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The service innovation of ticket agency industryBased 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

Lingling Lai

School of Management, Xiamen University

Xiamen, China

lailingling353@sina.com

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 helpto 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

I. INTRODUCTIONIn e-commerce environment, modern information

technology has a great impact on the business model andcompetition pattern of ticket agency industry. The newbusiness model online travel agency is growing, and e-ticketing promotes the development of online travel agencyservice market. The competitions among these travel agenciesare becoming fiercer along with the economic globalizationand information technology improvements. Innovation is thesuccessful exploitation of new ideas-this definition applies toall firms in the economy and is equally relevant to servicesinnovation. In response to the fierce competition, the traditionalticket agencies present a more comprehensive and moderntrend. The most important competence of ticket agency isservice quality, and service quality mainly comes from serviceinnovation. Hence, Service supplier businesses purse servicesinnovation in order to retain or improve their competitiveposition in the market place.

Its an important issue that how to enhance the competenceand expand the market scale of traditional ticket agency serviceindustry by utilizing innovative methods. This paper proposesthe 4D service innovation model, then takes Cococ ticket mall

as an example, from the practice in Cococs service innovationdesign, this paper presents an empirical case study of theservice innovation based on the 4D service innovation model.

II. A REVIEW ON THE METHODOLOGY OF SERVICEINNOVATION

With the importance of service sector in the economy,service innovation becomes more and more important. Therewere many scholars studied on the service innovationmethodologies. Service innovation refers to new orconsiderably changed service concepts or service deliveryprocess that deliver added value to the customers by means ofnew or improved solutions to a problem [1], methods ofimproving performance. In the early period, technicalinnovation is the dominance of service innovation. Literature [2]depicted technology advanced sector classification take servicesector as the leading supplier sector. The theory that serviceinnovation gains innovative momentums form themanufacturing sector was proposed in [3] and [4], that is to sayservice process innovation derives from technology innovation.Its one-sided for these views only emphasized the importanceof technology, they didnt conduct a comprehensive study onservice innovation. With the development of innovation theory,service innovation field continue to expand, including serviceinnovation management, innovation with customers,combination of innovative elements and so on. Literature [5]had a study on innovation with customers. It proposed thesignificance of interaction with customers as well as thecapacity of customers in service innovation. Service innovationmanagement was proposed in [6], including service conceptand service delivery system. Service features were proposed in[7]. Literature [8] conducted a research on service innovationcategory. Service is intangible, it focuses on the process,service innovative elements include human, technology,process, content etc. So service innovation is an integratedinnovation process.

Based on the previous studies, literature [9] proposed the4D service innovation model. It analyzed the possibledimensions of service innovation, also identified and integratedthe key factors that are applicable to all service industries. Itput forward an integrated service innovation model includingfour dimensions. Although the 4D service innovation model isjust a conceptual model, it describes service innovation

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

2010 International Conference on E-Business and E-Government

978-0-7695-3997-3/10 $26.00 2010 IEEE

DOI 10.1109/ICEE.2010.62

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comprehensively, and directs practical innovation activities.This paper proposes a good and universal framework for ticketagency industry service innovation.

III. ANALYSIS OF THE 4D SERVICE INNOVATION MODEL INTICKET AGENCY INDUSTRY

The four dimensions of this model are new serviceconcept, new client interface, new service delivery systemand technology options. The four dimensions impact uponeach other in both directions, and correspond to the differentinnovative activities. In practical application, most of theservice innovation is a combination of various elementsinnovation. The four dimensional model of innovation inservices is shown in Fig. 1 [10]. Ticket agency industry as aspecial individual service industry, its 4D service innovationmodel has its own unique meaning.

The new service concept in ticket agency industry:service is intangible, so the innovation is usually theconceptual innovation. The new service concept inticket agency industry should solve the followingproblems: providing what kinds of services to retain

existing customers and explore new markets;understanding of what kind of service the competitorsprovide; how we can provide our own unique service.The new service concept requires ticket agency shouldhave a deep understanding of their existing serviceproducts and new services, as well as what serviceproducts and new services that their competitorsprovide [11]. Overall, the new service conceptincluding services content innovation, services processinnovation and services concept innovation.

The new client interface in ticket agency industry: Itincludes the approaches by which to provide travelagency services to customers and the wayscommunicated with customers. It should solve the

problems that how to make customers participate in thetravel booking service innovation, how tocommunicate with customers more effectively, andhow to improve customer satisfaction [12]. Customerinvolvement is becoming more and more widelyapplied to service innovation. Its meaningful forimproving the success rate and reducing the innovationrisk to manage the client interface and customerinvolvement in the ticket agency industrys serviceinnovation.

The new service delivery system in ticket agencyindustry: service delivery system reveals the maincharacteristics of the service operation by describingthe service process. It covers the entire service delivery

process. Its the tool and technique for describing theservice process. So the innovation of service deliverysystem is mainly the innovation of service model.

Technological options: Technology plays an importantrole in service innovation, especially when thetraditional ticket agency industry upgrade to themodern service industry [13]. The innovation ofservice 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, itcan change the way that the formation and interaction ofservice [14].

IV. AN EMPIRICAL CASE STUDY ON THE SERVICEINNOVATION OF COCOC

With the development of civil aviation industry, the intensecompetition of online agency and traditional agency, thedevelopment of electronic commerce and the e-ticketing allhave a significant impact on ticket agency industry. AlthoughTempus occupy a large share of the ticket agency market, ifCococ doesnt develop the online agency model and expandthe 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 respondto the opportunities and challenge.

