1. Final Case Assignment: eHarmony
Marketing Strategy 7650
Name:Laura Neely
Cohort:Buckhead
For over150 years,some iterationof romanticpersonal ads hasbeeninplace nearly
everywhere inthe world. Since the oldestrecorded“personals,”meansof findingapartnerhave
increasedtothe pointwhere intoday’sdigital world, revenuestoonlinedatingcompaniesexceed$2
billioninthe USalone, and38% of Americansingleshave usedadatingsite orapp1
.
Once seenas a lastresort fora bunchof lonelygeeks,onlinedatingserviceshave graduallyshed
much of the stigmaformerlyassociatedwiththem. Over40 millionpeopleinthe UnitedStatesalone
have triedonline datingandone infive relationshipsnow beginonline worldwide2
;moreover, 85%of
singlessaidthatmeetingpeoplethroughonline datingissociallyacceptable3
–a markedimprovement
overthe last decade.
VALUE PROPOSITION
WheneHarmonycame onto the scene in2000, itwas the onlyservice thatoffereda“tightly
integratedsystemthatencompassedaPersonalityProfile,whichfedintoamatchingalgorithm, which
thenledto a GuidedCommunicationsystem.”Inotherwords,eHarmony differentiated itselfbya
scientificapproachto a deeplypersonalandemotional process thatwasoftenmarginalizedbyother
online meansof dating.
1
Romano,Elise, TheBiggest OnlineDatingServices, By The Numbers,May 302014.
2
“OnlineDating Industry's ContinuedGrowth Fuels One2OneLivingLatest Expansion,” PR Newswire, August 22, 2013.
3
Seal, Kelly, “NewStudy Shows Confusion AmongYoungDaters About What is a Date,” February 252014.

2. In fact,the Chief ScientistateHarmonyandhisteamsurveyedover4,000 couplestoframe
hundredsof questionsthatcovered29basic measuresof compatibility. Itsfocusonthe serious
relationshipsegmentwas until then untappedbytraditional datingsites; uponjoiningeHarmony,
members were required fill outquestionnaire aboutthemselves,ratherthanaboutwhatthey wantin
others,justto become a user.Throughthe patentedalgorithm, developedbasedonmanyyearsof
studyingtraitsof “happycouples,”the basisof the matchingsystemthatfoundersWarrenand
Buckwalterdeveloped,theseanswers wouldthen matchcompatibleusersand members. The proof isin
the science:the Proceedingsof the National Academyof Sciences(PNAS) rankseHarmonyasnumber
one for producingthe mostmarriagesandthe mostsatisfiedmarriagescomparedtoall othermethods
studied4
.
The value propositionistwo-fold:scarcityinthe marketplace due tothe aforementioned
screeningprocesses,andbuyer’sreturnforinvestment.
The price of an offeringtothe buyeris “the total money,time andenergy thatthe buyer
expendstoidentify,locateandrealize the specificbenefits5
.”ForeHarmonysubscribers,the offering
comesat a premium –howeverintentionally –witha significanttime investment(asmanyas450
questions) andthe highestsubscriptioncost initscompetitiveset.Thatsaid,realizingspecificbenefitsis
worththisinvestmentfornearlyamillioneHarmonyusers; 71% of womenand69% of menmeettheir
future spouse withinayear6
.
Ultimately,eHarmony’srigorousconstructsthatdefinethe screening andmatchingprocess,
alongwiththe researchand developmentforwhichthe companyisknown,reinforceslegitimacythatit
isa unique offeringtoconsumersthatcannotbe (easily) replicated.
4
“eHarmonyRanks #1forMost Online Marriages andMarital Satisfaction in GroundbreakingMarriage Data Publishedin Proceedings of the
National Academyof Sciences,”PR Newswire, June 03, 2013.
5
Hulland, John, StrategicPricing, Summer 2014.
6
“NewYear’s Resolution - Get Married,”Reuters, December 30, 2013.

