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eHarmony is an online dating site that was founded in 2000. It targets marriage-minded individuals that want to meet someone for a long-term relationship that would lead to marriage. The site has been able to maintain a good rapport by accurately matching individuals as they offer a detailed relationship questionnaire with a patented matching system under a guided communication system. This combination of services helped to meet the demand for a target market that was untapped.
Having identified the demand in the market and seeking a way to meet this demand as expected by the consumers, the company became successful as it grew exponentially. Its growth was significantly rapid and, in just one year of operations, it had millions of active subscribers. To achieve this, the eHarmony management had to analyse both the target market and the company’s potential to meet the demand, leading to the growth and expansion of the company.
To help identify the findings of what was happening in the industry at the time of the case, a PESTEL analysis will be drawn while addressing the Porters five forces in the industry’s life cycle.
PESTEL analysis in this case study will address the economic, socio-cultural, technological, and environmental factors that affected the industry at that time.
Social cultural factors influence most industries (Barnett, Greve, & Park 1994). The culture of relationships and marriage has been changing over the years. In the beginning, there was no need to have a relationship/ dating so as to get married. Some individuals were betrothed at birth. Thus, people were not looking for and dating someone who would be a perfect match for them. With time, society began to change, and, at the time of the case study, the society had left it to the individuals to meet and make decisions on their own. This change then encouraged people to interact. How they met was not a large concern, but a new culture of dating was adopted, and now, individuals have to get to know each other before getting married.
It was at this point that the industry introduced the need for on-line personals or more commonly referred to as on-line dating sites (the introduction stage of the industry life cycle) (Sizer-Webb, Noss, & DeBruyne 2000). The ability to assist individuals in meeting their dream partners came into being. Though it did not start off with the use of the internet; it started with a more traditional approach of having pen-pals. As the society accepted this approach of individuals getting to know each other, the industry began to expand and venture into new and better ways of introducing people to each other while putting into consideration the needs of the individuals.
Barriers like ethnic backgrounds and religion were eliminated as people at that time stopped discriminating against each other based on these factors (Havelin 2000). The operating field was levelled on the basis of major socio-cultural factors that included the level of education, diversity in language, social status, and cultural beliefs. The traditional way of doing things was changed as more people got an education and the world became more globalized.
Technology is rapidly changing overtime, and the ability to incorporate these changes into day to day operations is important so as to catch up with the time. This factor has affected the industry as it has made it possible for persons from different geographical regions to get to know each other. Technology has also made it possible for interactions to happen even without necessarily meeting face to face (Bryner 2007).
The use of the internet has facilitated this action, and despite the distance between the two individuals, it is possible to send photos from point A to B in seconds, which has made it less challenging to go around the region just to meet someone that may not please you. It has gone further and with the introduction of the web-cams, people can communicate and look at each other while being in the different regions.
This factor has also brought about competitive rivalry as more service providers can easily get into the market (Bowman 2008). Technology has made it easier to have a few physical addresses while at the same time operating in diverse regions. Competition has become stiff due to the technological advancement which led to the threat of new entrants into the market, as, for example, Chemistry, which was built by Match Company and posed tough competition for e-Harmony.
Technology has also led to the emergence of substitute products like social websites such as Facebook and Twitter. These websites allow people to interact with each other though not necessarily for long-term relationships or marriage purposes.
During this time period, the target market was willing to pay as long as the services provided were of the right quality to match the quantity (Ginsberg 2006). E-Harmony charged their subscribers twice as much as their competitors did but still managed to maintain their position as a market leader. This factor together with the technological advancement at the time led to the growth in the industry’s life cycle as members became more active and more people were willing to pay for their services. The company had also grown and accommodated well trained customer care agents to ensure that their consumers were satisfied at all times. In turn, the company received significant returns.
These factors played a major role in the establishment of personals sites. This is because people were too busy working to satisfy their needs and meeting people was not an easy task (Armstrong, Hamilton, & England 2010). Always being in a rush, people did not have time to create relationships and maintain them. The environment was not conducive.
