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Okcupid Marketing Strategy for China

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Research paper for the online dating service, Okcupid, to enter the Chinese Market for MBA6313: Marketing Strategy to Emerging Markets

Research paper for the online dating service, Okcupid, to enter the Chinese Market for MBA6313: Marketing Strategy to Emerging Markets

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  • 1. Alfred  W.  Dang  awdang@usfca.edu  Student  ID:  20210101  8/13/12  MBA  6313  –  Summer  2012  Prof.  Stanley  Kwong    Introduction:A universal axiom of life is that love transcends all language, social, geographicaland even gender barriers. No matter if you live in Shanghai, Dubai, or New YorkCity, the desire for compassion and appreciation are strong basic human needs.It is no wonder that as the use of technology has increased, so has its integrationwithin our personal lives. Now when we meet potential love interests we can findthem on Google, Facebook, or Twitter. From a hopeless-romantic’s perspective,the mystery may be dead, but from a business perspective, there is an extremelylucrative market to be had. Once looked upon as a place for social deviants,online dating has incrementally gained traction the past couple of years and iscurrently accepted in mainstream American / Western culture. The main UnitedStates non-demographic based online dating companies are OKCupid,Match.com, and eHarmony.i There are other more targeted online dating siteslike JDate for the Jewish population, Christianmingle.com for Christians, andDesicrush.com for Indians; however, for the scope of this discourse, the focuswill be on the inclusive sites.   1  
  • 2. Alfred  W.  Dang  awdang@usfca.edu  Student  ID:  20210101  8/13/12  MBA  6313  –  Summer  2012  Prof.  Stanley  Kwong    Company Backgrounds:  OKCupid is a free dating site and has over 4 million active users to date. The sitefeatures a multitude of ways to interact with potential love interests includingpublic forums, instant messaging, emails, ratings, “favorites” and winks. Theyalso utilize matching questions and an intense algorithm that finds matches thatfit. OkCupid is owned by Humor Rainbow, Inc and their founders met whilestudying at Harvard. In 2011, OKCupid was bought for $50 million byIAC/InterActiveCorp, operators of Match.com.iiMatch.com has a larger reach that serves 25 countries in more than 8 languagesspanning 5 continents. Match.com launched in 1995 and has aggressivelyexpanded, while making strategic acquisitions globally. Mostly recently they havelaunched to in-person events known as “The Stir”, which brings singles togetheraround fun activities like bowling, ping-pong, and rock climbing. They are takingthe online experience offline.iii   2  
  • 3. Alfred  W.  Dang  awdang@usfca.edu  Student  ID:  20210101  8/13/12  MBA  6313  –  Summer  2012  Prof.  Stanley  Kwong    eHarmony is a multi-faceted online dating service. It boasts members in 150different countries. The company is privately held with investors that includeTechnology Crossover Ventures, Sequoia Capital and Fayez Sarofim & Co.Currently, the site holds 33 million members and each day 15,000 new personssign up. The methodology behind eHarmony is what differentiates itself from itscompetitors.eHarmony operates eHarmony labs, a research facility, and eHarmony advice, arelationship advice site. Users take an extensive questionnaire surroundingcharacteristics, beliefs, values, emotional health and skills. The algorithm thenanalyzes the large amount of data in order to potentially match up and hopefullyleads to successful, happy couples. eHarmony has faced criticism because thefounder Neil Warren, a Christian theologian, did not include same-sex couples inits methodology.ivWith our technological advances and the poor economy, online dating hasexperienced a meteoric rise in the past couple of years. Professionals areworking longer hours and have limited time to find a partner outside of theconfines of technology. Senior Director of Research and Development ateHarmony Dr. Glan Gonzaga notes, "You have to know who you are and what it   3  
