Jan 27 2009
When one comes to developing an online business, which is more important? Profit first, or market share first?
I heard some say that market share, or “mind share”, is first and foremost important. When many people have got to know a dotcom brand, they will visit the web site, the “eyeballs” will be so increased, the “critical mass” will be so achieved, the “branding” will be so built up, and naturally the profit will come.
On the other hand, others think that profit should be the first to focus on, not market share. A business can grow its market share so much that it is still not profitable. It can command a large market share yet sacrifice the profits that could have been earned during the growth.
One typical example is a membership business online. Shall we first focus on market share by giving out free member accounts in order to first attract the mass, and then try to sell some premium services later to them? Or shall we start with a chargeable membership so that we can starting earning right from the first day?
Perhaps profit should be our first objective. And as we do things the right way towards the objective, market share is a natural result. What do you think?