In order to balance this environment, the internet provided a substitute. It made it possible to interact comfortably while resting from ones home. It was facilitated by the provision of photos and relevant information about a certain person. At this point, the industry had become overwhelmed with such companies, thus proving the necessity of such services in the society. In the United States, eHarmony service has provided a larger percentage of marriages from on-line personals (Armstrong, Hamilton, & England 2010). Therefore, the environment provided allowed individuals to get to know various people before they get to settle down on someone.
eHarmonys Strengths and Weaknesses
eHarmony has managed to stay the market leader in the industry for a long time. As a company, it has developed strengths to maintain its position, but it had some hiccups here and there in its operations that provided weaknesses. They have developed strengths as they were grabbing all the presenting opportunities. A SWOT analysis helped to identify these strengths and weaknesses.
A well defined market
Being a personals site, they have managed to attract the attention of marriage minded singles. They have also managed to identify the market that needed the services they provided to the extent of paying almost double than what the competitors offered. This market has successfully paid off in terms of portraying the seriousness of the purpose of developing the site.
Offered long-term compatibility
eHarmony, unlike its competitors, focuses on long-term compatibility as they try to lead their clients into marriage. This goes hand in hand with the Christian doctrine, which is readily accepted in the United States (Massa 2010). They did not promote same sex relationships/marriages. The company has managed to stand strong with law suits that came about from the company not recognizing the same sex relationships, thus building confidence in their Christian-based target markets.
A strong ability to convert active members to paying members
The financial success of a company comes from the ability to make consumers pay very well for the companys products helping it realize profits (Ginsberg 2006). The ability to make its client base active and make them pay for services has led to the company’s success, which a strength; if ignored, it may lead to the downfall of the company.
A scientific way of matchmaking
The company’s operation is based on mere attractiveness and basic similarities to match prospects. On the other hand, e-Harmony uses a more scientific approach of match making. They have provided a distinguished personality profile and a patented algorithm that factors in much more than the physical attraction.
Provision of a detailed questionnaire
The questionnaire has about 250 questions that should be answered when an individual joins as a member. The detailed questionnaire provides relevant information used to match the clients. The idea is to ensure that the opposite sexes have much in common based on the likes and donts in hobbies and character. They also address the intellectual compatibility – something that competing companies have to identify as a necessity. This aspect also helps them ensure that long-term relationships are built leading to a marriage as the two will tend to get along better due to the fact that they have so much in common, leading to a better understanding of each other.
Provision of guided communication
The company has offered a guided communication tool that focuses on helping the two prospects analyse each other before they are left to proceed on their own. Human beings are known to overreact in the case of excitement and, if not guided by an assistant, they may not get to move in the right direction. Guided communication fosters the company’s goal to bring about long-term relationships as the individuals do not rush into relationships. It is important to know a person before one can develop a relationship with him/her.
Investment of strong research capabilities
eHarmony has invested in research labs that take their time to find out the effectiveness of their work. They also research on the current biological, neurological, and socio-cultural factors that may influence a relationship as the community is rapidly changing and so are their needs.
As much as the company is an on-line business, e-Harmony has taken into consideration off-line marketing. They have marketed the company through radio and television advertisements, which has in turn paid off as they rapidly increased the number of subscribers over short periods of time. The effect is so intense that the off-line campaigns have managed to pay off in just under a year.
Professional and experienced board members
The founders and members of the board are known to have a good reputation in the relationship industry. Doctor Warren, who is a founding member, had an experience of 35 years working as a psychologist, focusing on relationship and marriage counselling. This experience is worth trusting considering he has written books about love, marriage, and emotional health.
Its market position
eHarmony is recognized as a market leader in the industry and is, therefore, easily related to. Relating to a market leader is more acceptable to individuals as they understand that the company’s strategies put in place are already working (Henry 2008). This is a major strength as competitors do not stand a chance of gaining a larger client base as opposed to e-Harmony due to the level of trust.
A time consuming questionnaire
Looking at the fact that the questionnaire has about 250 questions, the subscribers take a long time to fill in the questionnaire, which is rather annoying and repelling at first before the subscriber gets to understand the benefits of completing the questionnaire.
The company charges almost twice as much as its competitors in the same market. Potential subscribers may find the fee a little too high. Customers tend to compare market prices before purchasing a product or service. Customers that are price sensitive may shy away from this site due to the high prices.
