Explanation

Marketing a hot-air balloon is not like marketing a mass market consumer product. For one thing a balloon is expensive! To see how the cost of a balloon is broken down, you may want to have a look at the cost breakdown section. For another thing the market is a very choosy one. When making a large purchase of this nature clients will look at all the options very carefully. In fact 60-70% of the business of Cameron Balloons is return business - customers who have bought from them before and are upgrading. All of them will require close personal attention from the firm.

The market is not a clear one either - there are a number of different segments to the market. Some customers are private individuals for whom ballooning is a hobby. Some are semi-professional pilots who have been sponsored to fly their balloon and therefore have a large number of flying commitments each year. Some are professional operators who carry fare-paying passengers. Finally there are also the commercial customers who want special shape balloons. All of these customers are very particular about the product they are buying.

Balloon purchase is also very dependent on income levels. Because it is an expensive purchase it is more likely to be made when income levels are higher and growing - in a time of high economic growth. Demand for balloons is therefore income elastic.

INCOME ELASTICITY OF DEMAND

=

% change in quantity demanded % change in income

The higher the level of economic growth, the higher the growth in demand for balloons.

The nature of the market also means that advertising and many more conventional marketing techniques tend to be ineffective. There are only a small number of companies producing balloons and any prospective purchaser will tend to be aware of all of them. The most powerful marketing tool therefore tends to be "word of mouth". To market balloons therefore requires a subtle mix of techniques - product orientation, flexibility, a high level of technical knowledge, a good network of international agents and an intimate knowledge of the market. The rapid growth of Cameron Balloons in recent years is a testimony to the fact that they have got this subtle mix down to a tee!

The export market is a vital market to Cameron balloons. 75% of their output is exported and these are sold through agents and dealers. They have a worldwide network of these agents and much of the marketing departments time is spent liasing and communicating with these overseas dealers.

Cameron Balloons have around 8 competitors worldwide, though 3 or 4 of these are key global ones. There also tends to be a local manufacturer in each country who will command some of the market. However, Cameron Balloons are around twice the size of their nearest competitor. The main competition is:

• Lindstrand (UK) (though 65% owned by Canadians)
• Ultra Magic (Spain)
• Aerostar (US)
• Schroder (Germany)