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Marketing Strategy of Cold Spring Granite Company Inc.

Marketing Strategy of Cold Spring Granite Company Inc.

Discuss Marketing Strategy of Cold Spring Granite Company Inc. within the Marketing Management forums, part of the PUBLISH / UPLOAD PROJECT OR DOWNLOAD REFERENCE PROJECT category; Cold Spring Granite is a quarrier of granite and natural stone in the United States.[1] More than 110 years ago, ...

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Marketing Strategy of Cold Spring Granite Company Inc.
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Marketing Strategy of Cold Spring Granite Company Inc. - December 15th, 2010

Cold Spring Granite is a quarrier of granite and natural stone in the United States.[1] More than 110 years ago, a single quarry and a stonecutter named Henry Nair Alexander started the family business which became known as Cold Spring Granite. Offering a complete line of granite and limestone, Cold Spring Granite serves the memorials market, the design and architectural market and distributes slabs for the residential market, industrial products, raw quarry blocks, and diamond tools.[2]



Statistics:
Private Company
Incorporated: 1920 as Rockville Granite Company
Employees: 1,250
Sales: $128 million (2003 est.)
NAIC: 327991 Cut Stone and Stone Products Manufacturing


Company Perspectives:
Henry Alexander brought to Minnesota the stone skills, heritage and work ethic that has become the company culture for Cold Spring Granite Company. These skills and attitudes have been passed down from generation to generation within the company as many employees represent second, third and fourth generations of loyal and dedicated granite craftsmen.


Key Dates:
1889: Rockville Granite Company is formed.
1898: Henry N. Alexander becomes sole owner.
1912: Son Patrick takes over management of company.
1920: Company incorporates.
1921: New plant in Cold Spring begins operations.
1924: Company is renamed after its new location.
1929: Beginning of economic depression marks transition from building projects to monument work.
1939: Company is hit hard by loss of men called off to war.
1945: John Alexander becomes president following the death of his brother Patrick.
1957: Company is chosen as granite supplier for Air Force Academy located in Colorado Springs.
1968: Third generation Alexander, Thomas, is named president.
1989: Company controls 30 percent of domestic market for granite.
1998: Cold Spring Granite celebrates its 100th anniversary.
2004: Company begins test marketing high-end product directly to public.


Company History:

Cold Spring Granite Company Inc. is one of the largest granite quarrying and fabrication operations in the world. The small-town business over the years earned the respect of architects and gained an international reputation on its ability to provide a complete array of services from mining and finishing to installation. The company offers products for commercial and memorialization applications, ranging from building facing and countertop slabs to flat markers and family mausoleums. The privately held company has been led by three generations of the Alexander family.

The Early Years in Rockville: 1880s-1910s

Henry Nair Alexander worked in the granite and slate quarries of his native Scotland alongside his father and brothers. In 1880, he and two of his brothers immigrated to the United States and cut stone in Portland, Maine. He returned to Scotland two years later in order to finish a contract for granite barns. While back home he met and married Maggie Milne.

The American granite industry started to develop west of Chicago just as the second half of the 19th century began. Alexander decided to follow other Scotsmen to the massive granite fields in central Minnesota. In 1889 he and seven other men working for the Breen and Young quarry struck out on their own to form the Rockville Granite Company. Their first big contract--eight large columns--was for the Minnesota State Capitol in St. Paul.

Alexander bought out his partners on September 29, 1898, and became sole owner of Rockville Granite Company. He then moved the business to a quarry location closer to the Great Northern Railroad right-of-way and began modernizing his equipment. He also purchased a farm in the Rockville area to help support his growing family. Carrying on the family tradition, Henry's sons started working in the quarry at a young age. A daughter received business training and took over the bookkeeping. In general, Alexander believed a family was a stabilizing influence on his workers, and that belief would come to influence the philosophy of the business, then and in the future.

Rockville Granite Company faced stiff competition when a larger concern, the Clark and McCormick Granite Company, set up shop in 1907 and began quarrying the gray granite which was so plentiful in the area. Alexander kept the business going with projects such as Chicago's Iroquois Theatre and the Minneapolis disposal system. When Henry became ill from pneumonia in 1912, 22-year-old Patrick Alexander, who had left home to work in quarries around the country and in Canada, came home and took over management of the company. Fourteen-year-old John Alexander also helped out at the plant, but their brother William Alexander continued to farm.

When Henry died in 1913, Maggie Alexander decided to try to sell the business to the Clark and McCormick quarry. Unable to get what she felt was a fair price she kept the business, and Patrick became the youngest granite company manager in the country. John, a high school student, helped on weekends, and William assisted with blacksmith work when needed. Maggie died in 1916, and Patrick and John became the owners of Rockville Granite Company, which was valued at about $6,000, including plant, equipment, and property.

