Marketing Home Products

What sounds like a communicable disease just might help to drive the green building and quality-verses-quantity home building trends. “Biofilia” refers to why human beings function positively in environments we deem “comfortable” due to our evolutionary heritage. This has been studied extensively in landscape environments, but rarely in building architecture. It was a buzzword at this year’s KBIS, so maybe biofilia’s time has arrived – after all, it dovetails beautifully with green building because it addresses natural lighting, air flow, water distribution and indoor vegetation.

Current research has shown that with biofilic considerations, workplace productivity increases, worker absenteeism declines, students study better, retail sales are higher and hospital patients recover more quickly. This helps the green building cause because it “humanizes” the effort. Energy savings are one thing, but our homes are our castles and we want to feel secure and comfortable in our humble or not so humble abodes. Understanding and incorporating biofilia principles can help us to reach these goals.

A somewhat extreme look at the trend popped up recently in the April 2007 edition of Metropolis magazine. It featured several designer concepts and products including the “flow kitchen” by John Arndt that is described as “kitchen mini-ecology in a compact modular system.” This is a sink with counter space that includes a dish drying rack that drips water onto herbs and edible plants in earthenware jars. In addition, an inset bowl flips over to dump food scraps into a “worm composter” (with live earthworms!). This slides out for dumping the composted waste. Another featured product is the biofilic work pod that has curved, smooth white “enclosure” workspaces with plants growing on the outer surfaces, forming interior green plant corridors. Not your typical gray work cubicle!

A non-profit organization called The Rocky Mountain Institute is working to ensure biofilics are not overlooked in future green building plans. Their Built Environment Team has identified these attributes:

• the use of dynamic and diffuse daylight
• the ability to have frequent, spontaneous and repeated contact with nature throughout and between buildings
• the use of local, natural materials
• a connection between interior and exterior surfaces
• natural ventilation
• a direct physical connection to nature from interior spaces, and
• direct visual access to nature from interior spaces

As their literature states, “what has been often neglected by creators of low-impact “green” buildings is the need for spaces to be habitable.”

Occupants of built environments don’t want simply to work, play, eat, or sleep in a functional building. They want to be inspired, invigorated, comforted, and reassured by their surroundings.” Amen – biofilia is one science we can and should all understand.

There is one thing about the trough of business cycles – it kick-starts the Mother of Invention. One fascinating observation within the housing slow-down relates to builder-supplier relationships and how business creativity stabilizes and even moves an industry forward. Builders such as Lennar are understandably looking to their suppliers to reduce their costs. As reported in California’s Orange County Register, they demanded that suppliers and contractors lower their prices from 5 to 20 percent or run the risk of being blacklisted from the bidding process for six months.

But price issues are superficial knee-jerk reactions that have long-term negative effects within the market, starting with the manufacturer and continuing down the supply chain to the builder. Instead of seeing their profit margins erode, suppliers and contractors have rightfully taken the challenge of focusing on value instead of price and it appears to be working.

This amounts to product differentiation and good old-fashioned selling. By offering alternatives that don’t undermine the existing value of supplier’s products and services, everyone wins. For example, when builders demanded rebates, LP Building Products directed them to its Tech Shield radiant barrier and the accompanying tax credits builders could earn by installing it. By having differentiation in the their product line, LP Building Products was able to provide an alternative with value that was transferable to the builder’s customers

In the April edition of the Hanley Wood Builder magazine (“Something More” by John Caulfield), it was reported that “what started out last year as a conversation solely about price reductions between Pulte Homes and Therma-Tru, the Maumee, Ohio-based millwork manufacturer, evolved into an exclusive three-year deal where Therma-Tru is supplying fiberglass entry doors to all of Pulte’s communities nationwide.” The brainstorming resulted in the development of “Tru-Defense”, a door system that can withstand 150 mile-per-hour winds, 8 inches of rainfall and impacts up to 35 miles per hour.

To explore the innovation/added-value connection further, our client KOMA Trimboard Products, went directly to the builder-remodeler market and asked them to take a flat piece of PVC trim and reinvent it. One builder in particular laminated pieces of trim and came up with new interior uses that enlightened the manufacturer to something very important in the marketplace. Companies like KOMA, LP Building Products and Therma-Tru are demonstrating that there is a better way to compete. Carl Hedlund, Therma-Tru’s president and CEO said “this industry is looking for leadership and you can either cut your expenses to the bone, or you can make something happen”. We couldn’t have said it better.

The continuing “Chicken Little” talk in some housing market circles has had implications on our economy. We want to highlight some housing market segments that are doing quite well according to the latest research.

“Residential Design and Build” is the only high-end custom home publication dedicated to both residential architects and construction professionals. They recently announced their 2007 Market Trends Survey in April and the results show that the custom home business is healthy. More than 90 percent of the survey respondents plan to hire more staff in the coming months or maintain the status quo. Also, the number of clients that pay cash, as opposed to financing a new home, has remained at a steady 33% over the past four years. This market segment is less affected by market fluctuations adding to market stability.

More telling, the percentage of architectural design firms, construction firms and design/build firms posting profit margins between 11 and 25 percent has increased steadily from 2004 and projected to continue through the rest of the year. There has also been no change in the number of homes designed or built by the readers of Residential Design and Build.

The remodeling market segment also appears to be holding its own based on reports from the field. It has almost doubled in size over the past decade, with the upper-end projects exhibiting the fastest growth. “Remodeling retained strength across most of the country compared to late last year,” said NAHB Remodelers Chairman Mike Nagel. “Certainly regional economies and housing markets play an important role, but overall we see maintenance of high levels of remodeling activity and solid future prospects.”

The boomers control unprecedented wealth and Home Depot’s latest research shows that they want to remain in their current homes with 65% planning to remodel in the near future. Boomers also put kitchen and bath projects at the top of their list and these remodeling projects are and will continue to be in full swing throughout the year.

Even the bears in the market have got to admit that things can’t be that bad with continued low interest rates on the horizon, conservative job growth, gains in household income, and high home ownership rates. The economy has not stalled out and panic is not warranted as some might hope to project.