Eharmony Case Study Essay
Eharmony Case Study
The first general environment that is most relevant to this case is the demographic segment. This segment focuses on population size, age structure, geographic distribution, ethnic mix, and income distribution. This segment is relevant to eHarmony because there main focus is to match their customer’s with potential partners. They need to take in account the matches age, income, ethnicity, and income. In the case, they discuss how they require customers to answer questions about how old they are, where they are from, where they are living, where they work… etc. They take all this information and match it with another customer. The second general environment that is most relevant to this case is the sociocultural segment. This segment focuses on the society’s attitude and cultural values. This segment is relevant to eHarmony because when they match their customer’s, than they have to take an account what their cultural values are and what their attitudes are toward the social norms. The United States is a melting pot of different cultures. Some customers are high on culture and some are not.
Demographic segment represents an opportunity for eHarmony because they can expand their company to other countries. The article “Are You Ignoring Trends That Could Shape Up Your Business” made an interesting point that “ignoring trends can give rivals the opportunity to transform the industry.” If eHarmony does not go into international markets than they would give Match the advantage of getting more customers on their site. eHarmony wants to be on the top, and the only way they can do that is by entering a new market. Sociocultural segment represents an opportunity for eHarmony because customers want to have partners that work and have the same cultural values that they have. It is all about being compatible with your partner. In the article, it talks about how social trends can change the way people perceive the world around them. By showing customers different matches from different countries but the same values, can open their eyes to their new life partner.
When online personal firms entered the market in 1992, they didn’t do well because people thought the desperate use it. Which caused the online personal market to grow very slow. Everything changed in 2005, because people’s mindset changed and found it acceptable to use online personal site to find their partners. Not just young people use the site but also the middle aged group use this site. According to the article, of the 2.2 million marriages that took place, about 120,000 of them were because of online personals site. It took awhile for the market to accept this new industry to help people hook up and find a suitable person to marry.
The strengths of the power of suppliers is that they can increase their prices of their products so they can exert their power over there competitors. Thats what eHarmony is doing over their competitors. There are some drivers that drive the bargaining power of suppliers, which are: (1) there are few of them, (2) they purchase a large amount of total output from the industry, (3) products or services they purchase are homogenous and undifferentiated, (4) switching costs from one product or service to another are low, and (5) there is a realistic threat they could backward integrate into the industry itself. eHarmony does have service that no other company was able to copy well and be as successful as eHarmony.
The strength of rivalry among existing competition is that when a company has a big rival then they are determined to beat their competition. They would do anything to make sure that their company is on top. The biggest rival that eHarmony has is Match. eHarmony tries to give services to their customers that Match cannot give. There are some drivers that drive the intensity of rivalry among competition, which are: (1) there are many competitors of roughly equal size, (2) the industry has slow or no growth, (3) exit barriers are high, (3) existing firms are committed to staying in the industry, and (3) there are few bases of competition beyond price. Match and eHarmony are almost equal into size and they intend to grow even more. Match is determined to beat eHarmony for the top position in the industry.
The two opportunities that would reshape the industry structure are shifting threat of substitution and new bases of rivalry. Shifting threat of substitution is when a substitute becomes more or less threatening because of the advances in technology that creates new substitutes. New Bases of rivalry is when mergers and acquisitions introduce new ways of competing, or technology innovation can reshape rivalry. Question 3:
eHarmony competitive advantage is that it uses a scientific developed questionnaire based on Dr. Warren’s 29 dimensions. Another advantage is that they are the first online personals site centered around marriage minded individuals. The last advantage is that they are exclusive on who they allow to use the site. The competitive advantage is sustainable because they satisfy the four criteria in sustaining competitive advantage. The first criteria is valuable capabilities and they satisfy this criteria because the founder created this extensive questionnaire that he uses to determine which person they are compatible with.
The second criteria is rare capabilities and they satisfy this criteria because the founder has a PhD in psychology and he did is practice in marriage and love. He was the one who created the questionnaire and he was the one who created the algorithm on how to match the customers together. No other company was able to imitate that. The third criteria is costly to imitate and they satisfy this criteria because no other company was able to create the algorithm that the founder was able to create to match their customers together. The last criteria is non substitutable and they met this criteria because there is nothing that substitutes it. Question 4:
I believe that eHarmony should choose the last option, which is the rapid geographic expansion. They should take this option because they want to beat their competition and get more clients. They have already got their place in the US market, now its time to expand the business and become global. In the case, it says that in European Union nations, online dating is very popular. eHarmony does not realize that besides the US, there are other countries where online dating is popular. The downside of expanding is that they are not sure how these other countries might react with online dating. The countries would either accept them or decline them. They would loose a lot of money. Another downside is that they are not sure if their questionnaire and there algorithm would work in other countries. They would need to think about the social and cultural norms of each country.
I did not choose the third option, which was that eHarmony wanted to create sites that focused on key life stages such as wedding, pregnancy- fertility care, and elder care. I feel that eHarmony is known for the match making place and not known for doing life stages. I feel that they should first master one side of the company before they start jumping into new industries. Question 5:
eHarmony has an effective strategic leadership because Greg Waldrof, the CEO has all the qualities of a level 5 executive. Mr. Waldroff wanted to make sure that his company is the top company in the match making industry. He created a questionnaire and a formula on how to interpret the results. He made sure his staff understood it and used it correctly. The second reason why eHarmony has an effective strategic leadership is because the leaders of the firm made sure that the organization culture was kept in tact. Their culture was to create good matches for their customers. The leaders made sure everyone understood that. The last reason why eHarmony has an effective strategic leadership is because of their ethical practices. In eHarmony, they screen their customers before they can create a profile and buy the packages. They don’t allow married customers on the site because they want their customers to feel that the people on this site are looking for marriage.