CASPT 2015

Infotainment in Intercity Bus Services - Customer Require- ments Analysis and Conceptual Design

Joachim R. Daduna · André Richter · Stefan Voß

Abstract: This paper aims at identifying the customers’ requirements towards a possible infotainment system implemented in intercity buses in . Based on the customer requirements analysis a concept of an infotainment system is presented and assessed with regard to selected aspects and criteria. In addition, con- clusions are derived whether infotainment could be an advantage in competition and could increase customer loyalty. Methods of empirical research and direct question- ing with questionnaires were used to survey customers of intercity buses. Results reveal preferences towards an infotainment system in intercity buses such as internet connections via Wi-Fi, multimedia content from a digital media centre, real-time passenger information and information app content. The study offers an overview on necessary technical infrastructure for passengers’ usage and passengers’ ability to pay for infotainment services. Also bus manufacturers and providers get information on customer requirements and preferences towards an infotainment system as well as a financing and implementation concept to increase competitive advantages and customer satisfaction.

Keywords: Infotainment system · intercity bus · customer loyalty · mobile devices · public transport · multimedia

Joachim R. Daduna Berlin School of Economics and Law, Berlin, Germany E-mail: [email protected] André Richter University of Hamburg / Institute of Information Systems, Hamburg, Germany E-mail: [email protected] Stefan Voß University of Hamburg / Institute of Information Systems, Hamburg, Germany E-mail: [email protected]

1 Introduction

Following the deregulation of passenger transport in Germany from the 1st of Janu- ary 2013, the German market for intercity bus services has been opened for (private) providers. As a result the number of newly licensed bus providers (e.g. Mein- Fernbus, Flixbus or Postbus (the former ADAC Postbus)) increased, so that provid- ed bus lines, bus route frequencies and numbers of passengers increased rapidly within a year. Accordingly, the competition in intercity bus services increased and the market in Germany developed more and more dynamically (see BMVBS 2013, Statistisches Bundesamt 2014, BDO 2014a, BDO 2014b, Gipp 2013, Gipp 2014). Based on this development, bus manufacturer and also providers of intercity bus services were forced to figure out how they could stand the high competition and also could win market shares.

Figure 1: Market share of the five biggest intercity bus service providers (state: March 2014, freely adapted from Gipp 2014).

A possible differentiation to competitors for intercity bus service providers as well as bus manufacturers can be a more innovative and varied offer of IT- infrastructure and multimedia content. This can be provided by an implemented infotainment system in intercity buses. Bus manufacturers and intercity bus service providers have to ask themselves if there are changed and also new customer re- quirements towards technical equipment in intercity buses as well as preferences for in-bus entertainment. It is necessary to identify the relevance of infotainment ser- vices for customers and the preferred content and technology components. Based on a requirements analysis, a concept of a possible infotainment system was developed and assessed. Relevant aspects of multimedia content, IT-infrastructure, technology, costs, investments, usability, and legal restrictions are presented. Direct questionnaires in running intercity buses are used to survey the custom- ers’ requirements towards in-bus infotainment. The customers have been asked about their socio demographic background, their behaviour whereas the bus ride, their satisfaction and importance of already existent bus equipment and about their

satisfaction, importance, and willingness to pay for available and future in-bus info- tainment equipment (technical, information, and entertainment components).

