Exhibit 7 of the case indicates that around 72% of internet users in committed relationship met their partners at work, school or through family or friends. This represents of a significant share of customer base that the online personals industry banks on to earn its revenues.
Bargaining power of the customers: The concept of keeping customers happy cannot be any truer in this industry. Almost every aspect of the industry’s functioning is dependent on its customers. It is the customer who “supplies” a particular website with the necessary information to attract other singles. Customer happiness is what determines whether or not the customer will renew his/her subscription. Furthermore, customer testimonial may be viewed as the most effective marketing tool to attract more customers. All these factors coupled with the fact that (generally) customer loyalty tends to be quite low, shows the extent of difficulty of staying in business in this industry.
This relatively brief analysis of the online personals industry indicates that this industry is not very attractive. High customer dependence, intense competition, low barriers to entry and a high probability of losing customers to “substitutes”, makes this industry severely hard to compete in.
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