2010 International Conference on E-Business and E-Government

The service innovation of ticket agency industry Based on 4D service innovation model
An empirical case study on Cococ ticket mall
Lifang Peng
School of Management, Xiamen University Xiamen, China lfpeng@xmu.edu.cn
AbstractThe ticket agency industry is forced by the increasing worldwide competition due to the development of economic globalization and technology advancements. Competitive advantage undoubtedly can come from innovation in services. So innovation is now regarded as internal requirement for Chinese ticket agency industry to enhance the core competence. Since now many traditional ticket agencies transform into modern travel agencies, it is vital to research on the innovation models that help to clarify the innovation approaches for ticket agency industry. Therefore, this paper summarizes the methodology of service innovation, applying the 4D service innovation model on ticket agency industry. By taking Cococ ticket mall as an example, then this paper presents an empirical case study of the service innovation. Keywords-service innovation; 4D innovation model; ticket agency; Cococ

Lingling Lai
School of Management, Xiamen University Xiamen, China lailingling353@sina.com as an example, from the practice in Cococs service innovation design, this paper presents an empirical case study of the service innovation based on the 4D service innovation model. II. A REVIEW ON THE METHODOLOGY OF SERVICE
INNOVATION

I.

INTRODUCTION

In e-commerce environment, modern information technology has a great impact on the business model and competition pattern of ticket agency industry. The new business model online travel agency is growing, and eticketing promotes the development of online travel agency service market. The competitions among these travel agencies are becoming fiercer along with the economic globalization and information technology improvements. Innovation is the successful exploitation of new ideas-this definition applies to all firms in the economy and is equally relevant to services innovation. In response to the fierce competition, the traditional ticket agencies present a more comprehensive and modern trend. The most important competence of ticket agency is service quality, and service quality mainly comes from service innovation. Hence, Service supplier businesses purse services innovation in order to retain or improve their competitive position in the market place. Its an important issue that how to enhance the competence and expand the market scale of traditional ticket agency service industry by utilizing innovative methods. This paper proposes the 4D service innovation model, then takes Cococ ticket mall
Sponsors: The National Social Science Foundation of China under Grant 08BJY115 The Social Science Key Foundation of Fujian Province of China under Grant 2007A006; The NCET Foundation of Fujian Province of China 2007; Group of Tempus

With the importance of service sector in the economy, service innovation becomes more and more important. There were many scholars studied on the service innovation methodologies. Service innovation refers to new or considerably changed service concepts or service delivery process that deliver added value to the customers by means of new or improved solutions to a problem [1], methods of improving performance. In the early period, technical innovation is the dominance of service innovation. Literature [2] depicted technology advanced sector classification take service sector as the leading supplier sector. The theory that service innovation gains innovative momentums form the manufacturing sector was proposed in [3] and [4], that is to say service process innovation derives from technology innovation. Its one-sided for these views only emphasized the importance of technology, they didnt conduct a comprehensive study on service innovation. With the development of innovation theory, service innovation field continue to expand, including service innovation management, innovation with customers, combination of innovative elements and so on. Literature [5] had a study on innovation with customers. It proposed the significance of interaction with customers as well as the capacity of customers in service innovation. Service innovation management was proposed in [6], including service concept and service delivery system. Service features were proposed in [7]. Literature [8] conducted a research on service innovation category. Service is intangible, it focuses on the process, service innovative elements include human, technology, process, content etc. So service innovation is an integrated innovation process. Based on the previous studies, literature [9] proposed the 4D service innovation model. It analyzed the possible dimensions of service innovation, also identified and integrated the key factors that are applicable to all service industries. It put forward an integrated service innovation model including four dimensions. Although the 4D service innovation model is just a conceptual model, it describes service innovation

978-0-7695-3997-3/10 $26.00 2010 IEEE DOI 10.1109/ICEE.2010.62

216

comprehensively, and directs practical innovation activities. This paper proposes a good and universal framework for ticket agency industry service innovation. III. ANALYSIS OF THE 4D SERVICE INNOVATION MODEL IN
TICKET AGENCY INDUSTRY

