Hanamaru House: a standardised home for the ¥3–5m household (2009)

A product reasoned backwards from its price

Read only as an entry into the low-price segment, this decision is taken in the wrong order. What KI-Star settled first was not the product but the customer. It fixed a band — households earning ¥3m to ¥5m a year — placed a price of ¥8.7m for the house itself by working backwards from it, and prepared more than a hundred standard plans as the means of holding that price. Keeping the free-design brand KI Casa separate looks to have been for the same reason: not to chase customers at different prices with a single product.

For all that, the custom-build business was not, for its first several years, at a scale that could carry the company. Sales in the year to March 2016 were ¥4.6bn, down on the year before and nowhere near the ¥29.4bn of the subdivision business. The first franchise agreement came six years after launch, in May 2015. Even so, growing operating profit by 71.0% while holding unit volume was evidence that the way of building left profit behind even at a lowered price. That the later national expansion could take the shape of franchise first, subsidiary second appears to rest on this having been checked in advance.