E- Harmony Case

The Magellan MBA - Strategic Management

Name: Tiago André Couto Gomes

Case: eHarmony                              

Graded Assignment: Which of the four options should Waldorf pursue? Explain your reasoning. What are the risks involved?

eHarmony main asset is its recognition as a serious and effective platform for people looking for a serious relationship. Any option that would put this recognition in danger would diminish the power and coherence of its message and endanger its main competitive advantage and differentiation in the on-line dating industry in particular in the serious relationship segment. So consider removing the restrictions to memberships, although it might mean an increase of paying customers in the short-term, it could backfire and instead reduce the attractiveness of the platform for current costumers due to inferior results and also the perception of a less distinctive and selective platform. Meaning in the long term a loss of appeal and lower number of paying customers. The same reasoning can be done to the option of extending the service to casual dating. However in this case, entering in direct competition to the casual dating sites could compromise even more the differentiation of eHarmony and risk its market share by competing for the same segment with higher prices and against bigger players. In resume, the best defense of eHarmony in the long term is to remain faithful to its branding and distinctive features. Keep its offer centered in the serious relationship segment and continue to preserve the high level of matching results as differentiation factor.

The higher competition will nevertheless certainly take a toll in eHarmony market share in the US, in particular competition in the serious relationship segment from Chemistry. To maintain growth in the paying customers other alternatives are essential. The option to expand through a new business using the eHarmony research although may be perceived as an easy way to monetize previous R&D investments also signifies entering a different industry and apply a different business model (subscriptions vs. advertising). Creating a new business is inherently a risky plan, doing it in a new industry with a new value proposition and a new business model seems a risk to high to take. Moving away from the core business would most likely also result in a loss of focus which would in the end affect the original business.