3. Anotherfeature of eHarmony isitstendencytooccasionally rejectmemberships.Whereother
sitesdonot screensubscribers,eHarmonydeclinedtosell membershipstoatleastone millionpeople
since itsinception,becausetheywere currentlymarried,underage,andif theyhadbeendivorcedmore
than three times. Thishasresultedinapproximately$10millioninlostcashflow since the company’s
inception.So,while itaffectedrevenues,thispolicystrengthenedthe eHarmonyvalue propositionto
customersandelevatedthe feel of exclusivity.
Thishas made the companyevenmore reputable foritsloyal customerbase andreinforcedthe
“serious”relationshipstance itwantedtoachieve.
COMPETITIVE ADVANTAGE
As a company,eHarmonynotonlyhad a stake inthe groundas the veryfirstonline datingsite
concentrated solelywithinthe seriousrelationshipcategory, itwasunrivaled initscore competency,
too: a 2007 studyrevealedthat onaverage, 236 eHarmonymembersmarriedeverydayinthe United
Statesas a resultof beingmatchedthroughthe site7
.Today,onaverage, 438 people marryeverydayin
the U.S. as a resultof beingmatchedoneHarmony,nearly4% of all new marriages8
.
Thus,eHarmonyhas gainedareputationasa companywithgenuine objectivesthat“walksits
talk,”has protectedits algorithm, andboastsa Ph.D. initsco-founderDr.Neil ClarkWarren to legitimize
the science behindmatchmakingandjustifythe highestsubscriptionprice inthe industry.
However,inlate 2007, eHarmonyfaceda challenge by itslargestcompetitor: Match.com.Match had
recentlyincreaseditsadvertisingexpendituresby80 percent,largelydue tosupportthe growthof its
newdatingsite,Chemistry,whichwasverysimilartothe eHarmonymodel (althoughituseddifferent
matchingcriteriaandmethodology).The primarybenefitforcustomersthatcould significantlychange
7
“Over 90Singles Marry Every DayonAverage at eHarmony; Independent ResearchShows Over 33,000 Membes Marriedin One Year,” PR
Newswire, January 30, 2006.
8
“eHarmonyRanks #1forMost Online Marriages andMarital Satisfaction in GroundbreakingMarriage Data Publishedin Proceedings of the
National Academyof Sciences,”PR Newswire, June 03, 2013.

4. eHarmony’s dominance of the seriousonlinedatingcategory: lowerprice.Chemistrywaspricedroughly
10% lowerthaneHarmonyuponlaunch.If Chemistrycouldprove thatitsalgorithmandmatching
processwasequal to or betterthanthat of eHarmony,forthe firsttime since enteringthe market,
eHarmonycouldbe indanger of losingsubscribers indroves.Furthermore,free personalssitesand
online social networkswere encroachingonthe paidonline datingmarketplace,orat the veryleast
challengingthesebusinessestoprove theirvalue more thanever.
MARKETPLACE GROWTH
Basedon the successand industrygrowthbothwithinthe U.S.andinternationally,the marketis
veryprofitable andisgrowingat a reasonable rate. In2001, the online personalsmarketwasgrowing
veryslowly,reachingonly $40million9
;butby2005, the markethadgrown dramatically,with16million
people claimingtohave visitedanonlinepersonalssite atleastonce10
.Andtoday, the marketisworth
over$2 billion.
Despite the trendindivorce rates,the Americanmarriage marketexperiencedmore “churning”
than mostdevelopednations.Americansare more likelytore-marry,withamediantime between
divorce andsecondmarriage of 3.5 years11
.The model of eHarmonyinparticularwaspoisedforgrowth,
as the age of theirsubscriberswashigherthanthatof competitorsina time when40- and 50-year-olds
became the fastest-growingsegmentof the market.
A challenge tothisassumptionexistsinthat the marriage rate hadreacheditslowestpointin
recordedhistory aroundthe time of the Chemistrylaunch;however,the divorce rate remained
relatively high,andmanyof these individualssoughtoutaneasierwaytoreturn to the datingmarket
that waslessinvasive orpublicthanMatch, andthose individualswere more likelytopreferthe
eHarmony/ Chemistrymodel.Also,womenrepresentedalargerpercentage of eHarmonyusersthan
9
Karin Kapsidelis, “Surfingfor love / Today’s datingscene is undergoinga sea change,” The Richmond Times Dispatch, January27,2008.
10
Madden andLenhart,“Online Dating.”
11
“Findingtrue love: A lookat the historyof dating,” TODAYshow.com.