2 Literature review

Apart from the existing research literature on infotainment systems in automobile and air traffic (see e.g. Meroth / Tolg 2008, Wietzke and Tran 2005, Liu et al. 2009) and product specifications of published company-specific products (see e.g. LHSys- tems 2013, LHSystems 2014b, Mobility 2014, Greyhound 2013, Greyhound 2014, OmdisNet 2014a) there is only a few published research literature of infotainment systems in intercity buses. Shi and Yang (2013) analyzed the public transport system in Taiwan. Towards infotainment solutions in buses they identified real-time information systems that give passengers dynamic bus and interchange information which can be accessed by personal electronic devices (e.g. smart phones). In addition, one bus provider offers Audio/Video On Demand (AVOD) bus entertainment with movies, games and mu- sic. Schwietermann and Fischer (2011) analyzed the differences in customer usage of mobile technology / devices between intercity buses, long-distance trains and inland flights in the United States. They reveal that nearly half of all customers use some kind of mobile technology (e.g. smart phones, tablets, notebooks) with video and audio functions as well as Wi-Fi service while travelling in an intercity bus. Customers use it for in-bus entertainment, work, and communication to make the travelling time more comfortable and attractive. In contrast to intercity buses there is lots of published literature and specifica- tions of infotainment solutions, especially in the area of the automotive and the aircraft industry like Audi, BMW and Mercedes-Benz with infotainment solutions MMI, iDrive and COMAND Online as well as Lufthansa and Emirates with solu- tions BoardConnect and ice (see Audi AG 2014, BMW 2014, Mercedes-Benz 2013, LHSystems 2014a and Emirates 2014). There is an infotainment solution which is already used by Postbus (in Germany) and Greyhound (in the United States of America). This is Velimo from Lufthansa Systems, a guest and multimedia platform which combines hardware, software and multimedia content. Customers can con- nect with their personal electronic devices via Wi-Fi to the server and use the mul- timedia content such as movies, music, e-books or passenger information while traveling in the intercity buses (see LHSystems 2013, LHSystems 2014b, Deutsche Post Mobility 2014, Greyhound 2013 and Greyhound 2014). Moreover, there are other infotainment systems e.g. OmdisNet from Omdis Media GmbH, which offers customers nearly the same functions, infrastructure and multimedia content (see OmdisNet 2014a). Furthermore, Wen et al. (2005) analyzed the customer loyalty in intercity bus service in Taiwan and identified important factors that affect customer loyalty di- rectly or indirectly. Nine hypotheses were developed to proof these factors. They

revealed that all hypotheses are confirmed and that the factors customer satisfaction and service quality have the most significant effect on customer loyalty in the con- text of intercity bus services. Shaaban and Khalil (2013) (for Qatar) as well as Poli- cani Freitas (2013) (for Brazil) assessed the quality of bus service and customer satisfaction. They also revealed that the service quality and the customer satisfaction are important factors for the customers’ reuse of bus transport and for making the intercity bus service more attractive.

3 Methodology

One of the main goals of this study is to determine the customer requirements and preferences for an in-bus infotainment system as a basis to develop a well assessed concept for possible implementation in intercity buses. On the one hand, customers’ requirements are evaluated for deriving specific functions and the necessary tech- nology. On the other hand customers’ current satisfaction / dissatisfaction to exist- ing bus characteristics and features are measured to identify deficiency and to im- prove overall service quality. Quality norms as e.g. DIN EN 13816 for the measurement of service quality in public transport companies are used to identify relevant and important quality crite- ria such as availability, accessibility, comfort or safety. These quality criteria are used to determine the necessary questions and items for the later questionnaire de- velopment (see Winter 2005 and Meier 2005). Also dimensions and characteristics of the tool SERVQUAL are adapted based on Parasuraman et al. (1988) and recog- nized to identify and to classify several questions and items for analyzing and as- sessing customers’ preferences and opinions for already existent in-bus equipment as well as features. Direct questionnaires in running intercity buses are used to sur- vey the customers’ requirements towards in-bus infotainment (see figure 2). The customers are asked about their socio-demographic background, their behaviour during the bus ride, their satisfaction and importance of already existing bus equip- ment and about their willingness to pay for available and future in-bus infotainment equipment (technical, information and entertainment components). Through these questions the latent factors satisfaction, dissatisfaction, im- portance and willingness to pay are measured. The questions are based on a five point Likert scale and ranged from “Very unimportant/uninteresting” (-2) to “Very important/interesting” (+2) and “Very unsatisfied” (-2) to “Very satisfied” (+2). Respondents were also asked about their willingness of future usage of an infotain- ment system with “Very improbable” (-2) to “Very probable” (+2) and their will- ingness to change the provider to get better service with “Would never change” (-2) to “Would always change” (+2).

