Date post: | 11-Aug-2015 |
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BUYING A LEGEND
In April 1995, Steinway & Sons was bought by
Dana Messina and Kyle Kirklamd for
$100 MILLION !!
Who
are
Steinway & Sons
Leader in the market for high-quality grand pianos
Established in New York City in 1853 by Henry Engelhard Steinway
Had reputation of building best piano in the world for 140 years
What were
the types of
pianos
produced by
them
Grand Piano
Vertical Piano
FAVOURABLE CONDITIONS
In 1994, about 500 concert pianos were
manufactured worldwide with 350 Steinway
pianos bought and sold
UNFAVOURABLE
CONDITIONS
The company has changed hands several times and product
quality has been a problem.
The piano Industry saw a down turn in current years with global sales falling by 40%
Despite these
Steinway showed
productiveness in
the first 3 months
itself. The gross
profit of the two
companies
combined increased
from 31.6% to 33%
HOW CAN STEINWAY RESTORE ITS POSITION OF BEST PIANO PRODUCERS IN THE MARKET
AGAIN
1. Manufacturing
• Steinway decided to build low priced pianos of
high and consistent quality
• Assembled using skilled labour without use of
assembly line technique which resulted in less
production,less profit
2. Marketing
Steinway had Concertand Artist Program in which an artist found eligible by the company was allowed to use the
concert piano for all performances
Yamaha loaned pianos to music institues and
conservatoried to expose budding artist to their band
3. Used Piano Market
Pianos of many brands last for more than
40 years.
Certain strategies were used to enhance
the market of these used pianos
1 New Piano 10 Old Pianos
4. Competitions
The Competitors are…
• Yamaha
• Baldwin
• Kawai
• Faziloi
Largest producer of
piano in the world.
Produced limited number
of concert grand piano
with traditional craft
method.
Duplicated or used
better technology than
Steinway
By 1996,sole
remaining large
scale producer of
piano in USA
Produced wide range
of pianos ranging
from inexpensive
one to hand crafted
concert grand
Manufactured
pianos on highly
automated
assembly line
Focused on small
volume-top quality
grand pianos
Recognised as
being among the
highest quality in
the industry
UNIT SALES OF PIANO PRODUCERS IN 1994
• Yamaha – 175,000
• Baldwin – 20,000
• Kawaii – 100,000
• Fazioli – 60 grand pianos
STRENGTHS
• Brand name
• Highest Quality
• Traditional
handcraft
production
techniques
WEAKNESS
• Too much cost in
consuming
• The dealer
network is reduced
during Birmingham
• Lack of diversity
Financial Capabilities
• Owners has
changed many times
• Running in loss for
two consecutive
years (1992 & 1993)
• Seasonal downturn
in demand
1. Maintain high quality niche market
2. Should introduce new lower-priced piano to Asian
market as a flanker to compete against low-price
competitors
3. Should make good use of ‘THE CROWN JEWEL
COLLECTION’ as it represented 30% of unit sales in
1995
4. They should divide their roles into marketing and
finance section
Created by Aburvaa Ramesh, SVCE ,
during an internship By Prof. Sameer Mathur, IIM
Lucknow.www.IIMInternship.com