Determining Your Initial Web Hosting Business Target Market

Determining Your Initial Web Hosting Business Target Market
By Andrew McMaster

If you are planning to start a web hosting business then a key part of your plan is deciding what part of the web hosting market you will target and then building your business plan around it. Unless you plan a major well funded startup, if you target the whole market then you will weaken your approach and reduce your chances for success. Consider keeping your focus narrow in the beginning and broadening it later. This article is intended to help you think about a subject that is often overlooked.

There are different types of prospective web hosting consumer. You can define a prospect in a few different ways – by what they want to achieve with their website, their level of knowledge and by how price adverse they are. A consumer will be a mixture of all three to some extent.

Factor	Impacts
What they want to achieve (either describes an outcome of their intended website, or a technical requirement if they are web savvy)	Type of plans you offer Examples “We provide web hosting for people that want to put photo’s of their family online” “We provide ASP and SQL Server Plans”
Level of knowledge – High or Low	Level of service you will need to provide to support the customer (i.e. cost)
Price adversity – High or Low	Price of your offerings Examples “We provide Low Price Web Hosting”

Remember the goal is to create loyal customers, so it is critical to think through the above. If you try to be everything to everybody then you will increase your risk of being not much to anybody

A common approach is to create a web hosting business that has no real focus beyond the overall web hosting market. Although it is quite feasible to be a success with such a broad approach, it will be much harder unless you have a large initial budget to create your brand. This short article cannot tell you what the right target market is for your web hosting business, but it can help you devote some thought to the question.

The above diagram represents the different approaches you can take when deciding on your target market. At the top is the whole web hosting market (A) – at the bottom is the very narrow focus of a specific use for web hosting (C). Remember that web hosting is not an impulse buy or a product unto itself, it is just a service to support an end need.

Target Market	Pro’s	Con’s
A – The Whole Web Hosting Market	· Larger market · Includes all the (B) and (C) markets	· Much harder to differentiate your new company · Marketing is more expensive · Hard to create specific site content · Hard to create a brand name
B – Middle of The Road – Product Specific (e.g. Windows Hosting)	· Somewhat easier and cheaper than (A) to market · Easier to create site content to improve success with search engines · Less restraints than (C) when you want to grow · Easier to appear to be an authority or specialist	· Still potentially hard to differentiate · Still potentially expensive to market
C – End User Need or Market (e.g. People who want to put photo’s online)	· Easier and cheaper to market · Easier to get high search engine rankings · Easier to grow the business towards (A) · Easier to create loyal customers · You will be directly tied to the needs of the consumer (i.e. you will “understand” them) · Potential to charge higher prices than (A) or (B)	· The market might be very small · Your target market may not find you · Easier to create a brand name in the target market.

This step is really where you create the strategy for your business. In reality you will probably find a place between (A) and (C). It is worth spending some time looking for (C) opportunities. There are probably many untapped (C)’s where you can create some solid success with the right approach Vs the well mined (A) where unless you have a huge budget you will be a small fish in a big sea.

You may choose to take a (B) approach and focus somewhere in the middle with a product focused market (something like ASP & SQL server).

The main point to remember is that if you choose to just be a vanilla web hosting company then the odds are stacked against you due to amount of competition you will face.

Geography As A Target Market

The above assumes that you are focusing on internet based marketing to acquire your customers. Another approach that can be a good way to start your web hosting business is to be a general web hosting company (example A above) but in your local area. You can also do this in parallel with non local approaches.

Factor To Consider	Local	Non Local
Size of Market	Relatively small	Large
Primary Method of Marketing	Traditional marketing such as local print, flyers, cold calling, yellow pages etc.	Online methods, building a search engine presence, online advertising, Pay-Per-Click etc.
Ease of differentiation of your business	Easier, you are face to face. Competition is lower, opportunity for higher prices	Tough unless the focus is narrow, competition is fierce and price is a key differentiation in new business acquisition

Summary

The web hosting market is a fast growing industry and has attracted thousands of providers with the lure of profits. Competition is fierce. Thinking through what your focus will be and matching that focus to your overall business plan will give you an advantage as you launch your business.

Andrew McMaster is the co-founder of FindMyHosting.com. This article may be reproduced freely so long as this resource box is present with the article including the link to FindMyHosting - Web Hosting Search