Microbusiness in the Global Economy: Using the Internet for Idea Driven Commerce
Dr Susan Dann and Dr Stephen Dann
Abstract
The nature of the Internet as a global market place for ideas has seen a rise in the number of small, medium and microbusinesses that are taking advantage of these opportunities. As a part of this new wave of idea driven commerce, there has been a rapid increase in the number of niche orientated products being developed by microbusinesses operating without much of the traditional overheads of small business. This paper offers an examination of the role of the Internet in the rise of globally oriented, idea driven commerce, and the presents an alternative way of thinking of about how these microbusiness entrepreneurs are engaging in their product marketing. Microbusinesses have been able to use the street level marketing approach to assist in the development of goods and services for a psychographic niche of which the microbusinessperson is a member.
Introduction
This paper looks at the role of the Internet in facilitating global microbusiness success by
maximising the advantages of delivering microbusiness idea-products through the Internet. It
also examines the value of the business to microbusiness market from both the perspective of
the microbusiness for channel control, and the commercial opportunities for the facilitator
businesses. Facilitator businesses are described as those on-line organisations that offer
business to business functions, such as printing and distribution, for idea products such as art,
music or entertainment. This paper also briefly explores the role that street level marketing
can play in aiding the global microbusiness.
Definitions
Microbusinesses are defined as SME business operations consisting of five, or less,
employees (Baldwin, 1999). For the most part, the microbusiness sector remains a largely
hidden organisational structure, as it has previously been encompassed by SME definitions,
which regarded businesses of between 1 and 100 employees as being of roughly equivalent
nature. However, with the rise in the number of SOHO (small office, home office)
businesses, and the increasing focus on small operator e-commerce projects, the
microbusiness is now a significant factor in global economics.
Characteristics of the Global E-Microbusiness
For the purpose of this paper, a global e-microbusiness is defined as an Internet based,
globally focused business organisation consisting of less than five employees. In order to
qualify as globally focused, the microbusiness must either directly ship products to
international markets, or make use of an international distribution mechanism, which allows
for global access to their products (Dann and Dann, 2001b). For example, a microbusiness
based in Los Angeles must make their product available to buyers beyond the American
border in order to qualify as a global microbusiness (ie: if shipping restrictions to US
Mainland only exist then it cannot be classified as global). However, an Asian microbusiness
that uses a US based distribution service, shipping exclusively to the US mainland, does
qualify as a global microbusiness. The distinguishing factor is the distribution of the product
outside the country of origin of the microbusiness.
Nature and Structure of Idea Driven Microbusiness
Given the nature of the Internet as a medium of idea exchanges, one of the most common
aspects of e-microbusiness is the provision of idea driven e-commerce (IDE). Idea driven
commerce has been used to describe those categories of products that are based on eliciting
emotional responses from consumers – for example, art, graphical imagery, audiovisual or
interactive experiences. For this paper, (IDE) will be limited to those products which are
distributed through the Internet, and which are designed to elicit a cognitive-emotive response
from an end consumer.
Microbusiness Outcomes: Idea Products and Services
So what then are the most common forms of cognitive-emotive idea products that are
distributed on the Internet? There are four main types of products that are best suited to the
current conditions of the Internet, and these are digitised art, music, interactive software and
web sites. Digitised art includes any artist or design work that can be viewed digitally, and is
available for sale commercially as either a printed work or permanent assignment of digital
reproduction rights. This limitation to the product removes any non-commercial artist work
from consideration as part of the microbusiness portfolio. Similarly, the on-line distribution
of music requires that the music be available for sale in a commercial form (either as licensed
download, free sample of a commercially available album) to limit this application to those
bands or musicians using the Internet as a distribution outlet for commercial gain. Interactive
software includes those programs made available under commercial agreements, shareware
arrangements or any public licence that does not exclude commercial revenue from the sale of
the product. Finally, the microbusiness web sites are those web sites that provide content for
the intent of commercial gain, either through the sale of support merchandises, direct
subscription or advertising revenue. This paper is focused on digitised art and music services,
thus interactive software or web sites fall beyond the scope of the study.
