eHarmony Case Analysis
While meeting people online to find a viable partner is more popular now than ever, online matchmaking industry initially faced challenges stemming from the stigma attached to it. The stigma subsided with time as more successful relationships evolved from online dating. Currently, people frustrated with traditional dating process which takes time and patience, prefer to meet people online for several reasons. Primarily, the convenience and accessibility is a huge benefit. There are over 20 million singles online and eHarmony states that one in five ...view middle of the document...
Currently, eHarmony’s core competency is its scientific approach to matchmaking. It has highly integrated system, which is built on a foundation of in-depth research to help singles find long-term relationships. Despite the company’s current position, the threat of intrusion by new competitors remains a constant risk for eHarmony. It is necessary for eHarmony to maintain its competitive advantage and allow the company to retain paying customers over a longer period of time as well as reach the market of couples who did not meet on eHarmony. After a comprehensive analysis of its internal and external environments with the help of the data provided in the case study and evaluation of the four different options available for addressing eHarmony’s concern of growing competition, I recommend that eHarmony can protect its market share and financial performance by enhancing its differentiation advantage by growing a new business based off of internal R&D focusing on key life stages, and building a network of free eHarmony-branded websites. Adopting this strategies will improve growth, profitability and will be best alternative for the company.
Based on eHarmony’s current position we can agree that although online dating industry has grown tremendously, it is becoming increasingly competitive. The profit potential is diminishing as the industry has become more saturated with niche markets that focus on a specific element such as religion, age, or sexual preference. Let us examine the attractiveness of the industry structure and what differentiates eHarmony from rest by using and analyzing eHarmony’s competitive advantage.
Porters Five Forces Model
Threat of new entrants- Intensity: Low and High.
With the barriers of entry low, anyone can essentially start a website and begin an online personals/dating site. The biggest threat to eHarmony and other paid dating sites are the free dating sites that were the newest entrants into the market. These sites did not have major restrictions to joining and did not necessarily do the match-making for the members. However barriers to enter the target market of individuals such as actively engaged in the search of long term relationships are high due to extensive investments in research and patented algorithm by eHarmony.
Bargaining Power of Suppliers- Intensity: High
Online dating industry has a structure that allows buyers to become suppliers. As the number of buyers increase, the database increases concurrently driving its value and appeal. Though there is significant overcapacity of bandwidth and server access (which are required for maintaining the service and data storage) which should decrease supplier power drastically but due to lack of industry experts in online dating industry and low switching cost, supplier power is high.
Rivalry among existing competitors- Intensity: High
Competition is fierce and becoming increasingly intense as they compete for similar segments with generally...