5. any othercomparable site,atapproximately60% - at the same time,studiesshow thatforsecond
marriages,more womenthaneverbefore whogotre-marriedbetween1990 and 199412
were sustaining
those secondwalksdownthe aisle.
Simplyput,the secondmarriage marketisa growtharea inonline datingandbabyboomersare
not onlymore affluentandthuslikelytobe able toaffordan eHarmonysubscription,butare more
amenable toitsmatchmakingfeaturesandprivacy screenings.
Anotherbenefitof eHarmony’sburgeoningbusinessduringitsfirstsevenyearsinoperationis
the tactic of ‘bait’offeredonce potentialsubscribersfill outtheirquestionnaire.Inorderto
communicate withone’smatches,a userhadto buya subscription,forwhicheHarmonychargedalmost
twice as muchas other online personalssites. Despite the lengthof the questionnaire,more than14
millionpeoplecompleteditinthe firstsevenyearsof eHarmony’sexistence. Thus,there wasproof in
the numbers:eHarmonywasfamousforbeingable toconvertitsactive memberstopayingmembers
unlike anyothercompetitor. The site’s“user-to-member”conversionrate was20%, whichwas2.5 times
the industryaverage13
.
SUSTAINABLE GROWTH
At the time thatthe foundersfacedadecisiononhow tocontinue dominance withChemistry
encroachingontheirmarketshare in2007, people age 45 and olderconstitutedthe fastest-growing
segmentof usersforeHarmony.
In orderto remaincompetitive, eHarmony mustaddressthe complaints(albeitfew) risenbyits
existingmemberbase. While theseindividualswilllikelybe inaseriousrelationshipwithintwoyearsor
lessfollowinginitialmembership,theirword-of-mouthaspassionate advocatestopeersiscritical for
the continuedgrowthandpositive reputationof eHarmony.Forexample,one of these complaints
12
Kreider, Rose M, “Number, Timing, andDurationof Marriages andDivorces: 2001: HouseholdEconomic Studies,” U.S. Census Burea,
February 2005.
13
Blake, Stephanie Helen, “A Virtual LoveTriangle: MainstreamOnline DatingSites,” 2007.

6. entailedsubscribers’frustrationthatanon-payingusermaynotrespondtoa message because the
latterdoesnotwant to pay.The subscribersneededthe feedbackthatwaswarrantedfortheir
investment. Inresponse toothercomplaintsthatthe up-fronttime investmentpresentedtoomany
barriers,Dr. Warrendeveloped –out of more years of intense study –an opportunity forprofitability
withthe offeringof GuidedCommunication,whichdidnotrequire the lengthyquestionnaire,butrather
“guided”questions,whichwouldthenserve asthe conduitfora match.Anotherproducton the horizon
was “FastTrack,” whichwouldmove acouple inthe earlystages, intoOpenCommunication upon
mutual agreementinstantly –fora fee.Finally,the abilityformemberstosetscreeningpreferences was
inthe works,sothese payingsubscribersdidnotattractattentionfromotheruserswithtraitsthat were
a total “deal breaker,”withoutthose usershavingtogothroughthe uncomfortable decisiontoreject
the other.Thus, in 2007 eHarmony wasalreadyinvestedinimprovementsdesignedto drive new short-
termcash flow,as well as increasedmembersatisfaction.
ChemistryposesnumerousthreatstoeHarmony’sprofitabilityandgrowthtrajectory.The first is
simple:budget.Chemistry’sumbrellacompany,IAC,isfarandaway the giantof online personalssites
and has a much largerbudgetforimplementingmarketingresearchandstrategy,aswell as advertising
across multiple channels,evenbroadcast. Throughalaser-focusedlow-coststrategy, eHarmony had
alwaysfocusedonnational cable networks,typicallycostingaquarterof those airedby the ownerof
Chemistry. WhereaseHarmonyhadrestrictionsongrantingmemberships,Chemistryhadnosuch
barriers,allowinganyonewillingtopay,tojoin. Like eHarmony,Chemistrydeliveredapre-setnumberof
matchesto itsmembersusinganalgorithmdevelopedbyadoctor; however,Chemistryclaimedthata
significantdifferenceinitsalgorithmwasafocuson interpersonal chemistry –suchas fingerlength.It
alsoappliedforpatentsbasedonitsproprietaryalgorithm. Lastly,the largestthreatposedbyChemistry
was a glaringprice difference.In2008, eHarmonywaslistedata 20% premiumforone monthcompared
to Chemistry, andwiththe latter’s significantlylargermediaspend,Chemistry waspoisedto quicklychip