John was intent on getting a college education, but that changed when Patrick was called to serve in World War I. John had to return home to help run the plant. By the end of the war the amount of work coming into the plant was on the rise, but business was good for the company's competitor, too. The Clark and McCormick Quarry had acquired practically all the gray granite outcroppings in the area to supply granite for the cathedral being built in St. Paul. Rockville Granite Company had to find a new site in order to keep running. John gave up his plans to return to college and helped Patrick look for a new location for the company.

The Move to Cold Spring: 1920s

The site of a burned down flour mill, just west of Rockville in Cold Spring, looked like a promising location. It was on a river with a dam for supplying power, and the town needed new businesses. The loss of the mill had cost jobs, and the other big employer, Cold Spring Brewing Company, was suffering because of Prohibition. Cold Spring banker Fred Stein and Cold Spring Brewing Company owner Ferdinand Peters recruited several other businessmen to help bring the quarry company to town.

On October 5, 1920, Rockville Granite Company was incorporated with Peters as president, Patrick Alexander as vice-president, John Alexander as secretary, and Fred Stein as treasurer. The mill purchase price was $30,000. The company made a $200,000 stock offering and quickly sold over 40 percent of that and then borrowed additional cash to finance the startup costs. The new plant began operation in the spring of 1921. The Alexander brothers, as managers of the newly incorporated company, searched for new granite outcroppings to supply material for the plant. The stone they found had a pink tinge and was used to supply their first major job, the Stearns County Court House in St. Cloud.

The Rockville Granite Company was now on solid financial ground, and the company could begin growing. A full-time draftsman and later drafting assistants were hired and concentrated on architectural projects. A sales force was formed and opened offices near large building construction sites in Minneapolis, Chicago, St. Louis, and Philadelphia. New equipment was purchased and quarry and plant operations were revamped to cut down waste and increase efficiency. By 1923 the company could retire its debts and pay interest on its stock. Well-established in its new location, with an expanded physical plant and about 75 full-time employees, the company was ready for a name change. In 1924 Rockville Granite Company became Cold Spring Granite Company.

Growth created its share of problems for Cold Spring Granite. The company, which had operated a union, or closed, shop for many years, was struck when a contract was made to deliver granite to an open shop on the West Coast. The labor movement was in its formative years and working to gain strength and momentum; a compromise which would have allowed Cold Spring to fill its contract could not be negotiated. The closed shop policy was ended, and about one-quarter of the men left the company. However, due to relatively high wages the vacancies were quickly filled. Many of the men hired then later moved to supervisory positions. Others who joined on at the time were to be the first in a line of family members stretching for several generations that worked for the company.

According to John Dominik, author of Cold Spring Granite: A History, the company found early success due to the experience of the employees and their ability to innovate. Men with expertise in the industry were drawn on board, and Patrick Alexander strove to introduce production techniques that enhanced their competitiveness. Together they adapted equipment from other heavy industries for use with granite and became leaders in the field.

The Depression and War Years: 1930s-40s

The economic depression of the 1930s dried up the architectural work Cold Spring Granite had depended on in its early years, and the company had to temporarily shut down. After resuming operations, the company responded by shifting to monument work and by becoming increasingly self-sufficient. Employees painstakingly built their own surfacing wheels, which were needed to finish the stone, and when the cost of the steel shot used in the cutting process rose dramatically, they made that, too.

During the Depression, John Alexander took over the management of monument sales. In order to keep the plant running in the winter months he offered incentives to monument dealers who placed off-season orders. Promotional materials with drawings and photographs of the monuments and mausoleums were also generated. After the economy improved and architectural work increased, monument sales continued to hold an important position in the company.

Transportation was a large part of the expense of granite production. Cold Spring Granite had persistent difficulties connected to delivery of its unwieldy product. Most shipments were made by rail: breakage and long delays were common. In the mid-1930s, a trucker who hauled the company's granite from the plant to the railroad proposed that finished granite could be shipped directly to work sites on semi-trailer trucks. Consequently, Cold Spring shifted away from rail to truck transportation, ending its dependence on railroad schedules and routes, cutting shipping costs, and lessening the risk of damage which occurred during the transfer of stone from truck to train to truck.

The company suffered an important loss in 1938 with the death of its president. Ferdinand Peters had guided the company through its incorporation and managed the financial aspects of Cold Spring Granite while the Alexanders concentrated on production. With Peters's death, Patrick Alexander once again headed the company his father had founded. He soon faced another crisis.