Factors in Global Microbusiness Success
Despite such a variance in the type and nature of the global microbusiness, there are a series
of common factors that increase the likelihood of success for these operations. Initially, as
with businesses of any size, an e-microbusiness must have a business focus including the need
for the use of marketing. In addition, global e-microbusinesses need to consider their
distribution strategies for accessing their global target markets. For example, they may need
to consider whether they are inside America looking outwards, or outside America using the
Internet to access the US market. Finally, the e-microbusiness operator needs to examine
whether to use their own distribution mechanism, or to make use of an existing business to
business distribution channel.
The Street Level Marketing Paradigm
Street Level Marketing (SLM) is a new conceptualisation of small and medium enterprise
marketing that represents those entrepreneurial marketers servicing the needs of their own
niche-market community by delivering products that were developed within their community
(Dann and Dann 2001a). It is a technique especially suited to the microbusiness community,
as many exist to service smaller intra-niche markets. For example, a microbusiness could be
founded around the development of a piece of software (e-mail client) to meet a specific niche
need (multiple e-mail account handling) after the programmer could not find an existing
product. In the broader microbusiness sense, SLM represents a movement away from the
established belief that all marketing must be based on a top-down “research and discover
target needs, then develop products to match the needs” approach used by larger
organisations. Instead, this approach validates the marketing methods of the entrepreneurial
marketer who focuses on developing products to service their own needs first, and then
expands the application of this product to people with similar needs inside their market niche.
SLM Expanded
SLM expands into a series of sub-elements which operationalise the concept, which are
illustrated in Figure 1 (Dann and Dann 2001a).
Figure 1 Components of Street Level Marketing
MarketingOrientation
Marketing Philosophy
Marketing Intelligence
Marketing Research
Marketing Activities
Source Credibility
Street Credibility
Credibility
Self belief
Product belief
AidmheilMarket
Immersion
The central tenet of SLM is the need to use the principles of marketing in the operation of the
microbusiness. In this context, marketing is seen as the ability to recognise that the product
was developed to solve a personal need, has a wider application in the community, and can be
tailored to best suit the needs of the niche. The four elements of the marketing orientation
include the need for the microbusiness to engage in marketing activities, use the marketing
philosophy, gather marketing intelligence and engage in some forms of marketing research
(Doyle and Wong 1998; Gray et al 1998). For a business that consists of five or less people,
these tasks are usually handled as an informal part of the daily operations, in that a client
focus can be easily maintained (marketing philosophy in action) when the members of the
microbusiness are developing their product for their own needs. Similarly, marketing
research in this context is both quantitative where necessary, but primarily reliant on
secondary data or qualitative research. Customer feedback in microbusiness organisations is
usually directed straight to the person responsible for implementing the suggested changes.
Market Immersion is the second element of the SLM technique. This formally recognises the
involvement in the market niche as a criteria for success as an SLM business. Where a
microbusiness is focused on delivering a product to a target market, their level of market
immersion is critical in determining whether SLM is applicable. Those microbusinesses that
target external markets are not part of the SLM process, and must be examined under
conventional marketing techniques. The value of market immersion for the microbusiness
comes from inherent knowledge of the needs of the marketplace from personal experience,
informal information networks and a marketplace reputation. Reputation within the niche also
forms a part of the credibility of the product and microbusiness engaged in SLM.
Credibility splits between the source credibility theories of advertising and promotion, and the
street credibility of the microbusiness (Garbino and Johnson 1999). Street credibility is the
combination of personal and corporate reputation, perceived expertise, social network capital,
market mavenism (Feick and Price 1987), target market empathy (Andreasen 1994, Walker
Langmeyer and Langmeyer 1992) and peer group respect. The value of street credibility
extends beyond the professional reputation of the microbusiness through to the personal
reputations of the staff of the business, and their dealings with other members of the niche.
The final element of SLM for microbusinesses is the notion of aidmheil, which is the notion
of faith in the product and self belief and belief in the potential success of the microbusiness.
