Marketing and Online Social Networks

INTRODUCTION Situation outline Competitors experience developed different approaches to attract consumers in the online dating securities intentness some of which yield been copying eHarmonys product features and using alternative st grazegies to attract singles. Companys circulating(prenominal) Strategy eHarmony uses a rivet differentiation strategy. It focuses on singles seeking a serious family and keen-sighted-term compatibility. It distinguished itself from early(a) sites by using a fantastic co-ordinated algorithm. They have in any grammatical subject area invested developed resources into merchandiseing and R&D. conundrum Statement eHarmony has opened the door to their competition by declining potential customers as a way to ensure quality run. eHarmonys CEO must influence how to react to imitations of its business model, encroachment by competing models and the source of free alternatives. analytic thinking 1. EXTERNAL ANALYSIS 1. General External Environm ent Demographic hop on 40 and 50 family olds turn the fastest growing constituent Age structure 60% of eHarmony users were women Members reflect the geographical distribution of the US quite considerably Legal Lawsuits for discrimination, etc. Privacy settingsSocio-Cultural Aver fester age to get married is change magnitude The marriage rate had reached its lowest crest in recorded history Cultural changes and economic factors had a substantial effect on the marriage grocery Fluctuating divorce format One-fifth of marriages were initiated through online determines Technological Increasingly sophisticated communication and written text technology R birth dynamics, physical attraction, and couples Must obtain patents for run intoing bodys Global Competitors have expanded globally 2. Industry Situation abbreviation 1. 2. 1 Industry StructureThe online personals industry female genitals be section into 4 different categories where the 3 main players eHa rmony, Match, and hick Personals be be by the Paid Do-it-yourself category Paid Do-it-yourself Sites let off Do-It-Yourself Sites Niche Sites Online Social Networks 1. 2. 2 Industry Direction and Trends competitor is steadily increasing. Many companies within this industry try to develop new approaches in an attempt to divert customers away from market leaders much(prenominal) as eHarmony. nigh either put up a couple of(prenominal) barriers to nub or allow people to trade union for free. The industry is expected to rise and perhaps double by 2012.Trends that may be important for this industries prox include 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 rank are constantly fluctuating 1. 2. 3 Industry Economics The online personals market grew very slowly, reaching only $40 trillion in 2001. In 2007, as a result of changing attitudes amongst consumers, the industry adjoind to $900 one million million million. Observers have predicted that the industry may double in size by 2012. 1. 2. 4 Industry Driving Forces Internet As the number of people becoming internet savvy increases, so does the number of potential customers for online personals. Globalization Some competitors, for instance Match, have already branched out to markets overseas. Industry ingathering Rate Industry expected to double by 2012. Who buys & how it is used Online personals are most popular for middle-aged (40-50) peoples. Used to find potential copulate for those seeking various different types of relationships. Marketing Innovation eHarmony is one of the few online companies that made offline marketing work and pay for itself. Many companies end up cut downing large quantities on their marketing strategies but do non necessarily acquire to a greater extent than than than customers. Changes in Societal Concerns, Attitud es & Lifestyles More and more people are becoming internet savvy therefore increasing the market potential for online personals. 1. 2. 5 Key Success Factors (See Appendix A) 1. 2. 6 strategical Groups Map (See Appendix B for strategic Groups Map) woo to join and barriers to join an online personal site are the two dimensions which are relevant to a firms performance within this industry. Harmony possesses the highest membership fees in the industry along with particularly high barriers to join. Even 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 confirming competitors are free and have little to no barriers to join. 1. 2. 7 Strategic Issues in the Industry Industry was plagued by people misrepresenting themselves and putting fancied personal learning Users are concerned about the privacy of their information Level of customer dissatisfaction remains high . 2. 8 Opportunities & Threats Opportunities This industry pull up stakes confront to rise in popularity due to increasing usage of computing machine technology. Due to it being a more affordable means of match making, people provide generally turn to online personals as opposed to other offline services. Convenience also 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. warrantor issues linked with sharing information on online personals. Online dating scams) Reduction of barriers could also mean expanding globally out front other competitors capture unconnected market segments. 3. war-ridden Situation abstract 1. 3. 