W 1: The Life Of A Balloon And Its Bits

For more information about how hot-air balloons are marketed and the way the market is split, you may want to look at the explanation of marketing. This worksheet looks at the product life cycle of a balloon and its various component parts. For some detail about product life cycles you could also look at the marketing theories section.

A printable version of this worksheet is available for filling in answers.

Step 1 - How long will a balloon stay in the air?

This question will obviously be of intimate interest to a pilot, but as students of business studies we are more interested in how quickly we can sell a pilot a new balloon! The key to this is the product life cycle. Ballooning as a hobby began in the 1970s which was when Don Cameron set up in business as Cameron Balloons.

Using a graph that has "Time" on the x-axis and "Sales / profit (£)" on the y-axis, draw what you think the product life cycle for a standard hot-air balloon looks like. Mark on the following:

• A product life cycle for sales revenue
• A product life cycle for profit levels
• The years
• The point we are now at

Why do you think it is this shape?

What extension strategies could Cameron Balloons try to extend the product life cycle?

Step 2 - Which bits will fall off first?

However, a balloon is made up of many parts and it is too simplistic to analyse the balloon as a whole. It is more precise to look at each individual component. The main components, and the pace of development of them are as follows. Clicking on the icon next to each one will take you to the glossary, if you want a definition:

• Baskets - the pace of development of these is very slow. Traditional wooden baskets are still used as they absorb the shocks of landing the best. No modern material has matched it.
• Burners - developments in burner technology have been rapid. Improvements in burner output and design are fairly frequent and progressive.
• Envelopes - the changes in envelope design tend to be small and subtle. There can be changes in fabrics, durability and finish, but these are slight. An envelope will have a limited life and depends on the frequency the balloon is used.
• Artwork - the changes in artwork are frequent. Technology enables more and more sophisticated artwork to be put onto balloons and the techniques improve all the time.

Given this information, what shape do you think the product life cycles will have for each of these components? Try drawing them.

Step 3 - Fancy fliers!

One of Cameron Balloons major earners is also special shape balloons. These have a totally different purpose to the customer to an ordinary balloon. Ordinary balloons are there to be flown. Pilots may try to get sponsorship to help defray the cost of the balloon, but they nevertheless want to fly them. Special shape balloons tend to be there to be seen. Companies will use them for promotional materials, trade fairs, balloon shows and so on.

The complexity of special shape balloons has increased considerably in recent years and the shapes that have become possible with improved design are now much more sophisticated. So will the product life cycles of the two products differ? Draw the possible shapes of product life cycles for these two products.

Why do you think these will be the shapes?

Step 4 - The ballooning matrix (from Boston)?

Different product life cycles for different products means that the techniques for selling them also have to be different. It is therefore important for a company to have an idea of their whole product portfolio. One useful technique for doing this is the Boston Matrix. The Boston Matrix splits products into four different types:

• Stars - these are products that are in the growth phase of their product life cycle. They will have a high market share in an industry that is expanding fast.
• Cash cows - these are products that are in the mature phase of their product life cycle. They have a high market share in a mature market.
• Problem children - these are products that are not performing very well in a fast expanding market. If the company do not reverse this the product may turn into a dog.
• Dogs - these are products that are not doing well at all! They have a small share in a slow-growing market.

Try to put the following ballooning products into the appropriate categories in the table below. Put a tick to indicate the category.

PRODUCT	Star	Cash Cow	Problem Child	Dog
Cameron Balloons standard 'N' type balloon
Transatlantic / long-distance 'Roziere' balloons (similar to Richard Branson's)
A radical new burner that increases heat output considerably for the same amount of fuel
New titanium fuel tanks that save weight significantly, and enable more passengers to be carried
Two bladed inflator fans (given that most inflator fans are now three-bladed)

A more convenient way to represent these different categories of goods is on a matrix. On one axis of the grid we put the growth of the market - whether it is high or low and on the other axis we put the market share of the product - whether that is high or low. The result looks as below:

The firms products are all put into the appropriate categories. The firm can then check to see that they have an appropriate balance of products. It would be very dangerous, for example, for a firm to have too many cash cows with no rising stars. Too many dogs could also be a problem!!

On the blank Boston Matrix below, try to put the products above into their appropriate categories:

Now have a look at the Cameron balloons product range, and try to draw a Boston Matrix for all the products they produce. Try to include also:

• Small parts and spares
• Transatlantic balloons
• Airships and inflatables