant should start with a zero-“0” user base. For example True had spent $90 M for advertising, which exceeded the revenues and which had almost no impact. Additonally, the brand names are very well known to the public, with the user experiences of existing and previous users. eHarmony is an alternative method to establish a a more “rigid” family, whose divorce rate is reported to be much lower. With that in mind, people who are hopeless and reluctant to find a spouse, have an opportunity to establish a family. About 5,4% of Americans (120.000 out of 2.200.00) marry this way and there are many “success stories” of good matching people finding each other. So people will not risk their future with other new comer sites, rather use sites that many people benefited before.
Secondly we will consider the “Power Of Suppliers”. The suppliers here are the commercials on TV and radio, together with online ads and...
References: (1) http://www.youtube.com/user/eHarmony
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