Building Service Value Chain in the Chinese Travel Industry through Technology Innovation

1
Building Service Value Chain in the Chinese
Travel Industry through Technology Innovation
2
Introduction How can Contemporary
Service-Oriented Business Win?

• The calendar year 1999 is the First Year for
  Chinese internet industry. It is also the Birth
  Year for the development of Chinese Contemporary
  Service-Oriented Industry.
• In that year, a number of Contemporary
  Service-Oriented Businesses with internet
  characteristics were established, and they became
  black horses who rose in a sudden
• http//www.dangdang.com and http//www.amazon.cn
  (former http//www.joyo.com)
• http//www.alibaba.com and www.taobao.com
• http//www.ctrip.com

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Introduction How can Contemporary
Service-Oriented Business Win?
Visible factor
Internet
Invisible factor(s)
???
4
Introduction How can Contemporary
Service-Oriented Business win?

• Contemporary Service-Oriented Business is not the
  mathematic sum result of simple addition of
  traditional type of operation and internet.
• http//www.dangdang.com and http//www.amazon.cn
• ? internet traditional book stores
• www.taobao.com ? internet traditional stores
• Centered around the internet platform, what else
  was done?
• Abundant information ? Innumerous comments,
  feedbacks and recommendations
• Easy-to-use ? Friendly trading platforms
• Secure payment ? Alipay or credit card
• Reliable distribution delivery system ?
  Logistic delivery centers or UPS (U.S.A.)
• Friendly customer services ? Emails, Text
  Messages and Telephone Notices

Point An integrated and comprehensive
Service Value Chain
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Conclusion

• Internet is just a tool that the Contemporary
  Service Oriented Business may use to show its
  talents.
• Service Value Chain is the key for success for
  contemporary Service-Oriented Business.
• All of the excellent Contemporary
  Service-Oriented Businesses are capable to
  provide an integrated and comprehensive Service
  Value Chain.

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Establish Service Value Chain Service Value
Chain Determines a Companys Core
competenciesService Value Chain Management in
Different Phases Technology Development and
Application Elevate the Service Value Chain
Suggestions to the Development of Chinese
Contemporary Travel Industry
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Establish Service Value Chain

• Service Value Chain is a positively correlated
  effect that the Real Economy or the Service
  Oriented Economy form through promissory
  servicing and auxiliary activities, which is a
  dynamic value creating process.
• The Service Value Chain of an enterprise is built
  by a series of nodes that are correlated in
  certain way. Only when all the nodes are linked
  and connected into an organic entirety, it can
  create real value for the customers, provide
  value-added services, recruit new and retain
  existing customers, and accelerate its
  organizational development.

Point Neither Product-Oriented Business nor
Service-Oriented Business can do without the
visible or invisible Service Value Chain.
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Establish Service Value Chain

• What is called a Service-Oriented Business?
• The Characteristics that make the Contemporary
  Service-Oriented Business different from the
  Traditional Service-Oriented Business are
• It is interactive.
• It is enabling.
• It is an experience.
• These are the important characteristics of a
  companys capability in providing value-added
  services.

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Establish Service Value ChainService Value Chain
Determines a Companys Core competenciesService
Value Chain Management in Different
PhasesTechnology Development and Application
Elevate the Service Value Chain
10
Misunderstanding Towards the Travel Services
Industry Wide and Beyond
False
Travel Enterprises competitiveness is determined
by the PRICE.
ResultThey are indulged in the price war, which
causes the vicious cycle of lower price due to
lower quality and verse versa.
Travel Enterprises competitiveness is determined
by the SERVICE VALUE CHAIN.
True
ResultPaying attention to the service value,
they are able to elevate the service quality and
provide most cost effective travel services.
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Service Value Chain Determines a Companys Core
competencies

• Service Value is the most critical factor for
  customers to choose a product or a service
  provider.
• Rising Contemporary Service-Oriented Business
  provides value-added services to customers to
  achieve legend by its very creative service
  model.
• The enterprises who provide more value-added
  services can usually outstand.

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Service Value Chain Determines a Companys Core
competencies

• Domestic illustrative example
• Compared to the traditional retail direct sales
  enterprises, C2C business decreased substantially
  the trading cost and at the same time, made it
  much easier.
• ResultInternet sales revenues for
  Taobao.com and etc. became black horses and
  turned into a new force to attract individual
  consumption.
• International illustrative example
• Amazon.comabundant information and customer
  feedbacks, together with the strong logistic and
  delivery support.
• 08Q4 18 year over year increase
• Free wireless internet connection offered in
  Starbucks

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Service Value Chain Determines a Companys Core
competencies

• Illustrative example in the Travel Industry
• Innumerous travel information, transparent
  pricing system, convenient trading methods,
  scalable service system made online travel
  enterprises become the main stream of the
  industry.
• Resulttraditional mid-small travel agents
  gradually decline.

