Decision Case Study

Case type: Decision case study – Year 2008.

Position statement: How should eHarmony address the recent competitive threats and fuel the growth and the profitability of the company for long term success?

Background: eHarmony is an online dating site for singles specifically looking for long term and serious relationships.

Problem: Despite of great success of the company, the executive team considers that eHarmony is still stuck into a dense traffic jam of throat cutting competitors like Match, Yahoo! Personal, Chemistry and other free personal sites and social networks. Match, eHarmony’s biggest competitor introduced new dating site –Chemistry which uses different matching criteria and methodology which is easier for the members to handle and priced roughly 10% below eHarmony. The competitors not only appeal to broader overseas market but also offer relaxed and unbiased dating experience. Since eHarmony could afford to invest into limited options, it needs to be extremely nimble to maintain its existing leadership position in the market.

Evidence: SWOT Analysis

Action plan: Michal Porter’s five forces are powerful tools to evaluate the competitive positioning and increase industry’s profitability. As per Porters analysis, it can be recognized that ‘Operational competitiveness’ is the best way to compete the rivals since online dating sites are created and operated solely on the internet. Strategic positioning such as embracing innovative technology would add a unique value to the customers to gain competitive advantage.

Since barrier to new entry is low, market segmentation with global presence will attract new customers to the site.

In case of higher subscription fees, the competitive forces for eHarmony will be definitely intense. (Refer Exhibit 1).

Recommendation:

• eHarmony should expand the market by introducing casual and same sex dating. It should also customize the members’ profiles as per age, long term, medium and short term interests and sexuality. Free casual dating would help attracting more members who eventually may purchase paid subscription. This would not only help in retention of existing customer but also target a bigger market resulting into increased revenue generation and avoiding litigation.
• Global expansion by applying the patented algorithm across different countries would be easier for eHarmony since English is widely spoken language across the globe. For example, Canada has similar market and values as that of United States. Thus, available resources can be used with minimal investment resulting into global presence as well as revenue increase.
• The current subscription cost of eHarmony is almost double than its competitors thus, eHarmony should revaluate its pricing structure to be more competitive and cost effective with rival market leaders.
• eHarmony should target new generation by innovative marketing. For example, introduction of interactive mobile dating app for tech-savvy market since traditional media like Radio has become obsolete. The mobile app will provide the user 24 X 7 access with no restrictions resulting into increased member to member interaction than traditional email exchange.
• eHarmony should also expand the market to other lifestyle sites outside dating – Synergy with eHarmony brand.
• Credibility of members’ accounts can be further increased by asking the members to provide identification documents such as Passport or driving license instead of using time consuming questionnaire for authentication.
• Health issue is a considerable factor which resists the member to search the mate online. Thus, eHarmony should keep the record of health reports and categorize the members accordingly to avoid the frauds.

Conclusion:

The online match-making is extremely competitive with numerous rivals entering the market on daily basis because of the low barrier entry. Thus, product differentiation and value creation are the key considerable factors for the eHarmony to regain and maintain its leadership status in the market.

Revenue generation by global expansion targeting segmented market for example same sex marriage and creative tech-savvy marketing will broader its customer base.