Figure 2: Structure and content of the questionnaire

To validate the developed questionnaire for correct formulation as well as under- standing and to improve the (content) validity, the questionnaire was pretested by a selected group of ten people of all ages and employment. Most of them assessed the questionnaire as understanding and realizable within 15 to 20 minutes. The ques- tionnaire was distributed in intercity buses of the provider FlixBus to provide an authentic and realistic field of study. Respondents were bus users at tours with sev- eral starting times from locations in northern and eastern Germany between Ham- burg, Hanover and Berlin. The results from the data collection in March 2014 are 178 filled questionnaires, which represent intercity bus users and are evaluated regarding possible subgroups. Further quantity analysis shows validity, objectivity, and reliability (Cronbachs

Alpha of proofed questions: 0.722 ≥ X ≤ 0.931) of the collected data as well as significant correlations (p < 0.01) within the total quantity.

4 Results

Socio-demographic analysis shows that there are 40 % male and 60 % female cus- tomers and that 75 % of all respondents are between 18 and 35, so that they are the main bus user population. Most of them spend their time while taking the ride with activities such as reading, using internet services, listening to music, working or communicating with their personal electronic devices. 94 % of all respondents use smart phones, 26 % notebooks and 12 % tablets. Most of them do not want fixed installed electronic devices like TV- or touch-screens in front of their seats, but for 80 % sockets at their seat are very important. This shows that the necessary custom- er infrastructure for infotainment usage is given. For 70 % of the users the technical equipment in intercity buses is important or very important, but only 45 % are satis- fied with the current equipment, which indicates existing deficits. The following infotainment services are desirable for the majority of customers: for 83 % national internet services via Wi-Fi is important, for about two-thirds in- ternational internet services via Wi-Fi and real-time passenger information are im- portant and of great interest. For half of them a digital entertainment or rather a digital media centre is important. As the multimedia content for entertainment for most of the customers’ movies, TV-series, TV-documentations, music, audio books, e-books, and digital magazines are important as well as passenger information (e.g. moving route information and arrival time) and (local) destination / tourist infor- mation (e.g. newspapers, location services, events or point of interest) (see Figure 3). The customers are also interested in an information app, which they could use to get information from their intercity bus provider before and after a trip. A great amount of the customers would be willing to pay for well working ser- vices and features. On average, they would pay 0.60 € for national internet service, 0.82 € for international internet service and 0.64 € for offered digital entertainment (see Figure 4). 70 % of all respondents would probably use an infotainment system in the intercity bus if offered. For 40 % of the intercity bus users an offered in-bus infotainment system could probably have an influence on the future choice of a provider. Nearly 50 % would probably even change to a comparable competitor if the technical equipment and the offered in-bus entertainment would be better. Profitability analysis revealed that a self-financing operation of an infotainment system could be reached by an increase of 0.25 € per ticket on a fully booked route. According to the payment model, addi- tional earnings are possible.

Figure 3: Mean values of customer importance for selected multimedia content

Figure 4: Total willingness to pay of customers for offered services in percentage terms

5 Conclusions

The results from this study show some interesting insights for intercity bus service providers as well as for bus manufacturers, especially at this time of rapid and dy- namical market development and hard competition. For instance, a bit less than half of all respondents are unsatisfied with the available in-bus IT equipment and appli- cations, but for more than two-thirds such offers are of importance. Thus, compa- nies could use these results and findings to improve service quality and as a result to improve the customers’ satisfaction and also to increase the loyalty as well as to generated competitive advantages. Moreover, it should also be pointed out that on the one hand satisfied customers have a greater willingness to continue the use of intercity bus services and on the other hand the risk of switching to a comparable competitor will be reduced significantly. Additional effects can be attained based on viral marketing because satisfied and loyal customers may spread positive recom- mendation, especially in their personal surroundings. For bus manufacturers the study provides very important information regarding an innovative in-bus design which meets much better the intercity bus service companies demand, so that they can improve their technological competence as well as their market position.

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