1 Competitive Forces (See Appendix C for analysis). After analyzing Porters five forces it is concluded that the online personals industry is attractive. 1. 3. 2 Competitive Approaches Match They target individuals looki ng for enduring romance. They have also expanded their markets overseas. Yahoo Personals The types of consumers they target are not condition in the case.Although they have expanded their markets overseas Online Social Networks relies on viral process through which friends encourage their friends to join. 1. 3. 3 Competitive Strengths & Weaknesses (See Appendix D) 2. inborn 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 love (Biological, sociological, and neurological foundations of love) Scientists continue to do re front on physical attraction.They believe that the initial encounter is the crucial in determining the long-run success rate of relationship. Invested firmly on studies on couples. These studies analyzed how relationships were affected after specific disembodied spirit stages, for example, after a number one c hild is born. 2. 4 Procurement Analysis not applicable to this case 2. 5 Marketing and Competitive speckle Successful marketing edict the use of testimonials enabled their offline marketing efforts to pay for itself. Competitive position duplicate on the basis of long-term compatibility. Focus on direct-response marketing and only work with firms who truly show this form of advertising. They purchase media at lower rates. Advertise only on national cable networks and avoid broadcast tele imaging. (Less costly approach) ? of budget spend on TV and radio advertising, ? is spent on Internet search and banner ads (expensive). 2. 5 HR Analysis The company grew to 230 employees, half of whom were in customer service. They also employ a team of uniquely positioned interrogation psychologists. 2. 6 Managerial Preferences/Values 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 sustain internal funds marketing campaign paid for itself within the first week Borrowing capacity Received 3 million from an enthronisation firm at start up Technological Scientifically produced matching algorithm *** Organizational Resources and Physical Resources do not turn in to this caseResources Intangible Human resources knowledgeable team of psychologist Innovation resource labs were tasked with examine the biological, sociological, and neurological underpinnings of love Reputational resources eHarmonys focus on serious relationship resonated well with faith communities Capabilities Marketing Highly successful marketing formula R secured a patent for the matching algorithm well-knit vision *** Distribution, Human Resources, Management information systems, Management, and Manufacturing do not apply to this caseCore Competencies Sustainable Competitive Advantage Patented matching system and guided communication system Unique positioning of its team of look for 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 one million people every year costing the company an estimated $100 million per year. Break Even By early 2002 registrations had grown to over 300,000 allowing the firm to break even that year and become cash flow positive the next. Fixed Costs publicise Marketing outgos reaching as much as $80 million per year, firm profitability depended on efficient customer acquisition 4. provision AND DISCUSSION OF STRATEGIC ALTERNATIVES 4. 1 Option 1 Reduction of Barriers Pros Allowing more subscriptions will increase revenues Cost effective Would tap into niche markets such as the gay and lesbian communities (largest niche market). User satisfa ction increase when there are more users Denies competitors a chance to grow (Chemistry) Cons Current members will not be as confident when recommending matches Less unshared Spend money in R New matching models 4. 2 Option Broadening Customer base to include casual daters Pros Strong point of differentiation 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 commission Exposure to more competitive rivalry Spend money in R New matching models 4. 3 Option 3 emergence a new business based on R Pros great audience which allows for more subscriptions thus an increase in revenues Reducing attempt of being trampled by competitors by diversifying Cons Can tarnish eHarmonys nature and name brand Risky because it may not gain as much as what was anticipated Growth strategy may not be concrete . 4 Option 4 Rapid geographical 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 markets (Different cultures etc. ) Large investment in R in order to create new algorithms Must take into account politics, religion, culture 5. dodging RECOMMENDATIONSince its inception, the company has declined to sell memberships to at least one million people who sought to become paying customers. As a result, the prospect cost of this decision has lost the company an estimated $10 million in revenues per year. eHarmony should continue to focus on its vision in creating long-term relationships, however while reducing 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).Reducing their barriers could al so involve expanding their services globally before other competitors capture significant foreign market segments. On that note, they can also deny their competitors a chance to grow. This will also fulfill 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