  • 4. Alfred  W.  Dang  awdang@usfca.edu  Student  ID:  20210101  8/13/12  MBA  6313  –  Summer  2012  Prof.  Stanley  Kwong    is thats important to you in a relationship because when youre picking out apartner, it isnt just about finding the best person out there, it’s about finding thebest person for you."v People trust the algorithms of online dating, because youcan find the right person through technology.  Objective:The objective is to bring the American online dating brand OKCupid to China.The following discourse will illustrate how OKCupid can infiltrate the Chinesemarket by highlighting the new dating attitudes associated with youngChinese professionals and brand allegiance to American companies, whilesuccessfully penetrating one of the largest consumer markets in the world.As China’s economy has grown to the second largest in the world, the shift to amore modern culture has been significant and well documented. In the past,relationships were built on traditions and familial structure. In fact, there were sixetiquettes to marriage in which Chinese persons had to abide by. These include:Proposal, Birthdates, Bride Price, Wedding Gifts, Arranging the Wedding, andWedding Ceremony. These elaborate steps demonstrate how antiquated atraditional marriage was in China. Until modern times, marriages were arrangedunder the pretense of reproduction, honor, and paramount to all, the needs of thefamily.viArranged marriages are no longer common practice in China. Young peopleliving in China are more westernized and view marriage similarly their Americans   4  
  • 5. Alfred  W.  Dang  awdang@usfca.edu  Student  ID:  20210101  8/13/12  MBA  6313  –  Summer  2012  Prof.  Stanley  Kwong    / Western counterparts. In Shanghai, China’s richest and most urban city, hometo financial centers and the largest port, the marriage rate has fallen by 17%.viiThis can be attributed to a number of factors including a paradigm shift awayfrom living in rural villages and female education on the rise. The number ofsingle Shanghai women in their late 20’s tripled in the past 15 years, to almostone in three, according to the Brookings-Tsinghua Center and nearly 40 percentof college-educated women between 25 and 34 in the city were unmarried in2005.viii Wang Feng, Beijing-based director for the Brookings-Tsinghua Center forPublic Policy quotes, “Shanghai is at the frontier of these broad social changes,and this is what is happening across urban China. We will see it spread.”ix AsFeng notes other large urban cities like Beijing and Guangzhou are following thistrend. The younger generation wants to find partners who are suitable for theirlong-term needs in accordance to compatibility with personality, family structure,and financial goals.xSuccessful US Brands in China:As evidenced by the immense issues of intellectual property in China with fakeNIKE, Ikea, and Apple stores, the Chinese population is very much driven to theAmerican culture. Chinese consumers thoroughly enjoy western culture anddesperately want to be part of it, which is expressed by their consumption ofAmerican brands. They do this through the types of clothes they wear, food theyeat, and websites they join. It is not be illogical to make the following claim: China   5  
  • 6. Alfred  W.  Dang  awdang@usfca.edu  Student  ID:  20210101  8/13/12  MBA  6313  –  Summer  2012  Prof.  Stanley  Kwong    has much of a copycat culture to America. They have their own Facebook’s(RenRen), Groupon’s (Lahou), and Google’s (Baidu).xiThe most popular and successful brand integration from the United States toChina has been Nike. Nike has transformed the athletic landscape of China.Before their marketing campaigns, China was a very much an academicallydriven country and did not favor athletics as a career path. After a strong brandstrategy from Nike including key partnerships with the Bejing Olympics, “Battle ofthe 9 Gates” print campaign, and Internet ad campaigns, Nike’s success hasbeen huge. In 2011, Nike’s revenue grew by 22% and is the second largestmarket. They have $12 billion in total sales and open 1.5 stores a day.xiiSurprisingly, KFC, a fried