How you define the industry will affect how you

Before You Begin, Reading Notes for Week #4 – eHarmony Reading Notes for eHarmony Hello~ This week we examine a case from a service industry. Now that you’ve read Porter’s article about the Five Forces, you’ll notice in your reading that you may wish to define the industry for yourself, including aspects that identify some companies as competitors, others as providers of substitutes. What do you think distinguishes these? How you define the industry will affect how you determine its driving forces and how you categorize them (favorable or unfavorable). Think about possible industry characteristics. Given the information in the case, what characteristics do you think take priority? A few months ago, while attempting to find a shortcut to the University’s online graduate Engage Learning Management System, I typed the word, Engage, into my browser’s address bar on a family member’s iPad and hit enter. Imagine my surprise when the web page for ChristianMingle.com loaded instead of our online learning management system. Because of this and a few other examples I describe here, I’m convinced that the online dating (matchmaking) industry is as prolific as last year’s zucchini harvest. Each time I read this case, it reminds me (once again) of the movie, You’ve Got Mail, a romantic comedy in which the story uses the online dating industry (then in its infancy) as a vehicle to connect the two main characters. Believe it or not, the popularity of the movie, released in 1998, became a boon to the long stigmatized (at the time) online dating industry. To review: For our purposes, the movie contains several elements and examples relevant to our course. In addition to showing the industry in a positive way and helping to boost to industry acceptance, the first 15 minutes of the movie depict examples of businesses practicing the specific generic strategies we’re studying. Tom Hank’s character, Joe Fox, heads Fox Books, the broad (mass-market), low-cost provider that employs an offensive strategy. Meg Ryan’s character, Kathleen Kelly owns a small children’s bookstore, The Shop Around the Corner, a focused-differentiator (niche player) that employs a defensive strategy in reaction to the arrival of Fox Books in its neighborhood. We might define the industry as retail book purveyors on Manhattan’s upper West Side. The movie predates the proliferation of amazon.com. The two main characters have an online discussion about Starbucks (a mass-market differentiator) which plays as a narration over scenes filmed in a Starbucks location. The movie contains an interesting commentary about the social aspects of commerce, progress, and sustainability and a business’s potential effects on stakeholders. If you haven’t seen the movie, you can certainly find other examples of strategy portrayed in the media. The television show, 30Rock comes to mind, but if you have access to You’ve Got Mail, the first fifteen minutes are worth viewing once again. Evidence that some change in industry process/product is afoot existed prior to some well-publicized poor user experiences of the few years or so (Manti Te’o, for example). A friend who registered and subscribed recently to use the services of a competitor of eHarmony, match.com, reports a change since her last subscription of a few years ago. Before match.com will process one’s credit card info and confirm a subscription acceptance, one must read a document (and confirm agreement to it by clicking) that states that one will not ask for money of other members, nor will one send money to other members. In addition, one promises to report any other member who does either. After acceptance and confirmation of membership, a pop-up window appears that states guidelines for safer dating. Like the Terms of Use, one must acknowledge reading the safety tips before completing a membership registration. She says that in prior use, all services took the tone of caveat emptor and safety guidelines existed in the periphery of the site rather that the present up-front format. Do you think this action might relate to the possible special industry problem addressed above? Other changes come in the form of the mobile-app only companies. A question you might ask yourself is, “Do companies like Tinder, Coffee Meets Bagel, OKCupid, Tastebuds, Down, PlentyofFish, How About We, Happn, Grouper (iPhone only), Hinge, and Bumble, available via app, constitute competitors or substitutes?” We’ll exclude Ashley Madison, AffairMatch, and like companies from the industry. Luckily, the industry does have its successes, too. On the brighter side…one of the greatest honors in life is a bride and groom asking one to give a toast or speech on their behalf at their wedding reception. A dear friend from graduate school, working in S. Korea as a Fulbright Scholar, sent me an email over ten years ago with an attached online dating profile and the following message: “Here’s the guy from the Army that I’m meeting in the train station in Seoul this afternoon. A public place, but I’m out of my element, so who knows how safe this is. So far, he’s seems like the real deal on paper and if he is, this could be really fun. What the heck, there’s a lid for every pot, right? If not, well, if you don’t hear from me in 24 hours, please contact the State Dept. I’m off…Wish me luck!” A little over a year later, I shared this story as part of my wedding toast to them, an online dating success story, resulting from the use of services of one of the competitors listed in our case. After nine years of marriage, two kids, two dogs, four deployments, and life on three continents, they couldn’t be a better pair. They were definitely early (and open-minded) adopters of online dating. Serendipitously, my friend posted the following as her Facebook status this spring (shared with her permission, of course): “Ten years ago today I took a train to Seoul in order to go on a date with a guy I met on Match.com only two weeks prior. When ‘name changed to protect the innocent’ approached me, my initial thought was “I could live with that.” Now, a decade later, I know better. I can’t live without it. Thank you for proposing on that first date. And for cashing in your rain check exactly a year later. There is no one I’d rather share this wild ride with than you.” Just imagine the value of such an endorsement! Whether we like it or not, human connection (or lack thereof) is big business as evidenced by our case this week. While personal endorsement may bring customers (users) to various competitors, we need to determine what really created revenue and growth. Not everyone may have a success story like the one I describe, but with the initial stigma removed, many customers will use this industry’s products and services for assistance in the search for a social life and beyond. Those who succeed will endorse, but what determines success and who defines it? Don’t forget to think beyond the customer perspective here. Doing so will help you understand the case from the business strategy perspective and its importance to us. In addition to industry characteristics and driving forces, the eHarmony case gives us an opportunity to examine company objectives, value chain, key aspects of strategy, and the five competitive forces, in particular, substitutes and barriers to entry/new entrants. Do you find substitutes difficult to define here (examples include in person matchmaking, introductions by family & friends, and fee-free sites)? How might you structure the industry definition to exclude substitutes? Are there any complementary products for the industry? What changes do you see in the value chain when a company provides service rather than product? You’ll note as with the Trader Joe’s case that the industry-level customers for eHarmony, a service provider, and its competitors are end consumers, the same as the company-leve
l customers. Providing service has a significant effect on the value chain as customers play a role in a unique way compared to other industries. See if you can determine what that role is. You may wish to think about how and why eHarmony generates revenue. The case may seem outdated, but it provides one of the best examples of this special role/aspect, one of the many reasons we continue to analyze this this case and industry. Another area for comparison is the role of an influential leader. Some of the assigned questions address eHarmony’s leader. In addition, at least one significant ethical question looms over the case and this company. Feel free to address the ethics of the industry as a whole or of eHarmony specifically as an adjunct to your post topic. Love for sale? Not really. Food for thought, definitely…happy reading! ps – An aside…those of you involved in providing or managing healthcare services may see customers defined in a different way, because of the unique nature of healthcare. Customer in the US healthcare setting is defined often by who pays the bill (or determines the rules of payment). Patients are the beneficiaries of protocols and arrangements of customers. Customers can include insurers, governments, other health service providers, charitable organizations, NGOs, and patients/consumers (e.g. cash or partial cash-paying customers). We’d need to evaluate the value chain from the perspective of each of these customers for a proper perspective as activities important to a major insurer may be quite different from government payer like Medicare. Feel free to discuss such differences in your post, if appropriate.

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