The subject of hosting market segmentation comes up frequently in the web hosting industry. Specifically, web hosts are often searching for the best market segment or niche for their particular expertise. For anyone who has worked in the web hosting industry, these market segments are well known. To those who are newer to the industry these market segments can seem quite unusual. Here is a brief overview of some specific web hosting market segments, and examples of companies which occupy those segments.
Overview of Market Segmentation
Wikipedia describes aÂ market segment as follows: ”A market segment is a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product or service needs. A true market segment meets all of the following criteria: it is distinct from other segments (different segments have different needs), it is homogeneous within the segment (exhibits common needs); it responds similarly to a market stimulus, and it can be reached by a market intervention.” So generally as applied to the hosting market, segments are different groups of customers who will be attracted to the same basic products and services.
Market Segmentation by Price
A common market segmentation that occurs in hosting is that of price. One typically sees three segments of pricing emerge:Â discounters, mid-tier providers, andÂ premium hosting services. Examples of discounters would be: iPower or GoDaddy. Mid-tier companies are represented by firms like HostMySite.com or NaviSite. Premium hosting is the scope of web hosting companies like Rackspace.
Market Segmentation by Geography
Natural market segments arise according to geographic boundaries as well. It is logical that a business based in Germany would prefer a hosting provider whose website is written in German, whose support is conducted in the German language, and who uses the German Mark as the currency of choice for transactions. It is possible to get around some of these boundaries by having multiple versions of a website in multiple languages or currencies. Or to approach this as doesÂ UK hosting provider, 34SP.com by having icons to allow the selection of varous currencies for transaction. Generally, market segments will arise according to geographic boundaries.
Segmentation by Operating System
Specialty operating systems attract specific market segments as well. Programmers who are expert in ColdFusion, for example, will prefer to work with a hosting provider who offers this operating system – as well as the expertise to support it. HostMySite.com and Intermedia are hosts who have thrived in this market segment recently. The age old ”Windows versus Linux” debate points to another vast market schism. Microsoft offers Windows servers and this market segment is well represented by firms such as DiscountASP.NET and m6.NET. The vast majority of web hosting companies are built around the Linux operating system – thus the Linux market segment is very large.
Segmentation by Product Needs
One final segment of note – the natural segmentation that arises from those seeking a simpler hosting account (usually referred to as a shared account) and a more sophisticated hosting product (VPS or dedicated servers). For instance DiscountASP.NET currently offers only shared hosting accounts, and Rackspace offers only virtual or dedicated servers. By focusing only on the market segment that it favors, a hosting firm can usually compete better in that market space than a generalist.
Regardless of the specific market segment targeted, it is clear that focusing on a specific and narrow market segment allows a hosting firm to attract a particular audience. This can also reduce market costs and lead to greater customer satisfaction.