eHarmony Case Analysis
Background and Facts:
* eHarmony founded by Dr. Clark Warren and his son-in-law, Greg Forgatch, in 1998 * Officially launched in 2000
* First radio commercial in 2002
* First TV commercial in 2003
* They target serious relationship and marriage-minded individuals, offering a unique match-making product * They offer a tightly integrated system that encompasses a Personality Profile, which feeds into a patented matching algorithm, which then leads to a Guided Communication system * In 2007 Match.com launched Chemistry to directly compete against eHarmony * Direct competition: Match/Chemistry, Yahoo! Personals
* Indirect competition: paid do-it-yourself sites, free do-it-yourself sites, niche sites, online social networks
* With the advance from direct competition and increased popularity of free personal sites and online social networks would eHarmony eventually fold amongst all of the recent competitor actions or would they be able to choose a marketing strategy that will help them innovate and prosper?
* On page 13 it says that in 2004 a Yahoo! Personals Premier subscription costs $34.95 a month which is $15 more than Yahoo!’s regular service making it $19.95. However, when looking at Exhibit 10 it has Yahoo! Personals listed with a $29.99 cost per month which contradicts what page 13 says. Exhibit 9 even has a higher cost listed, $23.91 per month, than the stated page 13 price of $19.95. * Why does exhibit 9, 10, and 11 have prices in 2008 dollars when the case was set in October 2007?
Missing Facts or Details:
* 2004 eHarmony had 3 million registration * .40 = 1.2 million active users * No info for 2007 to compare to the competitors
* eHarmony was able to convert these 1.2 million active users into paying customers 3 times more effectively than the industry standard * No info on what the industry standard is to find out the total number of paying members to compare to the competitors * 2004 Technology Crossover Ventures and Sequoia Capital invested in the company * No info on how much or what eHarmony planned to do with the money * 94 million U.S. singles * .05 = 4,700,000 paying members of online personal sites * 2005 Match revenue = $250 million on 1.2 million paying members * 2007 projected revenue = $349 million
* Chemistry demographics missing
* 2007 Yahoo! revenue = $6.9 billion * .025 = $172.5 million revenue for Personals * No information in Exhibit 10 for Yahoo! Personals Premier even though the case brings it up * No current data for Exhibit 1 or 2. (Exhibit 1 only goes to 2001 while Exhibit 2 goes to 2000) * No international data for web users. (Exhibits 6 and 7 only show American statistics) * No breakdown to show how many users have 1, 3, 6, or 12 month subscriptions for each site * No mention of eHarmony’s revenue or yearly budget
* Size of eHarmony’s market share compared to their competition?
* I feel that a significant rate of success is due to eHarmony’s branding and the use of an advertising campaign that appealed to a broad audience. They went from 300,000 registered members in 2002 to 3 million users in 2004 because of this. To me, this shows the mass appeal eHarmony has. Their successful campaign, which featured happy couples that found love by using their services, gave people a hope that this could happen to them as well. I think this hope of falling in love and getting marriage is a large priority of women. Accordingly, they account for eHarmony’s largest users at 60% and generate 2/3 of visits to the website.
Kotler Text Teachings:
* Core Competency: Refers to areas of special technical and production expertise. * eHarmony targets serious relationship and marriage-minded individuals, offering a unique...
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