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Eharmony Case

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The Dating Services Industry provides a product that generated $320m in 2015, has historically grown at a 5-year CAGR of 5.0%, and is forecast to grow 3.9% YoY into 2020. I believe this trend is justified as a growing number of consumers begin to turn to the internet to look for love. Key Drivers for growth include the proliferation of broadband internet connections, the exponential increase the number of mobile devices, increased use of the internet, increasing GDP Per Capita (2.2% CAGR), and a slowing marriage rate indicating a high proportion of single adults. According to the case, the attractiveness of meeting others online instead of finding them in the real world has increased dramatically over the last two decades. The primary drivers …show more content…

A majority of the attractiveness stems from the abnormally low buyer and supplier power. However, this gain is offset by the current low barriers of entry and high competitive rivalry. In order to remain competitive, incumbents must (1) invest heavily in research and development, (2) secure technology via patents, (3) market heavily to monetize products, all of which will diminish bottom line results. Does eHarmony have a competitive advantage? eHarmony, founded by Neil Clark Warren in 2000, has pushed itself to the top of a very competitive industry. Currently maintaining a market share of 11.9% in the Dating Services Industry, eHarmony has grown their revenue by 2.5% YoY due to the competitive advantage that they have created. This competitive advantage stems from a tightly integrated system that encompassed the following: • 258 question personality profile • Matching …show more content…

As mentioned above, the competitive threat of rivals to incumbent eHarmony in the Dating Services industry is high and increasing; therefore resulting in a very serious threat to industry profitability. This threat is primarily due to the constant innovation in the industry that is driven by both internal and external incumbents. Internally, downward pressure is currently being placed by three key competitors, (1) InterActiveCorp, (2) eHarmony, (3) Zoosk, and (4) Others. InterActiveCorp, eHarmony’s largest competitor is a global conglomerate this creates a majority of the competition within the industry. IAC has been very successful due to their ability to monetize products and expand operations internationally, of which eHarmony is currently contemplating in the four options proposed by Waldorf. However, the key difference and competitive advantage that IAC fails to maintain is their customer selection. IAC believes that top line growth should be driven by delivering services to as many customers as possible, whereas eHarmony believes in maintain the quality rather than the quantity of their service. However, IAC quickly replicates any new product offered by eHarmony (e.g. Chemistry.com was developed to replicate eHarmony’s three step guided communication). Actions such as these bypass competitive advantages and facilitate the need for a new way to decrease this abnormally high

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