Archive for the 'Log homes industry' Category

Log home company segmentation

Monday, August 25th, 2008

Log home manufacturers aren’t only competing against each other, but also against other home manufacturers, which use different materials and building technologies. It is surprising to see huge differences in strategies that various log home manufacturers are using. Here’s a short example from Finland.

Of all the single houses that are built in Finland slightly less than 8% are log homes. To many this is surprisingly large share of newly-built single homes, but Finland does have long log building tradition and like elsewhere log homes are experiencing some kind of a renaissance.

It’s interesting to observe how companies are focusing on different niches, trying to carve big enough market share for themselves. Some log home companies focus on cabin production and don’t manufacture log homes. Some do everything, but in long term that doesn’t seem to bring good results. Some focus on exports while some remain domestic.

Honka is extremely strong in all kinds of vacation homes and cabins, as well as on several international markets. However, there are companies that sell more log homes in Finland’s domestic market. We can say that Honka is especially strong in vacation homes.

Mammuttihirsi is a log home manufacturer that has grabbed sizeable piece of total market in Finland, but it is not as strong on the vacation home market. Actually it is almost off the radar when we look at cabin side of the market.

As mentioned above, Honka is the king of vacation log homes and it is that on domestic and export markets. There are markets (eg. Slovenia), which Honka dominates with over 50% market share and that translates into fact of Honka being the biggest log home company in the world.

Right after Honka comes Kontio, which has grown steadily on all markets. Kontio has fared well in all product categories and markets. New contender behind these two giants is company called Finnlamelli, which supplies only glue-laminated logs and custom log homes. Finnlamelli’s strategy has paid off, because of their narrow focus, their quality is high and prices affordable - expect to see this company to close the market share gap to two biggest competitors.

Some companies provide anything you can think of. Very tiring strategy and only feasible for marketing companies that don’t actually manufacture everything they sell. Some companies only deliver round logs and some only glue-laminated straight-planed logs. It is evident that wider selection increases costs, because of more complicated production process. This is something that log home companies can’t afford in general, because log buildings are already considerably more expensive than e.g. element or stick-built buildings.

First I would check what companies deliver to my area and then I’d choose a company that can provide assembly and installation services. Only after these issues are settled, I would go into style and material. Fact remains that most log home manufacturers consider themselves as custom home makers so projects rarely stall because lack of manufacturing capabilities. No easy answers here, you see, companies are good in different things.

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