What s Green About It?

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1 Housing 2010: What s Green About It? Jerry Yudelson Yudelson Associates November 2009

2 The 2010 Green Homes Market Obviously a very depressed housing market! But green homes are selling Why? 70% of homebuyers would buy a green home 78% with less than median income say the same Green home retrofit market just getting started Great opportunity for green products

3 Trends Accelerating Green Homes Uncertainty about energy prices; local and federal incentives Increasing number of successful green homes and developments Growing evidence for the business case benefits of green homes for builders Sustained actions by local and state governments to promote efficient buildings (more than 100 cities mandate and 20 states) City regulations beginning to require green homes from the private sector Designers and builders are learning how to build green on a budget Major new push by NAHB, USGBC, government and others for +50% energyefficient homes Buyers responding to the ecofriendly messages Growing gpush for net-zero carbon emissions coming from Europe

4 More Favorable Trends U.S.: Obama focus Renewable energy Energy efficiency Green jobs Solid certifications in the marketplace NAHB US Green Building Council

5 Barriers to Going Green Issue Percent Agreeing Confusion over green standards 59% Increased costs 57% Need to educate cities 47% Finding the right products takes longer 45% Specifying the right products takes longer 38% Need to use new/specialty subs 24% GreenBuilder, November 2008

13 : 2009: LEED Growth Accelerates! 2005 to 2006: 50% cum. growth in new LEED projects 2006 to 2007: +75% 2007 to 2008: +80% 2008 to 2009: +100% More than 3,300 LEED certified buildings Nearly 3,000 LEED certified homes 18,000 registered 7000 new in 2009 Est. 100,000 ENERGY STAR homes in 2009 Galleries at Turney, Phoenix

14 Greening Existing Homes: Next Big Challenge Need to green existing building stock Some existing homes pursuing LEED Greening existing homes is going to be huge market Good market for green products Requires 3 rd -party certification

15 What s a Green Product? Source of product New material Recycled Sustainability of product Carbon footprint Location of manufacture Within 500 miles Certification body Independent of maker Reputation Other attributes Cradle to cradle Toxicity of ngredients

16 Green Product Certifications Scientific Certification Systems (SCS) Sustainable Choice Green Seal Environmental Choice Eco-logo (Canadian) Cradle to Cradle (C2C) SMaRT Consensus Sustainable Product Standards Institute for Market Transformation to Sustainability Building Green Green Spec Directory Home Depot EcoOptions Catalog listing Green Format (CSI) Standard reporting format Pharos Project Healthy Building Network

17 Ceramic Tile as a Green Product Tile is an inherently low-toxic, waterproof, durable finish material for flooring, walls, and other applications. While tile is somewhat energy-intensive to manufacture, the materials involved are readily available and mined with fairly low impact. Products may contain pre-consumer or post-consumer recycled content. --Green Spec Directory,

18 Green Home Certifications NAHB LEED Environments for Living (GE/Masco) ENERGY STAR (Energy/IAQ only) Dozens of local oa programs poga Southeast Northwest California i Electric utility programs (mostly energy-related)

19 Ease of Use by Builders Program Easy to Use Difficult to Use ENERGY STAR 69% 11% NAHB 43% 13% Manufacturer-led 41% 12% Utility company 41% 18% LEED 27% 43% Local programs 27% 16% Source: GreenBuilder, November 2008

20 What Do Buyers Want? Most highly requested features by home buyers More insulation: 185 Instant tankless water heater: 18% Energy Star appliances: 13% Air sealing/tight construction: 11% Insulated foundation walls & floor: 10% Energy Star HVAC: 8% Water-efficient plumbing: 8% Insulated concrete forms: 8% Energy Star windows: 8% SIPs: 6% Energy Star exterior doors: 6% Energy Star lighting: 5% Source: McGraw-Hill, The Green Home Builder,, 2008

21 Where is the Demand? Green residential market 5x increase, x increase % of builders will be dedicated to green in 2009 Up from 58% in 2008, 32% in 2007 Greatest percent demand (27%) is in $50K-$74K range 30% of demand is in lower income brackets Key drivers: cost savings and health benefits Associate green with quality construction/living Source: McGraw-Hill presentation, 2008 IBS

22 LEED for Homes There are no LEED-approved green products No single product gets a LEED point Some products may contribute to a LEED point if their attributes are well documented Recycled content Locally extracted and manufactured (500 miles) Some manufacturers may also try to claim: Energy efficient production (3 rd party documented) methods Carbon footprint reporting (to 3 rd party) BUT total cost of CT must be significant ifi in overall project

23 NAHB Green Approved Products Products for which the manufacturer has received a Certificate from the NAHB Research Center and the right to use the NAHB Research Center Green Approved mark are products that the Research Center has approved as being eligible to contribute points toward certification of a building under the National Green Building Standard. Such products, when appropriately used, enable builders to earn points toward certification of the building. The NAHB Research Center Green Approved mark is intended to assist builders, designers, and specifiers in identifying products that t can contribute t points toward building certification.

