An e-ticketing Service Innovation based on the Service-Dominant Logic: The Case of Accuvally Inc.

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1 Jeffrey C. F. Tai, Kai Wang, Chia-Chen Wang, & Cheng-Kiang Farn An e-ticketing Service Innovation based on the Service-Dominant Logic: The Case of Accuvally Inc. (Received Sep 15, 2012; First Revision Dec 17, 2012; Second Revision Feb 1, 2012; Accepted Mar 17, 2013) Teaching Case (A) 1 One day in 2005, Benjamin Lo, CEO of Accuvally Inc., finally received the long-waited mailed package that carried the admission tickets for Expo 2005 Aichi in Japan. Although Benjamin had already finished online ticket purchasing several weeks ago, he had to wait until the event organizer delivered the RFID tickets through registered airmail. What s even worse is that he might suffer the loss of ticket costs plus five hundred NT dollars for the postage, should the tickets had gotten lost during the delivery process. Being frustrated by the inconvenience and the risk of buying physical tickets, Benjamin began to seek opportunities for developing e-ticketing solutions that can get rid of the limitations imposed by bundling ticket information with physical carriers. Accuvally Inc. Accuvally Inc. is a startup company founded in The major founding members were old friends who had made up their minds to start a business when they were college students. Assisted by the Center of Innovative Incubator NTHU, Accuvally Inc. started to compete in various contests since It has won several awards in Taiwan and China during 2009 and 2012, allowing it to accumulate reputation and gain attraction in the media. In 2012, several venture capitalists invested Accuvally and further strengthened its financial base. Accupass, the e-ticketing service developed by Accuvally Inc., began its operations since June, As of March, 2012, Accupass has served more than twelve thousand events. Accuvally Inc. also expanded its head count to over ten employees. The Ticketing Service Market in Taiwan Taiwanese ticketing service market continues expanding along with the prosperity of artistic, cultural, and recreational activity market. It is estimated that the annual market size of concert events amounts to three to five billion NT dollars. Traditionally, consumers have to pur- 1Jeffrey C.F. Tai is Assistant Professor of Department of Information Management, National Chiayi University. Kai Wang is Assistant Professor of Department of Information Management, National University of Kaohsiung. kwang@nuk.edu.tw Chia-Chen Wang is Assistant Professor of Department of Information Management, Aletheia University. Cheng-Kiang Farn is Assistant Professor of Department of Information Management, National Central University. chase tickets from event organizers or their ticketing partners. In the past ten years, however, new ticketing services that aim at improving efficiency and convenience of the ticketing process have emerged. Generally speaking, there are four types of ticketing channels in Taiwan, namely, over-the-counter, ticketing machine, online ticketing, and mobile ticketing. With the exception of mobile ticketing, ticket vendors sell physical tickets to consumers. Traditionally, both vendors and consumers have to spend extra costs to distribute/acquire tickets because of the physical form of tickets. This burden stimulates the emergence of the ticketing process innovation that allows consumers to acquire tickets in convenience stores after placing and confirming orders in other channels. Despite the convenience, consumers still need to acquire and manage the physical tickets. On the vendor side, producing and distributing tickets also remain unavoidable burden to them. Therefore, virtualization of ticket seems to be the next step for ticketing innovation. The Challenge for Accuvally Inc.: Innovation on eticket or eticketing? In a brainstorming session in Accuvally Inc., the attendants agreed on developing e-ticket solutions based on smartphone. However, they were still unsure about the strategy for developing practicable and innovative solutions. During the session, the attendants began by discussing how to store and transmit ticket information in and out of a smartphone. The focus thus was placed on technical solutions that enable smartphone as a carrier of e-tickets. However, this discussion did not last too long when someone questioned the economic feasibility of mobile e-tickets. As Benjamin put it: We should not think of e-tickets as a product that is going to replace paper tickets, tokens, or magnetic cards. This will simply limit our sight to efficiency and cost reduction issues that might be not persuasive enough to changing customers ticketing behavior. Alternatively, we might want to think of e-ticket as a service. As such, we may be able to identify new values of e-tickets that customers truly appreciate. Management Review Vol. 32 (Apr 2013),