chicken fast food restaurant has been able to thriveand overcome expectations in China. KFC came to Being, China in 1987 and hassince opened to over 3,000 restaurants with one new restaurant a day. Thepopularity of KFC has altered the diets of citizens who want to be moreAmericanized. Moreover, many young Chinese’s’ first job is at KFC and theyenjoy the company culture of this American company.xiiiAs the Bay Area’s Silicon Valley and Manhattan’s Silicon Alley produce newmobile apps and websites on a daily basis, China is in their coattails waiting totake their ideas and make it their own. Because Facebook is highly monitored inChina, RenRen, the Chinese Facebook, has grown rapidly. Founded in 2002 byJoseph Chen, who studied in the United States, the site is one of the top 100   6  
  • 7. Alfred  W.  Dang  awdang@usfca.edu  Student  ID:  20210101  8/13/12  MBA  6313  –  Summer  2012  Prof.  Stanley  Kwong    websites visited in the world. Currently, there are 115 million active users on thesite and the company had its IPO in 2011.xiv As America capitalized on the daily-deal-market with LivingSocial, Groupon, and Bloomspot, China copied thisbusiness model as well. In a manner of months, there were a plethora of sitessimilar to the American daily-deal sites. In March 2010 there were 100 sites andby August 2010 there were 1,215. Lahsou.com leads the pack with 17 millionusers, 46,000 merchants, and 1,000 daily deals.xvSimilar to Facebook.com, Google.com is highly monitored in China and therehave been prior issues of spying and cyberattacks. Thus, China has created theirown search engine. It was the first Chinese website to be offered on the U.S.Nadaq and has an index of over 740 million web pages, 80 million images, and10 million multimedia files.xvi     7  
  • 8. Alfred  W.  Dang  awdang@usfca.edu  Student  ID:  20210101  8/13/12  MBA  6313  –  Summer  2012  Prof.  Stanley  Kwong    SWOT of OKCupid:Strengths WeaknessSuccessful American company Not Chinese basedEstablished user based in China already Issues with sexualFREE assaultAnonymity (Big one since it’s so non-traditional, it provides Non-traditionalanother level of protection from family members’ backlash Too many choices & not/ negative reactions) targeted algorithmsLeads to marriage and familyOpportunities ThreatsLarge consumer market Chinese Dating SitesShanghai - Most urban and modernized city w/ citizens’values similar to that of the US / Western consumer • JiayuanAmerican brand allegiance • ZhenaiSuccess stories • BaiheRise in technology / smartphonesUrbanization trendsChina is a proven market that American based brands can Government restrictionssucceed and flourish in (NIKE, Apple, Buick, McDonalds, Negative stigma of onlineKFC, etc.) datingAllows busy working professionals a way to date / Arranged marriagesocialize without the risk of ruining professionalrelationships (career / success very important in Chineseculture)     8  
  • 9. Alfred  W.  Dang  awdang@usfca.edu  Student  ID:  20210101  8/13/12  MBA  6313  –  Summer  2012  Prof.  Stanley  Kwong    Analysis:After analyzing the factors in bringing OKCupid to market, the focus of thisdiscourse will now shift to a marketing strategy, which will include the following: 1) The launch 2) Value propositions 3) Target market / Advertising strategyCurrently, OKCupid is already in the Chinese market, but the objective is toexpand its reach. This will be accomplished through via a “re-launch” of theproduct. The holidays are an important time for families and friends to cometogether in China. The whole country shuts down and people travel hours to bewith loved ones. It is also a time when parties and celebrations are in full swing.In large urban areas like Shanghai and Beijing, there are a number of largeparties where people gather. This would be the perfect time to re-launchOKCupid.Strategy / “Launch”:The “re-launch” would have two phases: 1) A pre-launch and 2) An officiallaunch. Both of these would revolve around the holidays in the New Year (not tobe confused with Chinese New Year). As New Years Eve / New Years are timesof celebration and always revolve around a midnight kiss, an effective strategywould be to implement a marketing campaign prior to the New Year. Sloganswould be centered on finding a date for the New Year and seeing what happens   9  