Faith in this context is not associated with a religious experience or belief structure (although
it can help when running a microbusiness). Instead, this is a formal recognition of the need
for a level of personal confidence in the product and a self confidence in the microbusiness’s
ability to deliver on their promises (Flores 1998). Quite often this is reflected in the personal
mission statements of microbusiness operators who express an inherent faith in their product,
or a belief in their eventual success. The aidmheil of a microbusiness can also be represented
through the owner-operator’s willingness to undertake the higher risks of small business
operation and working for themselves instead of working for another organisation.
Gaining an Internet advantage for SLM Microbusinesses
Having proposed that a microbusiness, using an intra-niched focused SLM tactics, can use the
Internet for servicing a global market niche, how can these businesses gain the maximum
effect from their on-line presence? Tetteh and Burn (2000) proposed a six point structure for
maximising on-line effectiveness for SME marketing. These are:
• Define clear goals for being on-line. For the e-microbusiness, an on-line presence should
be established with a series of goals and objectives in mind for two reasons. First, clear
goals are needed to plan the development of the microbusiness and its on-line presence.
Second, set goals allowing for calculated strategies in developing on-line networks,
business relationships and determining what infrastructure is needed to service the
targeted global on-line niche.
• Develop infrastructure that adds value to the business. Microbusinesses are restricted in
the degree to which they can extend their organisational capacities before moving into the
SME category, or losing sight of their core business. Microbusinesses are advised to only
add those functions to the e-microbusiness that result in an increase in value – for
example, a microbusiness that uses the Internet to conduct wholesale transactions with on-
line retailers does not need to develop their own on-line retail outlet.
• Incorporate and install networking features between stakeholders. For intra-niche targeted
products, this can be as simple as creating a means of communication and exchange
amongst niche market members through a discussion forum. Above all, the priority
should be to create a network of value between all of the relevant stakeholders, such as the
end users and the product manufacturer’s support staff (where the microbusiness is a
retailer), or between the microbusiness’s product designer and the retailers.
Microbusinesses based around entertainment products such as music or literature often
develop extensive networks between client-users (their fans) and client-distributors (live
music venues / book stores).
• Use the virtual infrastructure to create virtual values of process, product and image.
Process values involve using the on-line infrastructure to give greater depth and detail to
the on-line product – for example, a microbusiness that creates specialist wood souvenir
carvings can contain additional information on the history of the art, links to further
information, and even a discussion forum for other artists. This develops a sense of value
for the customer in visiting the virtual infrastructure and encourages repeat visits. It also
serves to enhance the reputation of the product through enhanced corporate image for the
microbusiness. Virtual infrastructure can also be used as the basis of cybercommunities,
which can create a strong loyalty to the product, web site and microbusiness (Dann and
Dann 2001b)
• Cultivate a virtual culture for the microbusiness’s clientele. Given that an SLM
microbusiness will be dealing in a marketing niche in which it, or the member staff, will
have personal relationships and networks, this aspect is a valuable reminder to encourage
those members of the target market to continue their interaction with the microbusiness
on-line. In addition, as mentioned above, cybercommunities can enhance the value of the
microbusiness by creating a supportive community of product users, who can also
contribute to the ongoing development and refinement of the microbusiness products
(Dann and Dann 2001b). By developing a virtual culture that supports the microbusiness,
it also serves to enhance and expand the potential target audience from the initial niche,
through the extended on-line social networks of members of that niche. One significant
advantage of the Internet over classic distribution channels is the ease with which a niche
product can expand its market via a horizontal spread through informal social networks of
the primary target niche (Cothrel and Williams 1999).
• Continual response: The final and most essential element of the on-line existence of the
microbusiness is the need for continual monitoring and response to market changes. A
hallmark of the SLM process is the use and reliance on constant feedback from fellow
members of the market niche as they use and refine the product to meet their needs. This
is one area where the microbusiness has the significant advantage of flexibility and speed
of response to changing conditions as it relies on (at most) an initiator convincing four
other people to respond to a stimulus. This allows for much faster response times
(particularly for solo operated e-microbusinesses) that can begin production of new ideas
immediately, when compared with slower requests for formal permission to expand the
product line. In this way, most microbusinesses have similar characteristics to
entrepreneurs when it comes to responses to environmental change and stimuli (Collinson
and Shaw 2001)
Microbusinesses can benefit significantly from engaging in structured and deliberate use of
the Internet to maximise their exposure to their target niche, and to gain the maximum
outcome for their on-line efforts. Part of this, however, also requires an important initial
decision process of determining what role the Internet will play in the product distribution
strategy.
