Durango Gravel

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Gravel Rock Products Business Plan

Strategy and Implementation Summary

Durango Gravel, Inc.'s strategy is as follows:

  1. Add an asphalt plant as quickly as possible to penetrate the asphalt market.
  2. Continue to expand gravel sales.
  3. Continue our uniquely designed service for those customers with their own delivery trucks.
  4. Continue the establishment of long-term, mutually-beneficial relationships with commercial accounts.
  5. Continue our revolutionary program to cut delivery costs for municipalities and industry end-users.
  6. Aggressively market our "Consumer-Oriented" focus.

We intend to maximize product sales through aggressive marketing, penetrate the asphalt market, and increase our targeted marketing efforts.

5.1 Strategy Pyramid

Our main strategy at Durango Gravel, Inc. is to position ourselves at the top of the quality scale, featuring our combination of fine quality products and the best customer service in the region. 

We are committed to communicating our "Quality" position to the market.  Programs are mainly those listed in the Milestones Table, including the continued acquisition of public-sector accounts.

5.2 Value Proposition

We offer our target customer, who cares about personal service, as well as product quality, a vendor who acts as a strategic ally, with the highest quality asphalt and gravel products at a premium price that reflects the value of reassurance that systems will work.

5.3 Marketing Strategy

The marketing strategy is the core of the main strategy, and is multi-faceted:

  1. Penetrate the asphalt market.
  2. Emphasize personal service and support.
  3. Foster a long-term relationship business.
  4. Focus on the public-sector, major contractor and high-end homeowner as key target markets.
  5. Induce more companies to utilize our revolutionary delivery and loading strategies.

5.3.1 Pricing Strategy

With regard to products carried by our competitors, our pricing strategy will be to either match their prices, or to be marginally lower. We expect that our superior service will be a major factor.

5.4 Competitive Edge

Our competitive edge is our quality product, location, emphasis on customer service, and our long-term availability of products.

5.5 Sales Strategy

We need to sell our company, not just the products. We have to sell our service and support.

The Yearly Total Sales chart summarizes our ambitious sales forecast. We expect sales to increase from $250,000 last year to approximately $2.7 million next year. The marketing strategy is the core of the main strategy, and is multi-faceted.

5.5.1 Sales Forecast

Sales forecasts are based on the following information:

  1. The acquisition of an asphalt plant, in place by April, 2001.
  2. A minimum 45.5K ton asphalt sales in year one.
  3. Our gravel sales total reflects 45.5K tons "sold" to our asphalt plant.
Sales Forecast
2001 2002 2003
Unit Sales
Asphalt 45,500 61,000 77,000
Crusher Fines - for Asphalt 18,200 24,400 30,800
3/4 in. ABC - for Asphalt 18,200 24,400 30,800
1/2 in. Screened Rock - for Asphalt 9,100 12,200 15,400
3 in. ABC 23,800 25,000 26,500
3/4 in. ABC 31,200 33,000 35,000
Other Screened Rock 10,000 11,000 12,500
Sand 10,500 12,500 15,000
Cobble 6,100 6,500 7,000
Boulders 2,100 2,300 2,500
Topsoil 6,500 7,000 7,500
Other Dirt Products 10,000 11,000 12,000
Total Unit Sales 191,200 230,300 272,000
Unit Prices 2001 2002 2003
Asphalt $36.00 $38.00 $40.00
Crusher Fines - for Asphalt $10.50 $11.25 $12.00
3/4 in. ABC - for Asphalt $5.50 $5.75 $6.00
1/2 in. Screened Rock - for Asphalt $8.00 $8.40 $8.75
3 in. ABC $4.50 $4.65 $4.90
3/4 in. ABC $5.50 $5.75 $5.90
Other Screened Rock $9.00 $9.50 $10.00
Sand $10.00 $11.00 $12.00
Cobble $13.00 $14.00 $15.00
Boulders $9.00 $9.50 $10.00
Topsoil $15.00 $15.50 $16.00
Other Dirt Products $2.50 $2.65 $2.80
Sales
Asphalt $1,638,000 $2,318,000 $3,080,000
Crusher Fines - for Asphalt $191,100 $274,500 $369,600
3/4 in. ABC - for Asphalt $100,100 $140,300 $184,800
1/2 in. Screened Rock - for Asphalt $72,800 $102,480 $134,750
3 in. ABC $107,100 $116,250 $129,850
3/4 in. ABC $171,600 $189,750 $206,500
Other Screened Rock $90,000 $104,500 $125,000
Sand $105,000 $137,500 $180,000
Cobble $79,300 $91,000 $105,000
Boulders $18,900 $21,850 $25,000
Topsoil $97,500 $108,500 $120,000
Other Dirt Products $25,000 $29,150 $33,600
Total Sales $2,696,400 $3,633,780 $4,694,100
Direct Unit Costs 2001 2002 2003
Asphalt $0.00 $0.00 $0.00
Crusher Fines - for Asphalt $5.50 $5.50 $5.50
3/4 in. ABC - for Asphalt $10.50 $10.50 $10.50
1/2 in. Screened Rock - for Asphalt $8.00 $8.00 $8.00
3 in. ABC $0.00 $0.00 $0.00
3/4 in. ABC $0.00 $0.00 $0.00
Other Screened Rock $0.00 $0.00 $0.00
Sand $0.00 $0.00 $0.00
Cobble $0.00 $0.00 $0.00
Boulders $0.00 $0.00 $0.00
Topsoil $0.00 $0.00 $0.00
Other Dirt Products $0.00 $0.00 $0.00
Direct Cost of Sales
Asphalt $0 $0 $0
Crusher Fines - for Asphalt $100,100 $134,200 $169,400
3/4 in. ABC - for Asphalt $191,100 $256,200 $323,400
1/2 in. Screened Rock - for Asphalt $72,800 $97,600 $123,200
3 in. ABC $0 $0 $0
3/4 in. ABC $0 $0 $0
Other Screened Rock $0 $0 $0
Sand $0 $0 $0
Cobble $0 $0 $0
Boulders $0 $0 $0
Topsoil $0 $0 $0
Other Dirt Products $0 $0 $0
Subtotal Direct Cost of Sales $364,000 $488,000 $616,000

5.6 Milestones

The accompanying table lists important program milestones, with dates and managers in charge, and budgets for each. The milestone schedule indicates our emphasis on planning for implementation.

Milestones
Milestone Start Date End Date Budget Manager Department
Asphalt Plant 1/1/2001 4/1/2001 $500 McCarty Admin.
State Gravel Awards 1/1/2001 5/1/2001 $0 Mazur Admin.
County Asphalt Awards 1/1/2001 6/1/2001 $0 Hughes S & M
Add Five Major Contractors to Customers 1/1/2001 7/1/2001 $500 McCarty Admin.
Reputation and Name Recognition 1/1/2001 12/31/2001 $1,000 Mazur Admin.
Totals $2,000