  • 10. Alfred  W.  Dang  awdang@usfca.edu  Student  ID:  20210101  8/13/12  MBA  6313  –  Summer  2012  Prof.  Stanley  Kwong    next. Partnerships with popular bars / clubs in Shanghai and Beijing that arehosting New Years parties would also be part of the “re-launch” strategy.Moreover, an attempt to create sponsorship deals so that OKCupid logos can befeatured in bars / clubs would be prudent. The second part of the launch would be executed around the proximity ofValentine’s Day. Prior to Valentine’s Day, OkCupid could host speed-datingevents and bar nights. Although these would be offline events, they would beused to drive online traffic. Valentine’s Day would be our main launch with apress release and online videos, which would spread virally, featuring successstories from using OKCupid.Value Propositions:The value proposition of OKCupid in China is that it is FREE. Unlike other onlinedating services that cost money to view profiles and take tests, OKCupid is risk-free. Even if an individual makes a profile he / she does not t have to engagewith the site. It is a “win-win” situation, because it can only help a person find loveand will not hurt that person financially. The second value proposition is that theindividual uses a “screen-name”. With today’s cyber stalking issues, anonymityhelps to lower risk. In addition, this will make people want to join because it willnot affect their online presence. As the Chinese focus on their jobs and careergrowth, having an anonymous name will help their online search results. Also, iffamily members do an online search they will not find users. Because some   10  
  • 11. Alfred  W.  Dang  awdang@usfca.edu  Student  ID:  20210101  8/13/12  MBA  6313  –  Summer  2012  Prof.  Stanley  Kwong    traditional families still adhere to arranged marriages, the anonymity feature willbe crucial in mitigating against any backlash from one’s family.Target Market / Advertising Strategy:The target market is a young working professionals who are living in urban areas: 1) Shanghai 2) Beijing 3) GuangzhouBecause the objective is to position OKCupid as an American dating company,strategic partnerships with successful and recognizable American brands inChina will be essential. For the launch a partnership will be established withStarbucks. OKCupid’s logo will be placed on the other “white-side” of their coffeecups. Since a lot of first dates take place at a coffee shop we find that this will bea great way to build our brand. Also, since Starbucks is a trusted brand, OKCupidwill be able to build off of their credibility.Barriers to Entry:As with any new product within the business landscape there are always barriersto market penetration. In this case they include cultural implications, negativestigma of online dating, lack of Internet access, and strong competition. Althoughthe rate of urbanization in China is 3% higher than anywhere else in the world,this does not mean that all attitudes have modernized and are nontraditional.Many families still believe in an arranged marriage. It is common for families to   11  
  • 12. Alfred  W.  Dang  awdang@usfca.edu  Student  ID:  20210101  8/13/12  MBA  6313  –  Summer  2012  Prof.  Stanley  Kwong    buy their daughters apartments so that they will be seen as desirable. If thefamily found out that their sons / daughters were online dating, they could feelbetrayed by their investment. Also for higher-class families, it would be upsettingif their kin found partners who were not of similar socioeconomic status. Eventhough China is becoming more westernized, there are still strongly instilledcultural beliefs that could adversely affect OKCupid’s growth. Furthermore, prideand “face” are very important in Chinese culture. By reverting to finding a partneronline, this could bring shame to the individual and his / her family. It could beperceived that the individual is not pretty / handsome, smart, nor wealthy enoughto find someone in real life and that he / she had to use the Internet