24 How Do You Capitalize? Recognize the opportunities Reconfigure your strategic plan Get firm-wide buy in to new direction Differentiate your service offerings Execute your opportunities New Town Builders, Denver

25 Five Ways to Market Green Products Differentiate the offering Become #1 in something Name it and claim it Find out how your customers make money Build a green brand

26 Idea One: Differentiate your offering Some good at this Stand for something important to your customers Need high level of communication skills & high levels of performance Only your parents love you unconditionally Differentiation needs to permeate the company s activities Everyone needs to talk the green talk Walk the green walk Differentiation is the practice of finding a difference that makes a difference, to someone who matters, and then communicating it to them persuasively. -- Jerry Yudelson

27 Positioning Positioning occurs in the mind of the buyer Segmentation & targeting yield target customer Positioning lets target buyer know you Must be in dimensions target customer cares about Integrate with all marketing communications

28 Strategic Positioning The best (Accenture, KPMG) Best value (Hyundai) Lowest cost (Southwest) Innovative (Boeing) Product-focused (P&G) Target segment (Gerber in baby food) Category killer (Oracle) Product attributes (Michelin) Product-line scope (Amazon) Organizational (H-P) Emotional (MTV) Self-expressive (Benetton) User experience (Nike, Starbucks) Brand personality (Harley) Competitive position (Hertz) Top quality in category (Toyota) Technology leader (BMW)

29 Positioning Positioning occurs in the mind of the buyer Segmentation and targeting yield target buyer Positioning lets target buyer know who you are Must be in dimensions target buyer cares about A good place for applying market research Must be integrated with all marketing communications i Branding Literature Web site Internal culture/training Speaking and writing

30 Positioning Attributes Market leader Third party certification or endorsement Types of materials used in product Energy efficiency of manufacturing process 100% green power Source of materials The more local, the better Less toxic glazes, etc. Most indoor air quality friendly

31 Idea Two: Become No. 1 in Some Aspect of Green Products! Reduce your carbon footprint Increase your use of renewable energy Reduce your energy use Increase recycled content Low-toxicity finishes

32 Idea Three: Name It and Claim It Find a signature green aspect or sustainable design aspect of your product that you can be the first to name Attractive to customers who have a hard time making decisions A form of differentiation Stand for something valuable to your customer!

Idea Four: How Do Your Customers Make Money?

materials contribute to a successful LEED

33 Idea Four: How Do Your Customers Make Money? How can tile made from recycled and local materials contribute to a successful LEED certification? How can the use of green tile help an architect or builder define their green brand better? Can the dealer develop a green brand itself? In this case, the tile is generic Customer buys from the dealer 30 The Bond, Sydney, Australia

34 Idea Five: Become a Brand What are the recognizable brands in green products? A brand is always a safe selection in a world of confusing green choices Don t have to be a world leader to be a brand As a brand, the client experience is critical How well do you manage it?

35 Looking Ahead: What Should You Do? Look past the ugly slowdown Rely on significant changes in buyer attitudes The Al Gore /Obama effect Keep figuring out how to do more with less Show buyers what to ask for Publicize i market successes Measure and communicate results, honestly Keep raising the goal posts

36 Triple Bottom Line

37 Greening Your Organization Buildings All green, new and existing Facilities Green power/sustainable actions Operations Carbon-neutral Environmental purchasing Products Incorporate green characteristics

38 The Future is Green! Sidney Crosby, Pittsburgh Penguins 2009 Stanley Cup Winners Skate to where the puck is headed, not to where it is now. What will the green products market look like in 2010? 2011? 2012? Go to market accordingly!

39 A Final Word An invasion of armies can be resisted, but not an idea whose time has come - Victor Hugo, Les Miserables author

40 THANK YOU!

2010 Yudelson Associates. Jerry Yudelson. Yudelson Associates March 2010

2010 Yudelson Associates. Jerry Yudelson. Yudelson Associates March 2010 2010 Yudelson Associates Jerry Yudelson Yudelson Associates March 2010 Take-Aways Triple Bottom Line Profit Financial return Marketing & PR Higher Productivity Planet Less carbon, waste and energy and