eHarmony
Applying the marketing concept to a small business is a two-stage process: (1) identifying the needs of the consumer and (2) satisfying those needs. Dr. Neil Clark Warren, eHarmony's founder and a clinical psychologist for 35 years, believed that his decades of marriage counseling and research could be applied to satisfy a need. Warren explained, "Fortythree percent of all people over 18 in this country are single. . . . Most of them have never been around a single really good marriage, but do they want it? Oh my gosh . . . they are so pulling for a good marriage for themselves." Warren was convinced that the current divorce rate is so high because many couples are ill-matched from the beginning.
Compatibility, he argued, is the key to a strong, long-term relationship. Eventually, Warren and his son-in-law, Greg Forgatch, launched a series of seminars based on the principles of his best-selling book, Finding the Love of Your Life. By 2000, the team had transitioned their work to the Web and established the fi rst online relationship service-eHarmony.com. In the video, Forgatch says that finding a mate for life is something that most of us really desire, but that determining how to go about finding the perfect mate is perhaps "one of the largest unmet consumer needs" out there today.
Indeed, by 2003, as many as 55 million Americans had visited dating sites on the Internet and were spending more than $300 million on Internet dating services. These numbers proved that people were using the Internet to find dates, but eHarmony was interested in creating more than just another dating service, so the team set out to come up with a means by which people could be screened for compatibility. Warren's team developed an extensive online questionnaire that screens for "29 dimensions of compatibility" and patented the resulting Compatibility Matching SystemTM.
The team also targeted a particular market segment-single, serious relationship seekers, especially women. And unlike the myriad Internet dating services at the time, eHarmony did not allow subscribers to search its database of people. Matches and subsequent invitations to meet occur in a very careful manner, and registered users are given the power to decide if, when, and how they want to share a photograph of themselves. Online analysts determined that many women are put off by dating services that seem to be based on looks or are poorly screened. eHarmony responded by building into its system an exhaustive questionnaire that casual daters would probably not take the time to fi ll out.
eHarmony then uses the results of the questionnaire to determine a respondent's number of previous marriages, assess psychological health (e.g., depression), and identify other characteristics the company deems too challenging to result in relationship success. eHarmony rejects up to 20 percent of its respondents because they do not meet the criteria for participating in a successful, long-term relationship. Though the policy might seem a bit harsh, it must be working: More than 6,000 marriages are credited to eHarmony so far, and the site has more than six million registered users and 10,000 to 15,000 new users each day. eHarmony was not an overnight success, however.
During its first couple of years, Warren almost gave up. He suggested they refund the money to registered eHarmony users, because they just didn't have enough people in their database to build compatible matches. Forgatch persisted, however, and after spending upward of $10 million on radio advertising and $40 million on television ads, eHarmony began to reach millions of prospective clients. Today, eHarmony is worth approximately $165 million.
Before answering the questions and working the activities, re-read Chapter 7 in your textbook and watch the video on eHarmony
Questions
1. Describe eHarmony in terms of its bundle of satisfaction.
2. How does eHarmony define its market segment? What strategy or strategies does eHarmony use to target one particular segment?
3. Referring to the video, describe the four parts of eHarmony's winning ad campaign. In what way(s) do you think the ad campaign reveals components of the company's marketing plan?
Activities
What entrepreneurs create for a specific market often finds unexpected success with a completely different target market. For example, after becoming discouraged trying to fi x broken marriages (his initial target market), Dr. Neil Clark Warren shifted his focus to single people who wanted to find the right person to marry in the first place (his new target market) and found great success.
For given activity, break into groups :
1. Working as a team, identify a problem in the university system that presents an opportunity for an entrepreneur- that is, a problem that can be solved by a new product or service. For instance, a common problem in universities is night security; a business opportunity might be a volunteer escort service. Once you have identified the problem, describe the product or service that could solve the problem.
2. Identify a specific target market for your product or service. You may think that college students represent a single target market, but if you think less broadly, you will see that the group "college students" is composed of many subsets of students: international students, returning students, commuting students, part-time and full-time students, and work-study students, as well as segments identified by college attended, major field of study, social group, and so on. Using the discussion of segmentation variables from the chapter, describe your target market segment in great detail. Why did you choose this group?
3. Continue to develop your marketing plan by identifying competitors (present or future), assessing the external business environment, and outlining your distribution, pricing, and promotion plans.
4. Present your plan to the class. Consider creating visual materials to make your presentation more engaging.