as analternative. The stigma has worn off in the United States, but it may be in place inChina. This would also adversely affect OK Cupid’s ability to expand. Eventhough the target market is a young professional living in urban areas, i.e.,Shanghai and Beijing, OkCupid is still an Internet based company. A large part ofChina is still rural and not all families have Internet access. This could potentiallynegatively affect the growth strategy of OKCupid. For it to be truly penetrable itwill need to span across the whole country. The number of users might becomestagnate after a certain point. xvii The final barrier to market is that the Chineseonline dating sites are already extremely strong in their domestic market.Jiayuan.com is the number one dating service in China. To date it is the 60thmost visited website in China and publicly traded under Date on the NASDAQ.   12  
  • 13. Alfred  W.  Dang  awdang@usfca.edu  Student  ID:  20210101  8/13/12  MBA  6313  –  Summer  2012  Prof.  Stanley  Kwong    They have 40 million users and their differentiator from American websites is thatthey focus on marriage. This may help OKCupid’s appeal, but it will be hard totransition users over to another online site.xviiiConclusion:Based upon the SWOT analysis of the current online dating landscape in China,it is OKCupid’s belief that it has has the potential to become the industry leader.However, due to Jiayuan.com’s well-established presence and currentdominance of the market, the timetable has been readjusted from 6 years to 8years (2020) until OKCupid becomes market leader.   13  
  • 14. Alfred  W.  Dang  awdang@usfca.edu  Student  ID:  20210101  8/13/12  MBA  6313  –  Summer  2012  Prof.  Stanley  Kwong                                                                                                                    i  http://www.consumer-­‐rankings.com/dating/  ii  http://techcrunch.com/2011/02/02/match-­‐com-­‐acquires-­‐online-­‐dating-­‐site-­‐okcupid-­‐for-­‐50-­‐million-­‐in-­‐cash/  iii  http://www.match.com/help/aboutus.aspx  iv  http://www.eharmony.com/about/eharmony/  vhttp://www.uppermichiganssource.com/news/story.aspx?id=682940#.UClx02NYuBA  vi  http://www.chcp.org/wedding.html/  vii  http://www.businessweek.com/articles/2012-­‐06-­‐14/in-­‐chinas-­‐dating-­‐scene-­‐women-­‐get-­‐pickier  viii  http://www.businessweek.com/articles/2012-­‐06-­‐14/in-­‐chinas-­‐dating-­‐scene-­‐women-­‐get-­‐pickier  ix  http://www.businessweek.com/articles/2012-­‐06-­‐14/in-­‐chinas-­‐dating-­‐scene-­‐women-­‐get-­‐pickier  x  http://www.businessweek.com/articles/2012-­‐06-­‐14/in-­‐chinas-­‐dating-­‐scene-­‐women-­‐get-­‐pickier  xi  http://voices.yahoo.com/china-­‐doesnt-­‐google-­‐facebook-­‐youtube-­‐or-­‐5682232.html  xii  Stanley  Kwong.  “Nike  in  China”.  University  of  San  Francisco  –  School  of  Management.        xiii  http://hbswk.hbs.edu/item/6704.htmlxiv  http://www.reuters.com/article/2011/05/04/us-­‐renren-­‐ipo-­‐idUSTRE7433HI20110504  xv  http://www.reuters.com/article/2011/05/04/us-­‐renren-­‐ipo-­‐idUSTRE7433HI20110504  xvi  http://ir.baidu.com/phoenix.zhtml?c=188488&p=irol-­‐homeprofile  xvii  http://technode.com/2011/05/17/jiayuan-founder-haiyan-gong-nasdaq/xviii  http://technode.com/2011/05/17/jiayuan-founder-haiyan-gong-nasdaq/  Other  Sources  used  for  preliminary  research:     • http://www.time.com/time/world/article/0,8599,2055996,00.html   • http://news.yahoo.com/chinas-­‐online-­‐dating-­‐market-­‐booms-­‐research-­‐ 112559777.html   • http://www.newyorker.com/reporting/2012/05/14/120514fa_fact_osnos   • http://www.uncommonwisdomdaily.com/online-­‐dating-­‐is-­‐a-­‐booming-­‐trend-­‐in-­‐ china-­‐14220   • http://www.sacbee.com/2012/08/08/4704495/jiayuan-­‐to-­‐report-­‐second-­‐ quarter.html   • http://www.skynews.com.au/offbeat/article.aspx?id=777161   • http://money.cnn.com/2012/04/25/news/economy/china-­‐middle-­‐ class/index.htm   • http://www.forbes.com/sites/kenrapoza/2012/02/03/the-­‐rise-­‐of-­‐the-­‐chinese-­‐ consumer/   • http://www.mckinseychina.com/2012/03/07/meet-­‐the-­‐2020-­‐chinese-­‐consumer/         14  

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