A. The new service concept of CococIn Cococs service concept innovation, Firstly, Cococ

proposes the new service concept turning from traditionalticket agency to online integrated travel services provider,turning from traditional service provider to modern serviceprovider. Secondly, Cococ concerns about the service contentinnovation. It utilizes information technology to improve theoriginal ticket agency service. At the same time, according tothe development trend of this industry and competitorsservices, Cococ will exploit many new online travel agencyservices which are different from competitors, and providemuch more high quality services, so that Cococs servicecontent turns from ticket agency to ticket agency andbusiness travel butler. For example, Cococ will develop the

user-friendly onward ticket design service based on itsoriginal ticket service, that is when customers are dissatisfiedwith the price of existing non-stop flights, customers can bringforward their own requests, then the system will interact withcustomers by providing humanized service, comparecustomers requests with the transfer program, and then givethe feedback which is the most closest to customersexpectation. In addition, Cococ will operate new service, forexample, it will exploit flight tickets + travel tickets service,

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after customers complete the flight tickets booking the systemwill recommend the destinations travel tickets automaticallyfor customers to choose etc. Thirdly, Cococ concerns aboutservice process innovation, it optimizes the original flighttickets service process by using electronic commercetechnology, and designs the service process of new serviceproducts. The new service concept of Cococ is shown in Fig. 2.

B. The new client interface of CococIn the innovation process, Cococ focuses on customer-

oriented service design. It utilizes information technology andprofessional staff to form a composite service system, so as toprovide customers with good communication platform. Besidescustomers service of traditional physical sales department andcall center, there is still the new client interface of electroniccommerce system, so it can communicate with customerswithout time and space constraints. Besides these, Cococ willadd member service module to its new electronic commercesystem, in order to provide customers with the virtual space ofonline interaction and online entertainment. Member servicemodule is a customer value-added service and an importantinnovation of client interface. In addition, Cococ will provide

personalized service in the new electronic commerce system. Itallows customers participate in the service design process asthe co-producers. The implementation of e-commerce willchange Cococs client interface and their associated forms.

C. The new service delivery system of CococTicket agencys service delivery system is mainly

determined by their service model. During the period in whichCococ turn from traditional service provider to modern serviceprovider, its service model has undergone two major changes.The first service model innovation is from small traditionalagency to ticket wholesaler model, the second service modelinnovation is from ticket wholesaler model toB2B+B2C+BBConline integrated service model which

based on information technology and internet. B2B servicemodel maintains the original ticket wholesale service. B2Cservice model is to develop online direct marketing business,with the popularity of e-ticketing, B2C service model will bethe core model of Cococ, B2C service model expands itsbusiness scope including ticket agency service and integratedtravel business such as hotel service, car service and so on. TheBBC model utilizes co-channel to provide service in internet

Figure 2. The new service concept of Cococ

environment. For example, Cococ cooperates with Taobao,Tencent using the cooperators system or Cococs systemwhich is embedded in the cooperators platform to provideservice. By the innovation of service delivery system, Cococbecomes into an online integrated travel service providerincluding traditional service approach, call center systemservice and online system service model. The detail of upper

service models are shown in Table I.

D. Technological options of CococTechnology 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-officeprocess, but also has become prominent within the clientinterface. Its necessary to integrate the various service modelswhen Cococ turns from traditional ticket agency to moderntravel service provider. The principle of integration isproviding customers with multi-service access methods,providing customers with convenient service, providing acentralized data storage and processing approach. Accordingto these requirements, Cococ chooses SOA solution based on

service-oriented view, utilizes Web approach to meet thisrequirement, and chooses ESB method to communicate, so theservice system can independent of hardware platforms,operating system and programming languages, also canpromise various of service models, business applications andinteract by a unified approach. Hence, Cococs scattered andisolated business systems can be transformed into a service-oriented integrated service system. Adoption of newtechnology options, Cococs integrated and business-orientedarchitecture is shown in Fig. 3.

TABLE I. THE DETAIL OF THE THREE SERVICE MODELS

Traditional

agency

Service

model

Ticket

wholesalerService model

B2B+B2C+BBC

online integrated

travel agency service

model

Service

targetConsumers

Small and

medium-sizedagencies

Individual customers,

corporate customersand agencies

Service

content

Ticket angecy

service

Ticket angecy

service

Ticket angecy +

business travel butlerservices

Service

channel

Salesdepartment

telephone

Sales department

Small Call center

system

Web systems

Sales department

Large Call center

system

Integrated web system

Service

scopeSmall scope South region

The country andaround the world

Growth

potentialSmall Moderate Large

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

V. CONCLUSIONTicket agency industry is a typical traditional service

industry, but with the development of information technologyand knowledge-based economy, it becomes into a modernservice industry gradually. The next years are the importantstage that online travel agencies compete for the travel marketplace, so the ticket agencies should maintain their owncompetitive advantage in the market place by serviceinnovation. But, service innovation is not a simple remedy. Itshould utilize new procedures and technologies. Service

innovation is the result of various innovative elements, ticketagency industry innovation including services conceptinnovation, services content innovation, services modelinnovation and services process innovation. Based on these, thetraditional ticket agency industry needs creative innovation inbusiness model and technologies. Thats consistent with the 4Dservice innovation model. So this paper analyzes serviceinnovation in ticket agency industry by utilizing 4D serviceinnovation model, and illustrates the application of 4D serviceinnovation model in civil aviation agency industry through anempirical case study on Cococ ticket mall.

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