Eharmony

Case study: eHarmony

Concepts of a case study:

General to specifics.

The economic, strategic and business logic of the industry. What are the choice, pros, cons, trade off.

Intro

eHarmony: online dating site for marriage-minded individuals. It combines extensive relationship questionnaire, patented matching system and guided communication.

Information good of eHarmony: individual match.

Match: eHarmony biggest competitor.

I. Overall view of the industry

| Size | Information flow | interaction |

activities (work, random encounters) | 3 | 1 | 3 |

brokers (family, friends) | 2 | 2 | 1 |

market (parties, bar, club) | 1 | 3 | 2 |

Interaction: how easy it is to get a relationship out of random encounters, friends etc.

Information flow: information you give about yourself and information you learn from the other.

From this table we can deduce that there is no perfect and best channel. Every channel has a significant disadvantange.

Hence there is a potential of overcoming these difficulties through online dating.

Companies have to add value and capture as much of this additional value as possible.

II. How much of that value can a company get?

For this we need to do an industrial analysis. How structurally attractive the industry is.

Suppliers and buyers are the same group of people. They are the customer supplying information/profiles.

They have a very strong power because they can go to another firm.

But the limit of their power is the price/time effort/network effect to subscribe to another online dating site.

The overall power lies with a customer because the price is not too expensive.

Substitutes: other way of finding a partner. This has a huge power.

Entry: some barriers to entry but the barriers are not very high. A lot of market power but not as much as others.

Competitors: degree of rivalry is quite high.

To conclude it is a bad industry to be in. It is not expected to have high...