2 Following this lead, the attendants broadened their discussions and touched the issues covering: Targeted customer for mobile e-ticketing services? The operating model of mobile e-ticketing services? The services offered by mobile e-ticketing business? The role of Accuvally Inc. in running mobile e-ticketing business? Potential revenue streams of mobile e-ticketing services? Teaching Case (B) Case B begins with another session aiming at addressing the issues raised above. The business plan for Accupass, Accuvally s mobile e-ticketing service, is summarized as follows. E-Ticketing technology Identification: QR Code Delivery: /SMS/MMS Targeted customers Consumers who possess smartphone or mobile devices with Internet access Small event organizers focusing on niche activities (e.g., artistic and cultural exhibitions) Event organizers who require full-featured services Operating model of Accupass Consumer: Accupass App for ticketing activities Event organizer: Accupass Portal for ticketing business Services offered by Accupass Consumer: Event listing, event subscription, ticket purchasing, payment, ticket management, check-in Event organizer: Event registration, ticket cataloging/pricing/sales/ delivery/validation, real-time entrance statistics, sales data interchange Accuvally Inc. s role: Solution provider of e-ticketing services and e-commerce service provider Revenue streams Commission Leasing fee Advertising fee Future Development of Accupass Even though Accuvally Inc. came out with a business plan for Accupass, Benjamin felt that there exists tremendous business opportunities that have yet to be exploited. He said: Our plan still focuses on improving efficiencies of the ticketing process so far. As I have said, this is insufficient to persuade customers to use our services. However, we own transaction data and this is going to be a valuable asset that we can exploit for developing more innovative services Case Features Teaching Note This case aims to help students to analyze how Accuvally Inc. innovates on e-ticketing. The case can be used in courses such as e-commerce, management information systems, and technology and innovation management. In order to situate students in what Accuvally Inc. encountered first and then to facilitate them to figure out possible solutions, this case is designed to consist of two mini-cases. Case A presents (1) the background of Accuvally Inc., (2) the Taiwanese ticketing service market, and (3) an initial discussion about the value proposition, the design logic (product vs. service), the targeted customer segment, and the sales channel of the e-ticket product to be developed by Accuvally Inc. Case B illustrates how Accuvally Inc. responded to these issues and provides additional information about the firm s core activities, critical resources, key partners, and revenue model for operating Accupass. Drawing on the case design principle, we suggest the following procedures to enhance the effectiveness of class discussion. Ask students to subscribe to Accupass service ( and give it a try before class. This would make them more aware of the subjects discussed in this case. Instruct students to search and read some materials about business model canvas before class. Developed by Osterwalder and Pigneur (2010), the framework can facilitate students in analyzing the business model of Accuvally Inc. during class discussion. Background Information: Business Model Canvas A business model describes how a firm creates, delivers, and captures value. It illustrates the core aspects of how a firm runs its business. In this case, we suggest business model canvas to be an appropriate tool for representing the business model adopted by a firm. It covers four major areas customer, offering, infrastructure, and financial viability, which can be disaggregated into nine building blocks (see Figure 1). The following describes each of the blocks. 1. Customer Customer Segments Customers can be segmented based on their needs and attributes. A firm needs to identify specific customer segments that it tries to satisfy in order to provide appropriate products/services and ensure its competitiveness. 190 Management Review, April 2013