7. away at eHarmony’smarketshare inthe “serious”market. While awarenesswouldseeminglybe high
amongall consumersforeHarmonybecause of several yearsof dominance,Chemistryappealstoa
younger– but still serious –demographicwithitsfreshadcampaignsandlowerentryprice. Onlythe 12
monthsubscriptionprice foreHarmonywaslowerthanthatof Chemistry.ButwitheHarmonyclaiming
that memberswere likelytomeetthe persontheywouldeventuallymarryafteronly4-6 monthsas a
member,the companywasseeminglycannibalizingitsownpotential forlong-termsubscribers. Witha
monthlycharge of $29.95 for a 6-monthcommitmenttoeHarmony,thiswasthe exactequivalentof
monthlyinternetservice byVerizonatthe same time.While Chemistrywasnotmuchless
($26.95/month for a 6-monthsubscription),andMatchwas only$19.99 a month,itseemsoddto
assume thateHarmonywouldcostthe exactsame as internetaccesseachmonth,especiallygiven a
usage limit.
Otheronline datingservices includedpaid“do-it-yourself”sites,which –instark contrast tothe
eHarmonymodel –put up few,if any,barrierstojoining.The differenceswentmuch further–no
questionnaire,individualscouldeasilyfalsifymostof the informationtheyprovided,andbecause of this,
payingembershadlittle loyaltyand,onaverage,belongedtoatleastthree otherpersonalssites14
.
Anothercompetitorsetwasthe free “do-it-yourself”site,like SinglesNetandPlentyof Fish,whichhad
beenrapidlygrowinginmembershipbase.There isanargumenttobe made forthe powerfree sites,as
Plentyof Fishreceived20%more visitsthaneHarmony.Lastly,niche sites,characterizedbylow
customeracquisition costs,presentedthe largestcompetitionof these otheronline datingsegmentsif
theywere of the profitable set,forexample:JDate,BlackPeopleMeet,andsitestargetedatgayand
lesbianpopulations. AsidefromChemistry,the otherpaidcompetitorswere of little concernto
eHarmonysince a large majorityof userswere relativelyunsatisfiedwiththeirexperience andtheircore
value propositionslackedlegitimacyforthe seriousdater.Free sitesfell intothe same category,because
14 Max Freiert, “Love Doesn’t Equal Loyalty: Online Dating in February 2007,” March 29, 2007.

8. mostof the individualsperusingthesecoulddosocasually,withnobarriers,andwere thusnot
“serious”andwouldlikelyneverbe atarget of eHarmony.Inmyopinion,whilethe niche paidsiteswere
verysmall relative toeHarmony,ChemistryandMatch,theypresentaninterestingopportunityfor
eHarmonyacquisitiontodrive increasedprofitability –particularlyforthe wealthierandolderLGBT
communitylookingforaseriouscommitment.
RECOMMENDED ACTION
Each of the four optionsbeingconsideredbyeHarmony’sownershasevidence orprofit
scenariosthatmake sense;however,the bestinthe shorttermis foreHarmonyto defenditsposition
and reduce itsbarriers.
As previouslymentioned,eHarmonyholdsthe “numberone inmarriages”distinctionforonline
datingsites.Regardlessof mediaspendandmarketingmessaging,thisstatisticisthe single most
importantmotivatorforsinglesseekingseriousrelationships.
Furthermore,eHarmonyisalreadyinvestingtime andresourcesintoreducingbarrierstobetter
compete withChemistryandMatch.The GuidedCommunicationandFastTrack productsare designed
to meetthismarketplace need,while alsogeneratingeasyprofitsandhigherlifetimevalue.Inaddition
to these newservices,eHarmony wasdedicatedtoimprovingthe experience forexistingmembers
throughdevelopmentof screeningpreferences.Inmyopinion,the companyshouldconsideracquisition
of a niche market,suchas the most successful LGBTonline datingsite,inordertoappeal tothe
customersinthat segmentwhomaybe frustratedwiththe alternativepaidandfree optionsinthe
market,muchlike theirheterosexual single counterparts.Itisonlyamatter of time until thismarket
agesand demandsomethingsimilartothe unique benefitsofferedbyeHarmonyandChemistry.
Short-Term Marketing Plan
 Pricing:Keepprice intact – there isjustificationtoremainthe highestpricedonlinedatingsite

