Steinway & Sons - Buying A Legend
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Created by Priyanjit Biswas, Jadavpur University
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Steinway & Sons - Buying A Legend
- 2. Analyzed By PRIYANJIT BISWAS JADAVPUR UNIVERSITY
- 4. Steinway & Sons is sold for $100 million to the Selmer Company
- 5. Steinway & Sons is sold for $100 million to the Selmer Company People familiar with Steinway and the piano industry’s problems, are amazed at the price of $100 million
- 6. Steinway & Sons is sold for $100 million to the Selmer Company People familiar with Steinway and the piano industry’s problems, are amazed at the price of $100 million Critics claim that the $100 million price, ‘is an extraordinary number and does not seem rational’
- 7. Steinway & Sons is sold for $100 million to the Selmer Company People familiar with Steinway and the piano industry’s problems, are amazed at the price of $100 million Critics claim that the $100 million price, ‘is an extraordinary number and does not seem rational’ Dana Messina & Kyle Kirkland, current owners of Selmer, wonder about the prospects of the purchase
- 9. No extant synergy between Steinway & Sons and the Selmer Company
- 10. No extant synergy between Steinway & Sons and the Selmer Company Unit sales of Steinway grand pianos had slipped from 3,576 in 1990 to 2,698 in 1994
- 11. No extant synergy between Steinway & Sons and the Selmer Company Unit sales of Steinway grand pianos had slipped from 3,576 in 1990 to 2,698 in 1994 Yamaha, a Japanese contender, continued to challenge Steinway as the maker of the finest concert grand pianos
- 12. No extant synergy between Steinway & Sons and the Selmer Company Unit sales of Steinway grand pianos had slipped from 3,576 in 1990 to 2,698 in 1994 Yamaha, a Japanese contender, continued to challenge Steinway as the maker of the finest concert grand pianos Steinway’s recent introduction of a mid-priced line of pianos (Boston Pianos), was a questionable strategy
- 14. Steinway was a pre-eminent brand name in the music industry and a producer of the finest quality grand pianos
- 15. Steinway was a pre-eminent brand name in the music industry and a producer of the finest quality grand pianos Economic conditions were improving in the U.S. and Europe, Steinway’s two largest markets
- 16. Steinway was a pre-eminent brand name in the music industry and a producer of the finest quality grand pianos Economic conditions were improving in the U.S. and Europe, Steinway’s two largest markets Steinway had yet to take full advantage of a promising and growing Asian market
- 17. Steinway was a pre-eminent brand name in the music industry and a producer of the finest quality grand pianos Economic conditions were improving in the U.S. and Europe, Steinway’s two largest markets Steinway had yet to take full advantage of a promising and growing Asian market Finally, being one of the greatest names in all of music, Steinway was a name that would be fun to own
- 18. Objective To study and analyze the current global piano industry and eventually undertake necessary measures, imperative for the sustenance of the brand name, ‘Steinway & Sons’
- 29. Two types of Pianos :
- 30. Two types of Pianos :
- 31. 90% 10% Vertical Piano Market Home/Private Market Institutional Market Vertical Piano Market, 1994
- 32. 80% 20% Vertical Piano Market Home/Private Market Institutional Market Grand Piano Market, 1994
- 33. Industry Trends
- 35. Downturn in the Piano industry, with global sales dropping by 40% since 1980 In the U.S., sales plummeted, from 2,33,000 units in 1980 to less than 1,00,000 units in 1994 Affected by the growing popularity of computers and increasingly sophisticated, low-priced electronic keyboards Affected terribly by the global recession of the early 1990s 1
- 36. 1
- 37. Consolidation of the Piano manufacturing industries in the U.S. and Europe 2 In the U.S., where there were several hundred piano makers initially, there were only 8 Piano makers by 1992
- 38. 3 Emergence of several strong Asian manufacturers such as Yamaha, Kawai, Young Chang and Samick The 4 Asian piano powerhouses combined for 75% of global sales by the 1990s From a near zero share in 1950, Asian imports achieved a 35% unit share of the U.S. vertical piano market by 1994 From a near zero share in 1950, Asian imports achieved a 80% unit share of the U.S. grand piano market by 1994
- 39. 75% 25% Global Sales Asian manufacturers Non-Asian manufacturers 35% 65% Vertical Piano market - U.S. Asian manufacturers Non-Asian manufacturers 80% 20% Grand Piano market - U.S. Asian manufacturers Non-Asian manufacturers Global Sales Vertical Piano Market - U.S. Grand Piano Market - U.S.
- 40. Emergence of new and potentially large markets with promising prospects 4 Countries like Japan, South Korea and China now represented huge opportunities for the piano makers
- 41. 4
- 43. High Volume Producers of both, Vertical and Grand Pianos Low Volume Producers of primarily high-end Grand Pianos Types
- 46. Price Comparison
- 48. With many brands of pianos lasting over 40 years, over 40 million pianos existed around the world
- 49. With many brands of pianos lasting over 40 years, over 40 million pianos existed around the world For every new piano sold in the U.S., 10 used pianos also changed hands
- 50. With many brands of pianos lasting over 40 years, over 40 million pianos existed around the world For every new piano sold in the U.S., 10 used pianos also changed hands In 1994, domestic dealers of new pianos, sold about 25,000 used pianos that they had obtained as trade-ins
- 51. With many brands of pianos lasting over 40 years, over 40 million pianos existed around the world For every new piano sold in the U.S., 10 used pianos also changed hands In 1994, domestic dealers of new pianos, sold about 25,000 used pianos that they had obtained as trade-ins Another 50,000 used pianos were sold by second-hand dealers, in 1994
- 54. 1853
- 55. 1853 1853-1972
- 58. Steinway & Sons Timeline 1853 1853-1972 1972-1985 1985-1995 1995
- 59. Concern What should the new owners, Dana Messina & Kyle Kirkland do with Steinway next ?
- 60. Boston Pianos introduced in 1992
- 61. Boston Pianos introduced in 1992
- 62. Boston Pianos introduced in 1992
- 63. Boston Pianos introduced in 1992
- 64. Boston Pianos introduced in 1992
- 73. Invest in R&D Reduce manufacturing costs Increase production Deliver High-Quality Products
- 80. Maintain a high-quality and focussed dealer network
- 81. Maintain a high-quality and focussed dealer network Develop ‘Partnership Programs’ and extend support to the dealers
- 83. Introduce Exchange Offers in order to replace the used pianos
- 84. Introduce Exchange Offers in order to replace the used pianos Produce high-quality contemporary designs so that replacement becomes a necessity
- 85. Introduce Exchange Offers in order to replace the used pianos Produce high-quality contemporary designs so that replacement becomes a necessity Used piano trade-ins can be rebuilt into modern designs at lower costs