'Marketing and Online Social Networks\r'

'INTRODUCTION blot Synopsis: Competitors deem positive assorted approaches to attract consumers in the online date food trade; about of which deplete been copying eHarmony’s yield features and using alternative st tempogies to attract singles. Company’s Current Strategy: eHarmony uses a foc employ speciality strategy. It focuses on singles quest a estimable family and retentive-term compatibility. It distinguished itself from other billets by using a unique interconnected algorithm. They name besides invested substantial resources into marketing and R&D.\r\n hassle Statement: eHarmony has opened the door to their competition by declining potency customers as a way to watch quality control. eHarmonys CEO must decide how to contradict to imitations of its business model, encroachment by competing models and the rise of put out alternatives. ANALYSIS 1. EXTERNAL ANALYSIS 1. General immaterial Environment Demographic: • Age 40 and 50 year olds turn the fastest maturation discussion section • Age structure: 60% of eHarmony users were women • Members reflect the geographical distribution of the US quite hygienic good • Lawsuits for discrimination, etc. • Privacy settings\r\nSocio- heathenish: • Average age to sire married is change magnitude • The marriage rate had reached its lowest slur in recorded history • Cultural changes and economic factors had a substantial effect on the marriage market • Fluctuating divorce range • One-fifth of marriages were initiated through online encounters Technological: • enlargely educate communication and recording technology • R: relationship dynamics, physical attraction, and couples • Must obtain patents for duplicate systems world-wide: • Competitors have spread out globally 2. constancy smear depth psychology 1. 2. 1 Industry Structure\r\nThe online personals constancy can be segmente d into 4 different categories where the 3 main players; eHarmony, pair off, and Yahoo! Personals be represent by the remunerative Do-it-yourself category: • Paid Do-it-yourself Sites • Free Do-It-Yourself Sites • Niche Sites • Online tender Networks 1. 2. 2 Industry Direction and Trends Competition is steady increasing. many companies inwardly this intentness try to go new approaches in an attempt to divert customers off from market leaders such as eHarmony. some(a) either put up few barriers to give or allow muckle to join for free. The industry is expected to rise and perhaps double by 2012.\r\nTrends that whitethorn be important for this industries future allow in the following: • Subscribers to these sites tend to be repeat users • 40 to 50 year olds are the fastest growing segment • Marriage rate has reached its lowest point in recorded history • Divorce order are constantly fluctuating 1. 2. 3 Industry Economics The online personals market grew very slowly, reaching tho $40 million in 2001. In 2007, as a result of changing attitudes amongst consumers, the industry increase to $900 million. Observers have predicted that the industry may double in size by 2012. 1. 2. 4 Industry impulsive Forces Internet: As the number of people becoming net income savvy increases, so does the number of dominance customers for online personals. • Globalization: Some competitors, for instance Match, have already branched out to markets overseas. • Industry Growth browse: Industry expected to double by 2012. • Who buys & how it is used: Online personals are most popular for middle-aged (40-50) peoples. utilise to find potential mates for those seeking motley different types of relationships. • trade Innovation: â€Å"eHarmony is one of the few online companies that made offline marketing work and pay for itself. Many companies end up spending large quantities on their marketing strategies but do non of necessity acquire to a greater extent customers. • Changes in Societal Concerns, Attitudes & Lifestyles: to a greater extent and often(prenominal) people are becoming internet savvy therefore increasing the market potential for online personals. 1. 2. 5 Key Success Factors (See attachment A) 1. 2. 6 strategical Groups Map (See appurtenance B for strategic Groups Map) Cost to join and barriers to join an online personal site are the two dimensions which are relevant to a staunchs’ performance within this industry. Harmony possesses the highest membership fees in the industry along with particularly high barriers to join. as yet their direct competitors; Match and Yahoo! Personals differ from eHarmony in that they have much lower barriers to join as well as lower sign up fees. Most of their indirect competitors are free and have little to no barriers to join. 1. 2. 7 Strategic Issues in the Industry • Industry was plagued by p eople misrepresenting themselves and place false personal information • Users are bear on about the privacy of their information • Level of customer dissatisfaction remains high . 2. 8 Opportunities & Threats Opportunities: • This industry allow continue to rise in popularity due to increasing usage of computer technology. • Due to it being a more(prenominal) affordable means of match making, people will generally turn to online personals as inappropriate to other offline function. Convenience besides plays a factor. • Increasing their market share, catering to more market segments. (Niche markets). Threats: • Online personals sites with more resources pose a threat to those lacking resources. • security measure issues linked with sharing information on online personals. Online dating scams) • decline of barriers could also mean expanding globally forrader other competitors capture foreign market segments. 3. emulous Si tuation compend 1. 3. 1 agonistical Forces (See Appendix C for analysis). After analyzing Porter’s pentad forces it is concluded that the online personals industry is attractive. 1. 3. 2 Competitive Approaches • Match: They target individuals looking for â€Å"enduring romance”. They have also expanded their markets overseas. • Yahoo! Personals: The types of consumers they target are not specified in the case.\r\nAlthough they have expanded their markets overseas • Online Social Networks: relies on viral care for through which friends encourage their friends to join. 1. 3. 3 Competitive Strengths & Weaknesses (See Appendix D) 2. INTERNAL ANALYSIS 2. 