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Service Value Chain Determines a Companys Core
competencies

• Incomplete or imperfect value chain will affect
  the core competencies.
• Traditional bookstores only provide on-site book
  sales, without readers feedbacks in pre-sales
  phase and convenient delivery in post-sales, and
  with limited number of books to be chosen from.
• Resultdangdang.com, amazon.cn became the
  new generations first choice for book shopping.
• In online travel industry, many websites were not
  user friendly, which made consumers have to give
  up the trading.

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Service Value Chain Determines a Companys Core
competencies

• Service Value Chain may be perfected and the core
  competencies may be elevated by the aid of
  external forces.
• Alipay provided a solution for the security issue
  of e-commerce utilizing credit sponsoring method.
• Resulta large number of mid-small
  e-commerce websites introduced Alipay and started
  to flourish.
• In the United States of America,a huge number of
  e-commerce enterprises adopted mature delivery
  services such as UPS to be their external
  logistics provider.
• Resulte-commerce development in the United
  States of America is way ahead of in China.

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Establish Service Value ChainService Value
Chain Determines a Companys Core
competenciesService Value Chain Management in
Different PhasesTechnology Development and
Application Elevate the Service Value Chain
17
Service Value Chain Management in Different Phases

• Pre-sales Value of a product/service consumption
  - it should be mostly a tool, including other
  functionalities.
• Value of a product/service consumption during the
  sales - it should focus mostly on the experience,
  including other functionalities.
• Post-sales Value of a product/service consumption
  - it should be mostly interactive, including
  other functionalities.
• Pointhigher return on lower investment

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Examples Pre-sales Value Management of a
Product/Service Consumption

• Ctrip.com integrated tremendous information via
  Information Technology. The travel notes
  currently posted in the Destination Guide and
  Internet Community categories of Ctrips website
  are much more abundant than any travel books.
  These notes now become important search resources
  for the travelers before departure.
• Ctrip.com initiated nationwide the hotel customer
  commentary function, which make the comments of
  previous customers of the hotels become a
  reference for others before making reservations.
  This effectively interacted among all 3 parties
  of Customers , Ctrip and Hotels.

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Examples Value Management of a Product/Service
Consumption During the Sales

• One-stop service model
• Relying on the platform based on the
  Information Technology, integrating the travel
  resources, and breaking up the regional and
  industrial barriers, Ctrip provides customers a
  one-stop travel service which includes hotel, air
  ticket, packaged tour, car rental reservations
  and visa service, et cetera.
• Various service channels
• Telephone reservation, website reservation or
  WEB2.0
• Reliable service quality
• Adopting 6 Sigma methodology for corporate
  governance, Ctrips service accuracy exceeds
  99.9.

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Examples Post-sales Value Management of a
Product/Service Consumption

• After the reservation is completed, Ctrip will
  send cell phone text message to the customer with
  hotel or flight information.
• Ctrip sends the weather information of the
  destination area some day before the customer is
  going to take the flight.
• Ctrip has Major Natural Disaster Travel
  Experience Security Fund.
• Ctrip forms customer comments group, customer
  feedback survey, online comments for itineraries,
  hotels and attractions.

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Service Value Chain Management in Different Phases

• Looking at it from end to end, for the pre-sales,
  during and post-sales phases of a hotel
  reservation, Ctrip is able to provide more
  value-added services than ordinary reservation
  center can, thus, Ctrip generates an adhesive
  force to improve customer loyalty.
• pre-sales hotel introduction, comments and 360
  degree real view pictures
• during sales tremendous amount of hotels to
  choose from, convenient and various reservation
  service options and reliable reservation services
• Post-sales Cell phone text message notice for
  successful reservation, free customer hotline

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Establish Service Value ChainService Value Chain
Determines a Companys Core competenciesService
Value Chain Management in Different
PhasesTechnology Development and Application
Elevate the Service Value Chain
23
Technology Development and Application Elevate
the Service Value Chain

• The development and application of technology,
  especially the revolutionary progress of the
  Information Technology during the last several
  years, made an immense contribution to the
  Service Value Chain for the Chinese Travel
  Industry.

• Innovation and application of internet technology
• Scientific management tools

• It is interactive.
• It is enabling.
• It is an experience.

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Technology Elevates the Service Value Chain

• The utilization of internet technology is a
  common practice for Service Value Chain
  elevation. Ctrip.com organically combined the
  internet technology and traditional travel
  services to provide value-added services to our
  customers.
• hotel comments and 360 degree real view pictures
• transparent travel itineraries and huge amount of
  travel notes
• online reservation and trading

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Scientific Management Tools Elevate the Service
Value Chain

• Contemporary Service-Oriented Business
  continuously improves procedures to evolve the
  service, utilizing corresponding scientific
  management tools.
• CEM Customer Experience Management
• CKM Corporate Knowledge Management
• CRM Customer Relationship Management
• Tools and methodologies for other products'
  quality management and project management
• PointService is not only something intangible,
  interactive between the subject and the object
  and may expire, it is also a contemporary
  industry, which is manageable in the sense of
  expectation value, is quantifiable and with
  trackable result if scientific methods are
  applied.

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Building Service Value Chain in the Chinese
Travel Industry through Technology
Innovation????????
??!