Microbusiness: Market Access through the Internet
Selecting the market access to be gained through the Internet returns the discussion to the
notion of idea driven commerce, and how ideas can be moved across national boundaries
through e-commerce. It also poses the question of how the Internet will be used – is it used as
a mechanism to reach a global audience, or is it being used by a global company to reach an
American (or equivalent single nation) target market? America is singled out in this context
for the number of Internet based product distribution services that are located within the US,
and that provide considerable cost advantages for delivering into America (it is noted that an
American company distributing into America as part of a global distribution plan remains a
global microbusiness. It is only where the primary, or sole target market is sourced from the
same nation as the microbusiness’s country of origin, that the microbusiness cannot be
classified as a global entity).
Global reach to access Global markets
The first and most touted use of the Internet for global marketing has been its role as a low
cost, highly accessible global network of exchange (Javalgi and Ramsey 2001). From the
perspective of the e-microbusiness, the Internet offers global access to either the
microbusiness’s web site, or to a microbusiness facilitator’s web site (see below). Issues of
the removal of geographic and time constraints associated with physical store locations give
the microbusiness a much greater level of independence in their production and distribution of
idea products.
Global Reach to Access USA Market
An alternative view of the role of the Internet arises from the current dominance of the
American marketplace in their minds of many of the e-commerce marketers, a number of
facilitator companies that have geographically limited distribution networks, and numerous
trade laws that restrict the movement of certain goods produced in the USA. Rather than
seeing the limitations of American based products as flaw in the global e-commerce economy,
many international microbusinesses can use these services as a method of entering the
American market. For example, a graphics designer working in Puerto Rico designing
products with an Hispanic focus can access US based print companies through the Internet,
and facilitate an entry into the American marketplace that would otherwise be difficult to
achieve from their home country. Similarly, non-American musicians can distribute their
work through American based music web sites without requiring work visa or permits that
would be needed to tour America, or an importer to bring the music content into the USA.
Consequently, the Internet significantly lowers many of the entry barriers faced by
international microbusinesses in entering US markets.
Microbusiness Facilitators: Microbusiness to Business Commerce
The ultimate value of the Internet for many microbusinesses has been access to a range of
intermediary business to business service providers. The ultimate irony of the Internet has
been the rise of the very intermediary channel that it was alleged to have been capable of
eliminating. Business to microbusiness commerce has flourished, as idea based commerce
providers can create economies of scale in storing, processing and dealing in idea products.
One aspect of the rise of the idea product, and the growing success of the business to
microbusiness relationships has been the ability of digital products to be reproduced in almost
limitless supply without exhausting the original product.
Additionally, the digital product is able to be transferred without recourse to conventional
product distribution channels, and usually through a range of automated processes (preset
upload scripts where the microbusiness controls the input of the content). The increase in
self-service B2B systems works to the advantage of microbusiness operations, as the content
creator of the uploaded materials is usually also responsible for the product pricing and
description. Compare this to a process where the creator hands over their work to a printer,
who produces the products for a wholesaler, who then onsells to a retailer, who writes the
product description and sets the price, and this is then conveyed to the target market via public
relations and advertising. In niche products, particularly SLM based products where street
credibility and source credibility are important factors for success, it is important to have the
shortest viable chain from product producer to product user (preferably the product producer
should also endorse their product by being a product user as well). The automation of these
processes also works to the advantage of the consumers, who can access the microbusiness’s
product without needing to rely on the availability of the microbusiness owner.
