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Threat of new competition
eHarmony operates in a unique environment and that is why there has been a threat of new competition. As much as Match remained the company’s biggest competitor, other new companies were entering the market with new products specifically designed for different segments of the market. Competitors were always in full attack mode which made the company to review its options.
This point can be reinforced by the fact that eHarmony had to invest in marketing to support its membership base. New entrants were mostly seen in the personals segment like Yahoo Facebook, MySpace and others. Competitor types have also been changing as time goes by which explains why the company will continue facing the threat of new competition.
Threat of substitute products or services
The match making industry has always been changing based on new customer needs and preferences. This means that the threat of new products has always been there. eHarmony had to put up a fight with new products and services like paid do it yourself sites, free do it yourself sites, niche sites and online social networks.
Consumers’ preference and tastes are always changing and that is why these sites were coming up with new products to challenge eHarmony’s market. As far as the threat of substitute products is concerned, most of these sites were concentrating on the market segment that was not covered by eHarmony like same sex relationships and specific age sets.
Bargaining power of customers (buyers)
With the increasing popularity of the internet, most customers have been able to access information thereby being knowledgeable on different aspects. This explains why eHarmony found itself in many lawsuits from different customers who felt that they were being secluded yet the company was focusing on a different market segment with its unique products.
In fact, customers were able to choose sites that they found to be comfortable to them based on their preference which shows that they have a bigger bargaining power.
Niche sites were in competition with eHarmony because they saw a gap that had not been exploited based on the demands that were being made by different customers. eHarmony had to invest a lot of money in research and development to meet the changing needs of customers for long term sustainability.
Bargaining power of suppliers
eHarmony had to invest substantial amounts of money in the market to continue being relevant. This means that the bargaining power of suppliers had also increased as time went by. The most notable suppliers who had increased their bargaining power were marketers because of a wide market. In fact, the bargaining power of suppliers had increased tremendously because of different and available options.
The company could not operate alone and that is why it had to rely on a large number of suppliers for proper provision of services to diverse and distinct customers. Just like in the case of customers, there was free access to information that enabled suppliers to be knowledgeable on different market aspects thereby increasing their bargaining power.
Intensity of competitive rivalry
The intensity of competitive rivalry on the market share of eHarmony could not be underestimated and that is why the company had to support the growth of its membership base by investing heavily in marketing.
Competitive rivalry had increased because of different competitor types that had emerged with new products targeting specific niche markets. For instance, online social networks were providing an important substitution that was a threat to the company’s products. On the other hand, direct competitors like Match and Yahoo were intensifying their activities in the market with an aim of reducing eHarmony’s market share.