When the United States entered World War II architectural steel manufacturers diverted their efforts to military production: construction jobs became scarce. But Cold Spring Granite had the experience and equipment for handling large, heavy material. John Alexander pursued war contracts and then managed production. The plants were converted to handle steel instead of stone and manufactured--among other things--ships bottoms and hull sections. Men who had been quarriers learned to be welders.

With the end of the war came a flood of structural granite orders. But the quarries had been nearly idle for four years, and experienced men had been lost to the war. Cold Spring fell behind in production. To ease the burden the Royal Granite Company in St. Cloud was purchased. The monument end of the business also needed some attention, for consumer preferences had changed. Flat markers--which allowed for easier care of cemetery land and created a park-like look--had cut into the market. Ferdinand "Frosty" Peters, son of the late Cold Spring president, promoted a line of bronze markers anchored in granite, and a wholly owned subsidiary, Granit-Bronz, Inc., was established. During this time of change the company again lost its president when Patrick Alexander died in 1945 and was succeeded by his brother.

Time of Expansion: 1950s-70s

"John Alexander's tenure as president of Cold Spring Granite Company was marked by unprecedented expansion," wrote John Dominik. It was through those acquisitions that the company "became the largest granite concern in the world." Prior to World War II Cold Spring Granite had already obtained quarries that allowed it to supply a rich variety of colors to its market: "black" Canadian granite; South Dakota Ruby Red granite; and Minnesota Rainbow granite. During the war the company purchased the quarries situated in the original Rockville location. The postwar expansion began with Royal Granite and was followed by the purchase of the Texas Granite Company of Marble Falls; a Purple Crystal granite quarry near Rockville; a quarry and a small plant in Raymond, California; the Lake Placid Granite Company in New York; and still more quarries in Minnesota, South Dakota, California, and Canada. The quarries and plants purchased during the 1950s and 1960s benefited the company in terms of proximity to desirable market areas or job sites and with the added expertise of the new employees.

As the company expanded Cold Spring Granite won larger architectural contracts. In 1957, the company was chosen as granite supplier for the new Air Force Academy in Colorado Springs, Colorado. Rockville granite was used for fortress walls, building facing, walkway steps, and the plaza. The million-dollar project was the beginning of a push to convince architectural firms to use company granite in large construction projects.

Just as the combined talent of the Cold Spring crew had solved production problems in the past, they came together to meet the architectural challenges of the 1960s. New techniques were developed in order to apply granite to modern office towers such as the 54-story Bank of America building in San Francisco. After completing several skyscraper projects, the company shifted its focus to large plazas including those at the Atlanta International Headquarters of Coca-Cola Company, the Chicago Civic Center, and the Twenty State Street Mall in Boston.

Even though the architecture of the 1960s and 1970s was dominated by modernism--more large commercial buildings were faced with glass, metal, and precast concrete than with stone--Cold Spring grew. Between 1975 and 1980 sales increased by $5 million per year, topping $50 million in 1980. By the early 1980s builders had begun to move away from modernism and emphasized the color and tradition found in stone. Cold Spring Granite Company rode with that resurgence.

Third Generation of Alexander Family Leadership: 1980s to Mid-1990s

The leadership of Cold Spring Granite had passed on to a third generation by this time. Thomas Alexander, Patrick's middle son, had been named president in 1968. Like his father and uncle before him, his involvement in the company started at an early age, first with small jobs around the office and then work in the plant. An experienced pilot, Thomas nearly left the granite business, but his uncle, John Alexander, brought him on as his assistant. Through doing the company's production cost accounting Thomas became familiar with every aspect of the company, which enabled him to guide the development of new products and production methods.

In 1983 Patrick Alexander, the namesake of his uncle, became the fifth Alexander to lead the company. He had followed in their footsteps and learned the business from the ground up. He worked in the quarries and the pre-casting plant while still in high school. After graduating from St. Edward's College in Austin, Texas, he went on to the Marble Falls plant. Eventually Patrick took over supervision of operations at Raymond, Lake Placid, Texas, and Cold Spring Granite of Canada, Ltd.

The first five years of Patrick Alexander's term as president were marked by rapid growth. The number of employees increased from 700 to 1,700, annual revenues rose to more than $110 million, and the company spent $40 million for quarry and plant improvements. But it also was a time marked by uncertainty. In the mid-1980s the granite industry was hit by high building vacancy rates and apprehension about federal tax law revision: the result was a slowdown of office and apartment construction. Foreign competitors were also a concern for the American granite industry. Italy held 70 percent of the total structural granite market, compared with Cold Spring's 15 percent.