3 Channels Channels are the contact points where a firm reaches its customers. A firm needs to deliver its products or services through its own channel or partners channels, so that customers can really experience the value propositions it claims. Customer Relationship A firm needs to identify its relationship with the targeted customer in order to ensure the success of its business. Typical forms of customer relationship include personal assistance, dedicated assistance, self-service, and communities etc. 2. Offering Value Proposition Value proposition depicts customer demand that is to be satisfied by a firm through product or service offerings. Typically, value propositions include cost reduction, performance, customization, convenience, etc. 3. Infrastructure Key Activities Key activities are the most important activities that a firm executes in order to fulfill its value propositions. Depending on the value propositions, there can be distinct activity configurations of value chain, value shop, and value network, which are constituted by different sets of primary activities and support activities. Key Resources Key resources are the critical assets that a firm relies upon to execute key activities for realizing its value propositions. Key resources may be either tangible or intangible. Examples include physical resources, human capital, intellectual properties, and financial resources. Partnership Network Partnership network allows a firm to acquire the required resources, optimize its activities, and reduce the risks of its business model. It can be manifested in various forms, such as buyer-seller relationships, joint ventures, strategic alliances, etc. 4. Financial Viability Cost Structure Cost structure can influence the cost behaviors of a firm s operations. Typical features of cost structure include fixed costs, variable costs, economies of scale, and economies of scope. Based on the cost structure of a business model, a firm needs to adopt either cost-driven or value-driven strategy to be competitive. Revenue Streams Revenue streams describe the means which a firm utilizes to acquire revenues from the value propositions delivered to its targeted customers. Typical revenue streams include asset sale, lending fee, usage fee, subscription fee, license fee, advertising fee, etc. Questions for Discussion Six questions are provided to assist the teacher to lead discussion in the class. The first two questions are for Case A, and the rest are for Case B. A-1. What are your selection criteria to utilize a ticketing channel? A-2. Please analyze whether or not QR code-based tickets satisfy the identified criteria in the previous question. B-1. Is Accupass an innovation based on the goods-dominant logic or an innovation based on the service-dominant logic? Please discuss. B-2. Please specify the dimensions of innovation in Accupass. B-3. Please discuss the co-opetition relationships between Accuvally Inc. and other ticketing vendors. B-4. Please discuss the possible value-added services or applications that can be extended from Accupass. REFERENCES Osterwalder, Alexander and Yves Pigneur (2010), Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers, Hoboken: John Wiley & Sons Inc. Partnership Network Figure 1 Business Model Canvas Key Activities Key Resources Value Propositions Customer Relationships Channels Customer Segments Cost Structure Source: Osterwalder and Pigneur (2010) Revenue Stream Accuvally's e-ticketing Innovation 191

4 Teaching Plan Suggestion Time Topic Key Points 5 min 5 min Sharing individual s ticket purchasing experiences Comparison of ticket purchasing channels 5 min Comparison of ticket forms 10 min The value of Accupass Market positioning of Accupass Service provisioning of Accupass Extended application of Accupass Financial structure of Accuvally 5 min Concluding remarks [Occasion, channel, ticket forms] 1. HSR, over-the-counter, paper-based 2. MRT, ticket machine, magnetic card [Comparison of ticketing channels] 1. Cost 2. Convenience 3. Operability 4. Risk 5. [Comparison of ticket forms] 1. RFID-based 2. QR code-based 3. Paper-based 4. In what occasions do consumers purchase tickets? What are the channels for purchasing tickets? What are the typical forms of tickets? Do the students possess the experiences of purchasing non-physical tickets? What are the merits and limitations of the identified channels? What are the appropriate situations to adopt each of the identified channels? How do the students select the ticket purchasing channels? What are the merits and limitations of the identified ticket forms? What are the appropriate situations to adopt each of the identified ticket forms? Why Accupass is attractive to consumers? What are the value propositions of Accupass to event organizers? What is the targeted market segment of Accupass? How does Accupass manage its customer relationship? How does Accupass interact with customers? What are Accuvally s core activities? What are the resources Accuvally needs to develop and operate Accupass? Who are the key partners Accuvally needs to develop and operate Accupass? What are the value-added services or applications that Accupass can incorporate in the future? In addition to consumers and event organizers, who else are possible customers of Accupass? What is the cost structure of Accuvally to operate Accupass? What is Accuvally s current revenue model? What is Accuvally s alternative revenue model that can be developed in the future? Board Plan Suggestion [Service value positioning] Consumer 1. Convenience businessmen 2. Innovation techies Event organizers 1. Economic small vendors 2. Specialties specialty exhibitions [Service provisioning] 1. Core competences 2. Critical resources 3. Strategic partners [Revenue model] Current 1. Usage usage fees 2. Ticket sales sales commission Potential (consumer-side) 1. Value-added services surcharge 2. Potential (Enterprise-side) 1. Integrated marketing service fees or revenue splits 2. Sales cooperation with counterpart service fees or revenue splits [Cost structure] 1. Fixed costs 2. Variant costs 192 Management Review, April 2013

5 Management Review Vol. 32 (Apr 2013),