Distinction between paying and non-paying members
Non-paying members and paying members could not communicate as their profiles were separate. Non-paying members communicated only with the non-paying and the paying could communicate with both; though they could not get feedback from the non-paying, which is repelling, especially if one saw potential in the other.
The company operates only in the United States; it is an international company as some of the competitors. They are, therefore, not able to compete on a level ground.
Due to the company’s limited resources, it does not allow the company for quick changes to be made to meet customer changing needs.
eHarmony’s Adopted Strategy and its Success
eHarmony settled for the first strategy where they defended their position in the market. They target marriage minded individuals that are finding a means of meeting someone to develop a long-term relationship. With the backing of the Christian religion, they have to adopt strategies that would revolve around this aspect.
This allowed targeting more of a mass market as they introduced a plan for non-paying members and distinguished it from the profiles of paying members. Despite the fact that this created a barrier for these subscribers, it also motivated and encouraged the non-paying members to invest more in the services to fully enjoy all benefits.
In order to address the strategy adopted, Ansoff’s growth strategy model will act as guidance. The strategy is comprised of a market penetration strategy, product development, market development, and diversification. These strategies identify the different approaches of growing and expanding in a competing industry (Hamel & Prahalad 1993).
Market penetration involves using the same service in the present market but campaigning intensively for the service to be used more or for the consumers in the same present market to seek the service more. This was done through television and radio advertising. The impact was so great that they managed to get millions of active subscribers over a short period of time.
Advertising may have acted as a mode of letting people know of the availability of the service. It is essential if the company wants to expand the market as it will be able to reach those who wanted the service but were not aware of where to seek for it.
Product development is the process of introducing a new service or product in conjunction with the current service to the current target market. E-Harmony is a personals site but it has managed to differentiate itself from its competitors by offering a little bit more than its competitors in the provision of their services. It is the only company that has used a scientific approach in partnering people to facilitate better and suitable match making, thus long-term relationships. The fact that it has not ventured into any other line of business like their competitor Yahoo, demonstrates the dedication they hold in the line of business they have chosen to take.
This is the process of finding a new market for the current services of a company. The main aim of doing this is to expand the business operating sites. Since it is a business that is run majorly through the internet, it does not require a physical address everywhere it operates. Deciding to venture into a new market has been rather simple as the foundation has already been laid out. Initially, the target market comprised young singles, but it went further to provide service for the divorced who were seeking to remarry.
This strategy was successful as the main reason for its adoption was to defend the company’s market position, which has served just right as e-Harmony is still a market leader in the United States. It, therefore, served its main objective.
Apart from that, the advertising in the market penetration strategy worked greatly. Companies produce advertisements and, in most cases, it takes a significant time to break even and recover the cost. In the case of e-Harmony, the impact was so great that, in just a year, they were able to break even, which ensure the success of the market penetration.
Product development created an added advantage for the company as it made the company unique. The services they provided were differentiated from those of competitors due to the more detailed information provided to the potential couples. The above points prove that the strategy worked as it was expected and shows the benefits brought about by its implementation.
eHarmony’s Next Strategy
Now that the market in the United States is becoming saturated, the company should try Ansoffs growth strategy of diversification. This will involve venturing into new markets with a refined service. This will enable them grow geographically, thus capturing new market segments while allowing them to step outside the same business line so as to compete with competitors such as Yahoo, who are known for diversification.
In order for this to be successful, the company has to put into consideration the evaluating strategies (SAF) that is suitability, acceptability, and feasibility. This is considered when the company decides with which market to start and how best to approach it. Evaluation strategies look into the suitability of the target market and the strategies to be put in place as well as assess the acceptability of the service and how it is going to perform in this market, while considering the feasibility of the company resources and competencies that will allow the company to succeed in its new ventures.
This strategy can help the company grow to international levels, thus satisfying a global need as technology has made the world a small village to operate in, especially for online businesses. Due to the fact that they do not support same-sex relationships, they are bound to be readily accepted with the backing of all religions. There are high chances of making the company big in the industry, and this opportunity should be exploited by eHarmony.