Dec 2, 2009

The Economics Of MatchMaking - Part 1

After losing hope of myself simplifying their job, my parents have taken up charge & put me into the 'market' ...Or in other words, I've debuted on Bharat Matrimony :) ... Purpose of the post is not to discuss about the happenings over there... it is to discuss the economics principles behind this..

(Anyone who is not interested in Economics, please feel free to skip the content below)

In term-4, we studied one of the best courses that I've come across at IIMK - Complementary Products & Competitive Advantage.. In that, there is this concept of 2-sided platforms..Intuitively it is very simple -- 2 sided platforms brings together 2 distinct sets of customers together.. Credit card companies bring together merchants & consumers... Iphone App Store brings together the App developers & phone owners together...etc.. In most of the cases, the platform tend to benefit from one set of customers..Like, Credit card companies tend to benefit mainly from merchants ( they usually give lot of discounts to consumers ) .. However in that aspect, this matrimony portal business is kind of unique.. They tend to benefit from both the sets ( men & women ).. Their income is from the paid membership ( though I'm still not very convinced about its benefits ) ..And there is no price discrimination thats really employed over here.
Is that the correct business model or will these portals benefit if they employ a slightly tweaked pricing model ? The success of a 2-sided platform depends on the volume of customers...Its like a vicious cycle..More the number of consumers having ICICI credit cards, more merchants will buy their card machines & more the benefit to the bank .. Applying an analogous concept, what actually drives the success of these portals ? Are men attracted by the number of prospective women signed up in this ? Or is it vice versa ? Its like a chicken & egg problem..
Either way, one specific drawback to this business model -- It can easily be dis-intermediated ...i.e, one can easily sign up in this, find a prospective partner, get their contact & get married without paying even one rupee to this portal... Its in a way like Software companies turning a blind eye to piracy..Most university campuses are havens of pirated software..And still software companies don't bother about that much ..The reason - The grads from these institutes occupy the corporate decision making positions tomorrow & they will be so used to these software packages that they will end up buying them for their company use.. ( Companies are very strict on their anti-piracy efforts on the corporate front ) .

My main question is this - What is the best pricing model for this marriage portal business ? A total paid membership will restrict people from trying it out..Even a semi-open type pricing has a strong risk of dis-intermediation..
And what will happen if we set the pricing/fee of service at different levels for men & women ? Will that be better ?