The four dimensions of this model are new service concept, new client interface, new service delivery system and technology options. The four dimensions impact upon each other in both directions, and correspond to the different innovative activities. In practical application, most of the service innovation is a combination of various elements innovation. The four dimensional model of innovation in services is shown in Fig. 1 [10]. Ticket agency industry as a special individual service industry, its 4D service innovation model has its own unique meaning. The new service concept in ticket agency industry: service is intangible, so the innovation is usually the conceptual innovation. The new service concept in ticket agency industry should solve the following problems: providing what kinds of services to retain existing customers and explore new markets; understanding of what kind of service the competitors provide; how we can provide our own unique service. The new service concept requires ticket agency should have a deep understanding of their existing service products and new services, as well as what service products and new services that their competitors provide [11]. Overall, the new service concept including services content innovation, services process innovation and services concept innovation. The new client interface in ticket agency industry: It includes the approaches by which to provide travel agency services to customers and the ways communicated with customers. It should solve the problems that how to make customers participate in the travel booking service innovation, how to communicate with customers more effectively, and how to improve customer satisfaction [12]. Customer involvement is becoming more and more widely applied to service innovation. Its meaningful for improving the success rate and reducing the innovation risk to manage the client interface and customer involvement in the ticket agency industrys service innovation. The new service delivery system in ticket agency industry: service delivery system reveals the main characteristics of the service operation by describing the service process. It covers the entire service delivery process. Its the tool and technique for describing the service process. So the innovation of service delivery system is mainly the innovation of service model. Technological options: Technology plays an important role in service innovation, especially when the traditional ticket agency industry upgrade to the modern service industry [13]. The innovation of service content, service model, service process and the

Figure 1. Four dimensional model of innovation in services

client interface all need information technology to support. Modern service system is based on information technology, technology is the driver and supporter of service innovation, it can change the way that the formation and interaction of service [14]. IV. AN EMPIRICAL CASE STUDY ON THE SERVICE INNOVATION OF COCOC

With the development of civil aviation industry, the intense competition of online agency and traditional agency, the development of electronic commerce and the e-ticketing all have a significant impact on ticket agency industry. Although Tempus occupy a large share of the ticket agency market, if Cococ doesnt develop the online agency model and expand the business scope, just maintains the traditional agency model, It might lose its competitive advantage. In this environment, Cococ decides to choose service innovation in order to respond to the opportunities and challenge. A. The new service concept of Cococ In Cococs service concept innovation, Firstly, Cococ proposes the new service concept turning from traditional ticket agency to online integrated travel services provider, turning from traditional service provider to modern service provider. Secondly, Cococ concerns about the service content innovation. It utilizes information technology to improve the original ticket agency service. At the same time, according to the development trend of this industry and competitors services, Cococ will exploit many new online travel agency services which are different from competitors, and provide much more high quality services, so that Cococs service content turns from ticket agency to ticket agency and business travel butler. For example, Cococ will develop the user-friendly onward ticket design service based on its original ticket service, that is when customers are dissatisfied with the price of existing non-stop flights, customers can bring forward their own requests, then the system will interact with customers by providing humanized service, compare customers requests with the transfer program, and then give the feedback which is the most closest to customers expectation. In addition, Cococ will operate new service, for example, it will exploit flight tickets + travel tickets service,

217

after customers complete the flight tickets booking the system will recommend the destinations travel tickets automatically for customers to choose etc. Thirdly, Cococ concerns about service process innovation, it optimizes the original flight tickets service process by using electronic commerce technology, and designs the service process of new service products. The new service concept of Cococ is shown in Fig. 2. B. The new client interface of Cococ In the innovation process, Cococ focuses on customeroriented service design. It utilizes information technology and professional staff to form a composite service system, so as to provide customers with good communication platform. Besides customers service of traditional physical sales department and call center, there is still the new client interface of electronic commerce system, so it can communicate with customers without time and space constraints. Besides these, Cococ will add member service module to its new electronic commerce system, in order to provide customers with the virtual space of online interaction and online entertainment. Member service module is a customer value-added service and an important innovation of client interface. In addition, Cococ will provide personalized service in the new electronic commerce system. It allows customers participate in the service design process as the co-producers. The implementation of e-commerce will change Cococs client interface and their associated forms. C. The new service delivery system of Cococ Ticket agencys service delivery system is mainly determined by their service model. During the period in which Cococ turn from traditional service provider to modern service provider, its service model has undergone two major changes. The first service model innovation is from small traditional agency to ticket wholesaler model, the second service model innovation is from ticket wholesaler model to B2B+B2C+BBConline integrated service model which based on information technology and internet. B2B service model maintains the original ticket wholesale service. B2C service model is to develop online direct marketing business, with the popularity of e-ticketing, B2C service model will be the core model of Cococ, B2C service model expands its business scope including ticket agency service and integrated travel business such as hotel service, car service and so on. The BBC model utilizes co-channel to provide service in internet