In 1987 Cold Spring along with two other American granite companies filed a suit with the International Trade Commission (ITC) against Italian and Spanish granite firms. They claimed that government subsidies were allowing the foreign companies to sell granite below cost. Patrick Alexander was quoted in the Star Tribune as saying that the Italian and Spanish firms "are slowly but surely driving otherwise competitive U.S. companies out of business." The companies were seeking penalty duties on foreign granite. Even though the commission initially found that there was a "reasonable indication" that U.S. granite firms were being hurt, ultimately it ruled against them.

Although the purchase of new granite and plant sites had slowed in the 1970s and 1980s, it had not ceased entirely. Cold Spring acquired Capitol Marble and Granite Company, Inc., in Granite Falls, Texas, in 1988. With Capitol's annual revenues of $20 million, the investment was expected to boost Cold Spring's sales to $130 million.

In 1989, Corporate Report Minnesota reported that Cold Spring Granite controlled 30 percent of the $500 million domestic market for granite, employed 1,900 workers, and operated 31 quarries. Structural granite still provided its greatest source of revenue, but one-third of its business came from tombstones and mausoleums, and another 10 percent from a new commercial line of highly polished granite tiles and countertops.

Cold Spring Granite laid off over 400 employees in 1991 in response to a severe downturn in the construction business. To help boost sales it introduced a line of unfinished granite slabs targeted for sale to international granite fabricators. Continued diversification resulted in a drop of architectural sales to about 28 percent of business by 1995. With a long history of successful adaptation to rapidly changing circumstances, a powerful legacy in itself, Cold Spring Granite appeared solidly positioned in the industry as it prepared to enter its second century in business.

Second Hundred Years: Late 1990s to 2004

The MonuWest facility, designed for memorial fabrications, opened in January 1997. The first phase of a new foundry was completed in 1998. International sales, a business begun in the late 1980s, continued its yearly rise. Cold Spring Granite was 100 years old and growing.

As 1999 wound down, Cold Spring Granite was set to begin delivery of stone for the national World War II Memorial. More than one million pounds of granite quarried from sites in Minnesota, South Dakota, North Carolina, and Canada would be fabricated and shipped to Washington, D.C., for the monument honoring soldiers involved in the Normandy invasion.

According to an April 2000 PR Newswire article, "no single company has contributed more raw and finished granite building material to the development of national memorials in the last century." Among the memorials Cold Spring Granite had worked to build were ones dedicated to Franklin Delano Roosevelt, the Vietnam and Korean wars, and the U.S.S. Indianapolis.

Despite the high visibility of such projects, it was the personal memorial which continued to help drive the company. Over time, too, the products had taken on color. In a departure from traditional neutral toned stone, in the 1970s colored granites began gaining greater acceptance and availability. "Cold Spring was one of the first companies to successfully market granite colors for use in memorials and grave markers," according to a November 2000 PR Newswire article. The colored granites were marketed under equally colorful names such as "Mountain Red" or "Lake Superior Green." The company also offered limited supply colors such as "Autumn Blaze," found in a Wisconsin quarry, and supplemented its own color line by materials brought in from other continents.

Historically innovative, Cold Spring Granite had set its sites on another goal, achieving heightened manufacturing standards. In 1996 the company earned ISO certification and began pumping millions into updating plants and equipment. In 1999 the company was re-certified for the ISO 9001standard for quality management and began bolstering continuous improvement efforts with lean manufacturing and time-based management techniques. Cold Spring Granite strove to not only increase productivity and flexibility but improve customer satisfaction.

The company's results in terms of its on-time performance challenged the industry. Chief Financial Officer Greg Flint told IIE Solutions: "A colleague of mine was flabbergasted that we were doing something so cutting edge and unique in a mature company and industry. I told him the same people that expect meals, pictures and oil changes in minutes order from us and that if we did not reduce our lead times we would be left by the wayside." The company's dedicated workforce contributed to the firm's success. In 2002, Cold Spring Granite employed around 1,230; more than 190 of them had 25 or more years of service to the company.

Private mausoleums, the stone tombs which largely fell out of fashion in the United States in the 1920s, were experiencing resurgence as the number of wealthy Americans grew. In 1985, only about 65 private mausoleums were constructed in North America. In 2002, the number had climbed to 1,300 and the next year 1,400, even while death rates remained relatively stable. Cold Spring Granite, the largest mausoleum builder in the country, began test marketing direct sales to the public in 2004. Traditionally these sales had been made through monument retailers and cemeteries. The price tag ranged from $180,000 to more than $1 million. Once more Cold Spring Granite made a move in line with the times.

Principal Competitors: Georgia Marble Company; Pete Lien and Sons.
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