How to succeed in the market for prefabricated houses

In line with the trends affecting manufacturing industries in general, the market for prefabricated houses is experiencing drastic change. Consumer preferences are shifting and decision-making is ever more internet-focused. The market is growing, but competition is simultaneously getting fiercer. In this complex environment some companies are growing and prospering, while others are struggling with declining sales and negative margins. What defines successful companies, and what could companies facing serious problems do to change their destiny?

A growing and developing market

According to a report by RTS the demand for turnkey houses is increasing in Finland. In fact, 2017 was the first year to date that turnkey houses formed a greater percentage of total deliveries than traditional element deliveries, marking a significant milestone in the development of the prefab house market. Furthermore, as the financial crisis years have receded, the market for prefab houses has begun to grow and this growth is expected to accelerate in the future.

Shifting consumer preferences

I have worked with a company offering prefab houses and done research on the market, as well as on the construction scene in Finland in general. We can see a distinct trend in terms of what consumers actually want. The key words are “readymade” and “simple”. Readymade as in turnkey, and simple regarding contracts and the supervision of the process. In short, consumers seem to want to minimize their own involvement and effort – they want to sign a contract and move in when the build is finished. Obviously, there are those who prefer traditional prefab houses that entail a level of involvement and work, but their prevalence is indisputably decreasing.

Emphasis on price and online sales channels

The prefab house market is not an exception when it comes to digital solutions. Consumers increasingly base their decision-making on information they find online, and Skype meetings are increasingly common. This has resulted, at least partly, in consumers putting out requests for tenders more frequently and expecting rapid responses which, in turn, has forced companies to differentiate and improve their internal processes. The problem is that differentiation has very little effect if the price isn’t right. Many argue that today’s typical prefab house buyer knows much less about the construction of houses than previous generations. Quality is indeed crucial, but why make it the focus of differentiation if it merely raises costs and prices, and consumers neither appreciate it nor understand it?

Accepting the changing circumstances

The answer is essentially quite simple – adapt or die. Companies have to acknowledge the changing circumstances and tailor their offering and services accordingly. Based on my experience and analysis, my tips for success are:

1) Focus on turnkey houses in growing geographical markets.
2) Maintain an adequate level of quality, but don’t overdo it.
3) Develop internet sales channels to simplify the intricate process of buying a prefab house.
4) Limit your product portfolio and standardize products in order to increase control and enable sourcing efficiency.

If you have comments on the above content, or relevant experience you would like to share, I would be happy to hear from you.