environment. For example, Cococ cooperates with Taobao, Tencent using the cooperators system or Cococs system which is embedded in the cooperators platform to provide service. By the innovation of service delivery system, Cococ becomes into an online integrated travel service provider including traditional service approach, call center system service and online system service model. The detail of upper service models are shown in Table I. D. Technological options of Cococ Technology is the supporter of service content innovation, service model innovation and client interface innovation. Technology has changed how the travel services are conceived, developed, and delivered. It has not only optimized back-office process, but also has become prominent within the client interface. Its necessary to integrate the various service models when Cococ turns from traditional ticket agency to modern travel service provider. The principle of integration is providing customers with multi-service access methods, providing customers with convenient service, providing a centralized data storage and processing approach. According to these requirements, Cococ chooses SOA solution based on service-oriented view, utilizes Web approach to meet this requirement, and chooses ESB method to communicate, so the service system can independent of hardware platforms, operating system and programming languages, also can promise various of service models, business applications and interact by a unified approach. Hence, Cococs scattered and isolated business systems can be transformed into a serviceoriented integrated service system. Adoption of new technology options, Cococs integrated and business-oriented architecture is shown in Fig. 3.
TABLE I. THE DETAIL OF THE THREE SERVICE MODELS Ticket wholesaler Service model Small and medium-sized agencies Ticket angecy service Sales department Small Call center system Web systems B2B+B2C+BBC online integrated travel agency service model Individual customers, corporate customers and agencies Ticket angecy + business travel butler services Sales department Large Call center system Integrated web system The country around the world and

Traditional agency Service model Service target

Consumers

Service content

Ticket angecy service

Service channel

Sales department telephone

Service scope Growth potential Figure 2. The new service concept of Cococ

Small scope

South region

Small

Moderate

Large

218

Figure 3. The integrated and business-oriented architecture of Cococ

V.

CONCLUSION

[5] [6] [7] [8] [9]

Ticket agency industry is a typical traditional service industry, but with the development of information technology and knowledge-based economy, it becomes into a modern service industry gradually. The next years are the important stage that online travel agencies compete for the travel market place, so the ticket agencies should maintain their own competitive advantage in the market place by service innovation. But, service innovation is not a simple remedy. It should utilize new procedures and technologies. Service innovation is the result of various innovative elements, ticket agency industry innovation including services concept innovation, services content innovation, services model innovation and services process innovation. Based on these, the traditional ticket agency industry needs creative innovation in business model and technologies. Thats consistent with the 4D service innovation model. So this paper analyzes service innovation in ticket agency industry by utilizing 4D service innovation model, and illustrates the application of 4D service innovation model in civil aviation agency industry through an empirical case study on Cococ ticket mall. REFERENCES
[1] J. Tidd, F. Hull, Service Innovation: Organizational Responses to Technological Opportunities and Market Imperatives, London:Imperial College Press, 2003. K. Pavitt, Sectoral patterns of technological change: Towards a taxonomy and theory, Research Policy, Vol. 13, pp. 343-373, 1984. R. Barras, Towards a theory of innovation in services, Research Policy, Vol. 15, pp. 161-173, 1986. R. Barras, Interactive Innovation in Financial and Business Services: The Vanguard of the Service Revolution, Research Policy, Vol. 19, pp. 215-237, 1990.

[10]

[11]

[12]

[13]

[14]

[15]

S.J. Kline, N. Rosenberg, An overview of innovation, The National Academy Press, Washington D.C, 1986. R. Normann, Strategy and leadership in service business, Services management, 1991. Miles, Services in the new industrial economy, Futures, Vol. 25, pp. 653-672, 1993. F. Gallouj, O. Weinstein, Innovation in services, Research Policy, Vol. 26, pp. 537-553, 1997. Fuyi Chen, Yanchao Sheng, Analysis of the four-dimensional model of travel service innovation. Journal of Zhengzhou University of Light Industry (Social Science), Vol. 6, No. 1, pp. 27-30, Feb. 2005 (In Chinese). Junzheng Wang, Guisheng Wu, The Innovative Modes of Chinese Tourism Based on 4D Service Innovation Model. Commercial Research, Vol. 364, pp. 1-5, August, 2007 (In Chinese). Ren Xinhui, A Study of Service Innovation in Airlines Based on Experiential Services, Service Systems and Service Management, pp. 1-6, June, 2008. Dongmei Zhou, Ruoyu Lu, Research of Customer Involvement in Service Innovation: Basic Problem, Research Content and Research Integration. Journal of UESTC (Social Sciences Edition), Vol. 11, No. 3, pp. 26-31, Jun.2009 (In Chinese). Lei Lin, Guisheng Wu, The four-dimensional model of service innovation. Quantitative & Technical Economics Research, Vol. 3, pp. 32-37, 2004 (In Chinese). Wei Lu, An Analysis of Airline E-commerce Strategies in Ticket Distribution, Service Systems and Service Management, pp. 1-5, June, 2007. Vicky Pryce, service innovation, Dti occasional paper, No. 9, June, 2007.

[2] [3] [4]

219