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BUYING A LEGEND
HARVARD BUSINESS SCHOOL : CASE STUDY
:
EXECUTIVE SUMMARY
PROBLEM STATEMENT:- Find a way to uphold
historical brand reputation- Gain market share world
wide
BACKGROUND:On April 18, 1995 Kyle Kirkland and Dana Messina purchased the piano
manufacturer for an incredible $100 million!
HISTORY: (1/4)Established in New York
City in 1853 by Henry Engelhard
Steinway, an immigrant from Germany.
HISTORY: (2/4)For 140 years, Steinway had the reputation of building best pianos in the world.
BUTlast 25 years have been
tumultuous
HISTORY: (3/4)Sold to the CBS Musical Instruments Division in 1972 for
$21 million
Sold to John and Robert Birmingham for $ 50 million
Sold on April 18, 1995 to Dana Messina and Kyle Kirkland for $100 million
HISTORY: (4/4)Steinway was the leading producer
of :GRAND PIANOS
VERTICAL PIANOS
INDUSTRY TRENDS: (1/6)A domestic share of 34% in student band instruments
in 1994
A domestic share of 45% in
professional band instruments in
1994
Sold @ $500 per
piece
75% of unit sales
Sold @ $1500
per piece
50% of revenue
25% of unit sales
50% of revenue
INDUSTRY TRENDS: (2/6)
25% DECREASE in sale of pianos in 1994 relative to
1990.
INDUSTRY TRENDS: (3/6)85% of the piano sales
were in the United States
INDUSTRY TRENDS: (4/6)4 Asian companies:
YAMAHA, KAWAI, YOUNG CHANG &
SAMICK accounted for 75% of global sales in
1990’s.
Asian imports achieved 35% unit share of Vertical
pianos&
80% unit share of grand piano market.
INDUSTRY TRENDS: (5/6)South Korea, Japan & China
represented a very large portion of the market.The United States and
Western Europe were no longer the industry leader in
sales.
INDUSTRY TRENDS: (6/6)$ 11,900 - $ 17,000
(Year 1995)$ 26,000 - $ 70,000
(Year 1995)
Only a small percentage of people can afford a
product of Steinway and Sons.
ULTIMATELY LEADING TO LIMITED PIANO SALES !
MARKET COMPETITION: (1/2)HIGH-VOLUME MANUFACTURING
YAMAHA KAWIA
BALDWIN
LOW-VOLUME MANUFACTURING
BOSENDORFER FAZIOLI
MARKET COMPETITION: (2/2)YAMAHA
$1 billion in sales in 1994 with 35% world market share and 50% Japanese market share
KAWAI
Produced 90,000 vertical pianos and 10,000 small grand pianos a
year
MARKET COMPETITION: (2/2)BALDWIN
$122 million in sales in 1994 by selling 20,000 pianos worldwide
OTHERS
Bösendorfer from Austria produced 400 grand pianos in
1994 to Fazioli’s 40
TARGET MARKET STRATEGIES: (1/2)how to tap into the Asian market ?
Introducing the Boston piano to rival that of the Yamaha and Kawai that are produced in Japan.
Enable Asian people to purchase a Steinway without going broke!
TARGET MARKET STRATEGIES: (2/2)how to cope up with new advancements ?
Focus on expanding into electronic
keyboards becoming popular with the
younger generations.
Reach younger people & make them aware of
Steinway!
S.W.O.T ANALYSIS
Established brand reputation of quality and durability
Around 850 artists who choose the Steinway and Sons piano
Differentiation and customization of the product
Stores in North and South America, Europe, Asia and Africa
Average customer is over 45 years old and earns in excess
of $100,000/year
Replaced by keyboards and other computer technology
Saturated Market
Establish a larger customer base in Asia to increase market share.
Using innovative technology, they can introduce low to mid priced pianos to cater to middle class.
Have new famous music personalities represent Steinway & Sons.
Declining demand for pianos
Ever-increasing technology in the music industry eg. Electric
Piano
Level of inexperience of the current owners.
CONCLUSION (1/4)
STEP FORWARDusing technology to enhance
their products while maintaining their traditional
brand reputation.
CONCLUSION (2/4)
Eliminate the Boston line pianos all together
ORUse it to your advantage!
CONCLUSION (3/4)
Reach new customers all over the world by
introducing low to mid range
pianos.
CONCLUSION (4/4)
Use this declination of the piano industry to
their advantage.
DISCLAIMERCreated By Harsh Raj Chauhan, Delhi
Technological University, during a marketing internship by
Prof. Sameer Mathur, IIM Lucknow
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