E Harmony Case Study PDF

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Executive Summary eHarmony is a dating and match-making service, application, and website designed to assist individuals to find their potential lifelong partner. The service is specifically directed towards marriage-minded consumers, who pay a monthly subscription fee to gain access to various premium features. Dr. Neil Clark Warren and his son-in-law Greg Forgatch founded eHarmony in 1998; the service’s unique algorithms, guided communication methods, and personality matching systems allowed the company to gain success, and eventually competitors began copying features and flooding the market until growth and profitability rates began declining in 2007. Faced with multiple strategic options, the leadership team narrowed them down to 4 potential winners. The first would be to attempt to defend and maintain eHarmony’s success within the long-term relationship niche market by increasing advertising and lowering the barrier to customer entry and on-site communication. The second would be to increase the scope of their customer segment to include more casual daters not necessarily seeking marriage. The third would be to start new business operations focused on other life stages such as weddings, pregnancies, parenting, and elder care. The fourth would be to spread into additional countries, such as other English-speaking countries in the EU and gradually expand globally. Porter’s Five Forces Analysis Substitutes to eHarmony’s online match-making service such as During eHarmony’s birth and growth, existing competitors such as Match, and new competitors entering the market threatened their growth. Additionally, the preexistence of personal ads in public forums, newspapers, and online personals sites posed a similar moderate threat to their success. Since the end goal of each service or product was ultimately to match people for marriage, although their methods differed, the end results mattered most. Only if

eHarmony could more successfully accomplish its customers’ matchmaking goals would their service be proven to be more effective than their competitors. Additionally, substitutes to online match-making services were still viable to individuals seeking relationships. Family members and friends, trips to the bar, and even free online social networks could still allow people to match and form relationships. Such substitutes may not provide the same number of potential matches upfront, but their history of success and cultural integration posed a threat nonetheless. Similar to eHarmony’s existential threat from competitors and new entrants, the threat from substitutes remained moderately strong. Customers had many options, and eHarmony was but one. Potential new competitors faced little challenge in entering the match-making industry. Not only could indirect competitors such as substitutes easily begin offering match-making services (family members and friends, bars, and online social networks could easily start offering these services), new direct competitors could easily copy eHarmony’s services and tactics. The largest barrier to entry is the ability to scale services, but social network websites and other online services with existing consumer bases could program, introduce, and advertise matchmaking services, tempting customers away from eHarmony. The lack of barriers to exit from their service does not help; switching is easy and convenient. It would seem that competitive advantage is difficult to maintain in the industry. Customers of eHarmony and other match-making services have the advantage of easily switching subscription, payment, or even free use of services between companies with little to no barrier. This customer freedom is a strong power against the company because any dissatisfaction can cause a customer to test another service and cease subscription payments.

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Suppliers of the personals and match-making industry have little to no power. Since much of the industry runs its services online, website and server providers, search engines, and application developers may be considered suppliers. Because of the vast abundance of providers online, eHarmony could choose between any number of them and switch with relative ease, excluding minor switching costs if their application and website was developed through a single provider; low rates across the internet would make it profitable to switch if online presence maintenance rates rose too high.

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