Eharmony How Is the Industry Changing over Time and Is the Market Attractive for Competitors?

Siu Man Rachel Lui

20678104

eHarmony

1. How is the industry changing over time and is the market attractive for competitors? 5 marks

At first, personal ads in newspapers and magazines were very popular. Increasingly sophisticated communication and recording technology led to the creation of telephone personals. In the 1980s, the advent of video tapes brought images to personal ads. Technological advancement, especially the Internet, then expanded partner seeking opportunities. The first online personals firm was started in 1992.

I think the market is unattractive for competitors. First of all, technology is extremely advanced nowadays leading to low entry barriers, which makes it easier for competitors to participate in the market. Moreover, substitution is high as there are a lot of different other dating services for customers to choose from and the switching cost is low.

1. Does E-Harmony have a competitive advantage?  If so, where does it come from?  4 marks

Yes, E-Harmony definitely has competitive advantages.

Firstly, E-Harmony is the first online personals website which tapped into the new market segment that focused on marriage minded individuals, which it is hard for other competitors to replicate. It has an extensive registration system consisting of a patented matching system, a guided communication system and a paying membership.

Secondly, E-Harmony is for individuals who are looking for a serious relationship, unlike other sites where people are looking for quick hookups. It has a sophisticated and high-quality questionnaire for service users.

Thirdly, the founder, Dr. Neil Clark Warren, who practiced psychology for 35 years, has plenty of experience in the field of marriage and family relationships. Credibility will increase with his helping for selecting a potential partner for service users.

1. How serious is the competitive threat to E-Harmony?  3 marks

The competitive threat to e-Harmony is pretty serious. Chemistry, from Match, is trying to replicate the match-making system from E-Harmony, and one day it might take over and make the idea better. In which, Chemistry might tap into a new market segment.

Moreover, other sites have fewer barriers for customers to join. They also have a shorter registration process and some of them do not require membership payment, which will attract more customers.

Niche sites are also threatening E-Harmony as they offer services to gay and lesbian market, which E-Harmony does not have.

Perform an analysis of the 4 options available to E-Harmony.  4 X 10 = 40 marks (Use Day's 5 tests.  Include 2 marks market opp. and 3 for feasibility, 2 marks for financial, other tests 1 mark each) Explain what you would recommend and why.  3 marks

Option 1: defending position as the leading matchmaking company in the long-term relationship segment of the market

• market opportunity: market size is large, and the market will be growing due to reduced entry barriers for service users and selling memberships to anyone who is interested to join
• feasibility: as E-Harmony is basing off of what they have to make changes, they already have the required skills and resources
• competitive advantage is relatively sustainable: fast track communication 🡪 others do not have similar feature
• risk 🡪 lower quality results
• financial: increased revenue dues to greater awareness from increased advertising

Option 2: broadening the customer base to include more casual daters

• market opportunity: market size not too large
• feasibility: E-Harmony has the resource of the matching algorithm
• competitive advantage: relatively sustainable 🡪 matching algorithm provides strong point of differentiation
• risk 🡪 expose to more intense competition with competitors
• financial: will not financially benefit because customers who are looking for medium-term relationships can have a lot of other cheaper options

Option 3: growing a new business based on eHarmony’s own research and development efforts

• market opportunity: market size is large because the site is free to everyone
• feasibility: E-Harmony does not have enough resources and skills as they will have to employ more experts
• competitive advantage: is quite sustainable due to the offering of experts’ advices
• risk: decreased credibility due to expert advice from other website users
• financial: not financially beneficial due to the instability of revenues from advertising

Option 4: rapid geographic expansion

• market opportunity: market size is large, and is targeting other segments from different countries
• feasibility: E-Harmony will have to acquire other countries’ background information
• competitive advantage: relatively sustainable as the market size will increase due to the global expansion with better quality comparing to other sites
• risk 🡪 culture differences as the matching patterns are based on U.S.
• financial: financial will be instable due to the fact that expanding globally has a lot of unknown factors

I would recommend option 1. That is because eHarmony’s main competitive advantage is providing customers a serious relationship. Any option that would put this recognition in danger would diminish the power and coherence.