Case Studies of Microbusiness Facilitators
The final element of the paper examines a brief series of case studies of three different forms
of on-line microbusiness idea product facilitators. These are:
• music distributors
• short order merchandise; and
• graphical design printing and production
Global Music Marketplace – MP3 Distribution
Perhaps the most infamous use of the Internet as a distribution mechanism was the rise in peer
to peer file sharing during the late 1990s with services such as Napster and Gnutella. Whilst
the majority of public attention for these services was focused on the illicit trade of copyright
materials, these peer to peer services also presented new delivery alternatives for copyright
owners wishing to distribute samples of their work. In addition, the recent redevelopment of
Napster into a fee paying content search service (partnered with Bertelsmann) permits the
opportunity for musicians operating as a microbusiness to use the service to sell their
independent music product through Napster (IUMA 2002). Microbusinesses hosting content
through IUMA can rely on the service to act as an agent, distributor and collection agency for
their products that are distributed through the Napster subscription service.
The independent music industry is also strongly associated with SLM business and
microbusiness productions in that many musicians produce music products for their own
niche (eg surfers producing surf music, DJs developing turntable equipment), or provide
microbusiness services such as small scale recording studios or video productions to fellow
artists.
Just in Time Microproduction – Delivering to a Market of One
Associated with the development of microbusiness music producers is the concept of just-in-
time microproduction, which is designed to service the product needs of the microbusiness
sector. One on-line music host, MP3.com, provides just-in-time production of short runs
(include individual pressings) of mixed media audio and data CDs for the microbusiness
musicians using their site. Similarly, other microproduction services such as Cafepress.com
produce short run merchandise for microbusiness clients. The Cafepress service hosts the
microbusiness user’s images associated with a range of products (eg mugs, shirts, mousepads
and hats), and also provides secure on-line purchasing arrangements for the store. The
microbusiness owner provides the graphical content for the products in a non-exclusive
licence arrangement, and the Cafepress site provides the production, on-line store, and
shipping for the microbusiness.
On-line Art Production- Idea Driven Commerce
The third aspect of business to microbusiness support is the manufacture of idea driven
commerce products by enterprises such as Zazzle.com. The Zazzle site provides on-line
hosting for high resolution graphics that can be purchased through the site as posters printed
to either high resolution paper or direct to canvas. One of the key points of the service, which
they highlight to potential customers and users, is that they see their role as enablers of idea
commerce by providing the intermediary function of production and shipping for digital
content. Microbusinesses using this service can focus on the production of the idea content
(artistic work) without needing to develop extended supply chains of printers, art exhibitors
and distribution networks. The Zazzle service also facilitates niche orientated art publishing
by offering a key word (up to 9 per image) search mechanism, and up to four genre locations
(eg landscape, religion, patriotic, college life) in order to unite similar art and artists, as both a
convenience to the consumers using the service, and the intra-niche focused microbusiness
artists.
The essence of these services is to provide economies of scale to collective groups of
microbusinesses by diffusion of establishment costs of capital equipment across a wide range
of product users. Systems such Zazzle and MP3.com allow the microbusinesses to produce
just-in-time products without the expense of start up costs, or the need to sink large amounts
of capital into product stockpiles
Conclusion
The emergence of facilitator organizations on the Internet opens up a vast array of marketing
opportunities for micro businesses. The global nature of the Internet brings with it potential
for global expansion, although in the past, the logistics of shipping world wide were often
beyond the scope of micro businesses. Having access to products sales website that could not
deliver the products was more likely to cause frustration for out of range potential customers
than to make sales. Recognising that many micro businesses are intra niche operators,
traditional marketing models are of little relevance as they assume a level of resourcing for
marketing activities that is unrealistic. Consequently the street level approach appears most
relevant to their needs.
The emergence of the successful new model of on line facilitator organizations
simultaneously overcomes problems of marketing, production and delivery for globally
focused micro businesses. Assuming the continued development and acceptance of facilitator
organizations on line, barriers to entry for small businesses, particularly into difficult to enter
markets like the US, will continue to be substantially reduced. Further the new business
model of just in time off shore manufacturing opens up new opportunities for a variety of
creative micro businesses. This paper has outlined some of the current developments in this
field and provides a basis for future comparison as the global micro business develops as a
future trend in international commerce.
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www.zazzle.com/welcome/home/default.asp