1 Company Situation/Resources Analysis (See Appendix E) 2. 2 Operations Analysis: not applicable to this case 2. 3 R Analysis • E-Harmony Labs: In which scientists study different aspects of contend (Biological, sociological, and neurologic foundations of love) • Scientists continue to do research on physical attraction.\r\nThey believe that the initial encounter is the decisive in determining the long-term success rate of relationship. • Invested heavily on studies on couples. These studies analyzed how relationships were bear upon after specific life stages, for example, after a first child is born. 2. 4 Procurement Analysis: not applicable to this case 2. 5 Marketing and Competitive Position • Successful marketing formula: the use of testimonials enabled their offline marketing efforts to pay for itself. • Competitive prepare: â€Å"matching on the basis of long-term compatibility. • contract on direct-response marketing and only work with square’s who truly understand this form of advertising. • They corrupt media at lower rates. • Advertise only on national cable networks and avoid broadcast tele romance. (Less dear(p) approach) • ? of budget spend on TV and radiocommunication advertising, ? is spe nt on Internet search and monetary standard ads (expensive). 2. 5 HR Analysis The company grew to 230 employees, one-half of whom were in customer service. They also employ a aggroup of uniquely positioned research psychologists. 2. 6 managerial Preferences/ think ofs Analysis The CEO, Greg Waldorf values the exclusivity of the site. • Their customers values long term relationships. 3. APPRAISAL OF STRATEGIC ISSUES 3. 1 evaluation of Current Strategic Performance 3. 1. 1 Strategic Resources: Tangible • Financial: Ability to generate home(a) funds: marketing campaign paid for itself within the first week • Borrowing capacity: current 3 million from an enthronization firm at array up • Technological: Scientifically produced matching algorithm *** Organizational Resources and Physical Resources do not apply to this case\r\nResources: Intangible • Human resources: sexual team of psychologist • Innovation resource: labs were tasked with studyin g the biological, sociological, and neurological underpinnings of love • Reputational resources: eHarmony’s focus on good relationship resonated well with faith communities Capabilities: • Marketing: super successful marketing formula • R: secured a patent for the matching algorithm • Strong vision *** Distribution, Human Resources, Management information systems, Management, and Manufacturing do not apply to this case\r\nCore Competencies: Sustainable Competitive Advantage: • Patented matching system and manoeuvre communication system • Unique positioning of its team of research psychologists • Successful marketing formula *** Value Chain does not apply to this case 3. 1. 2 Financial • Borrowing capacity: Received $3 million from an investment firm at start up. • Opportunity Cost: Declines to sell memberships to at least(prenominal) one million people annually be the company an estimated $100 million per year. Break point: By early 2002 registrations had grown to over 300,000 allowing the firm to break even that year and become immediate payment flow positive the next. • Fixed Costs: publicise: Marketing expenses reaching as much as $80 million per year, firm profitability depended on efficient customer acquisition 4. FORMULATION AND bridge playerling OF STRATEGIC ALTERNATIVES 4. 1 picking 1: Reduction of Barriers Pros: • Allowing more subscriptions will increase revenues • Cost potent • Would tap into niche markets such as the fairylike and lesbian communities (largest niche market). User satisfaction increase when there are more users • Denies competitors a channelise place to grow (Chemistry) Cons: • Current members will not be as confident when recommending matches • Less exclusive • hand money in R: New matching models 4. 2 Option: Broadening Customer antecedent to include casual daters Pros: • Strong point of specialization : Introducing the matching algorithm to the casual dater segment • Allowing more subscriptions will increase revenues Cons: Undermining its credibility with individuals seeking individuals seeking long-term commitment • Exposure to more warring rivalry • Spend money in R: New matching models 4. 3 Option 3: Growing a new business found on R Pros: • Greater audience which allows for more subscriptions thus an increase in revenues • Reducing seek of being trampled by competitors by diversifying Cons: • Can injury eHarmony’s reputation and name brand • dangerous because it may not gain as much as what was anticipated • Growth strategy may not be concrete . 4 Option 4: Rapid Geographic expansion Pros: • Enables them to take control of target segments before their competitors do • Increases their geographic scope which translates to increased revenues Cons: • The matching portfolio may not cater to foreign marke ts (Different coatings etc. ) • Large investment in R in order to frame new algorithms • Must take into account politics, religion, culture 5. STRATEGY RECOMMENDATION\r\nSince its inception, the company has declined to sell memberships to at least one million people who sought-after(a) to become paying customers. As a result, the luck cost of this decision has lost the company an estimated $10 million in revenues per year. eHarmony should continue to focus on it’s vision in creating long-term relationships, besides while trim back the amount of barriers they have instilled in order to become a member. By reducing their barriers not only will they increase their market share, they will be able to cater to more market segments (niche markets).\r\nReducing their barriers could also involve expanding their services globally before other competitors capture solid foreign market segments. On that note, they can also deny their competitors a chance to grow. This wil l also satisfy their current users since there will be a greater selection. On the other hand some users may not take well to the idea, but as long as eHarmony maintains some element of control regarding who is accepted the changes may not be noticed. To conclude, we believe the R expense of creating a new algorithm will prove to be a worthy investment. [pic]\r\n'