9.  Messaging:Re-energizemarketingmessagingtoinclude new productfeaturesand “dumb-
down”Chemistry;continue toreinforce (throughcreative assetsortestimonials) how quickly,
on average,individualsmeettheirfuture spouse,andthe #1 rankingof numberof marriages
and marital satisfaction
 Advertising:Enterbroadcastadvertising,particularlyduringpeaktimesfor40-50 yearold
viewers;thisisthe onlywaytocompete withChemistry
 Experiential:Consideraneventstrategy – funmatchmakinggamesatwine andfoodshows,
creatinga service thatassistsinsettingupa firstmeetingbetweenmatchedmembers,etc.as
thishas beenaneffective strategyforMatch and maybe usedforChemistry
Aftertwoto three yearsof implementingthese strategies,if the companyisunsuccessfuloronly
mildlysuccessful infendingoff Chemistry, itshouldlookintoalongterminvestmentof expandingto
Canada.Basedon the demographicsinthe study,the Canadiansingle populationisrelativelysimilarto
Americansinglesinmarriage marketstudies,frompercentage marriedandunmarried,tofertility
frequency,andmoderate viewsandattitudestowardsmarriage15
.Plus,therewouldbe noinvestmentin
translation,andlittle researchrelative towhatitwouldtake to successfullylaunchinEurope orany non-
Englishspeakingcountry.
Lastly,the Hispanicpopulationisapotential growthmarketbasedontheirwebusage.The
percentage of webusage withinthisdemographicwhohave gone toa personalssite ishigherthanthat
of White orBlack racial counterpartsat 14%, versus10% and13%, respectively16
15
Stevenson,BetseyandWolfers, Justin, “Marriage andDivorce: Changes andtheirDrivingForces,” Journal ofEconomic Perspectives,”
November 2007.
16
Madden, Mary andLenhart, Amanda, “Online Dating: Americans who are seekingromance use the Internet tohelpthemin theirsearch, but
there is still widespreadpublic concern about the safetyof online dating,” PewInternet & AmericanLife Project,March5, 2006.

10. The two optionsthateHarmonyshouldabsolutelynotconsiderare:broadeningtocasual daters,
and expansionintolifestyle subscriptionsites,foramultitude of reasons –the primarybeingthatthese
marketsare alreadysaturated.
Veryfewcompanies shouldeverdivertfromtheircore competencyandbeliefs.If eHarmony
broadensitsoffering –or launchesanew site – aimedat the “casual dater,”it will instantlylose
credibilitytomuchof itsadvocatesandexistingmembers.Similarly,itsexpertise andreputationlies in
expensive,rigorousstudiesandalgorithms.Thisisnotof interesttocasual datersunlessthe price is
much lower;evenstill,the casual dateris lesslikelytobe amenable tothe barriersof communicationto
othersubscribers.
As faras extensionsintolifestyle sites,eHarmonyhaslittle tonoexpertise inthismarketplace.
The company hasdone fewstudiesthatdeterminerelativesuccess,andthe marketplace forwedding,
baby/parentingandaging“advice”sitesandblogsisextremelysaturated,andhasbeenforsome time.
Also,a lotof these sitesownproprietarysoftware (i.e.weddingandbabymicro-sitecreation,registries,
and geographical recommendations) thateHarmony completely lacks.Ultimately,successforlifestyle
sitescannotuse “matching”algorithms andcompatibilityteststhatare subjective (althoughbackedby
scientificmethods).Forexample,parentscannot“choose”theirownbaby,norcan familymembersfind
compatible assistedlivingfacilities,becausegeneticchangesandmanagementquirkscannotbe
controlledandmonitoredbyeHarmony’sresearchteam.If eHarmonydecidedtogothisroute basedon
some researchithas gatheredasa resultof othertests – mostlythat of successful relationships –it
wouldrequire averysignificantupstartcostthat isa long-termvision. Thisshouldonlybe exploredas
an acquisitionstrategy.
Similarly,internationalexpansioniscost-prohibitive.Itwouldrequire researchdone bylocal
scientists,collectedoveraat leasta fewyears,toeffectivelyreplicatethe algorithmandsite analytics
that eHarmonyhashad successwithinthe U.S.It wouldbe a nearlyimpossible tasktoidentifyandtrack

11. thousandsof happycouplesacrossEuropeannations,whenthe eHarmony staff isnotevenequippedto
understandthe cultural differences.So,while thisoptionisagoodideain theorydue toeHarmony’s
establishedreputationandmarketingbudget,inadditiontothe factthat its core competencyof
science-basedmatchmakingwouldbe utilized,itisaverylongterminvestmentthatmaynotbe
successful,particularlyinsome of the more liberal EuropeannationssuchasFrance where the
institutionof marriage islessof amark of success.
In conclusion,eHarmonyshoulddefend itspositionandintroduce solutionstoitsfew existing
problemstocontinue itsownershipof the seriousonline datingsegment.If the companydecidesdown
the road to pursue anotherprofitable optionthatitisconsideringnow,international expansioninto
Canada andpossiblylaunchingaSpanishlanguage sitewouldbe asmartmove.