Steinway And Suns : Building a Legend (A), a Harvard Business Review Case and it's analysis. This is done under the guidance of Prof. Sameer Mathur

1. Steinway&Sons:Buyinga
legend
Harvard Business Review Case

2. MainPlayers

3. MainPlayers
Kyle Kirkland
Chairman of the Board
Dana Messina
Chief Executive Officer

4. TheCurrent
Situation

5. Situation
Steinway is the pre-eminent brand name in the music business
and the producer of the highest quality grand pianos in the
world.
Steinway grand pianos had reduced from 3,576 in 1990 to 2,698
in 1994.
A Boston Line of Pianos were recently introduced to sell a
mid prices line of vertical and grand pianos manufactured
under contract by a Japanese competitor.

6. Situation
Economic Conditions were improving in the U.S and Europe,
Steinway’s two largest markets
Steinway still had to still take full advantage of a growing
Asian Market.

7. Unitsalesofsteinwaypiano

8. AsianMarketshavealargenumberofsales

9. Questions

10. Decision
The main decision is how to move forward with the company ?
Should it focus only on the high-end, niche strategy of high
quality vertical and grand pianos ?
What should it do with it’s Boston Pianos?
How can Steinway use its brand name to further enhance
revenue ?

11. DecisionCriteria
Sales of Grand and Vertical Pianos
Steinway’s Main Markets (U.S. and Europe)
Piano Sales all over the world, the industrial trends
Competition
The Distribution Network
The Used Steinway Piano Market
The Steinway Tradition

12. PossibleDecisions
The Boston Piano sales are almost equal to the sale of Grand
Pianos all over the world and hence they could also down
market stretch to earn sales in the entry level market as
well
Evidence:
In 1994, Steinway and Sons had a sales of 100 million,
derived from the sale of 2,698 Steinway grand pianos, 600
Steinway vertical pianos, and 2,300 Boston pianos. The new
line is generating a large number of sales

13. PossibleDecisions
Expand the production line so that old Steinways are bought,
restored to their original make and quality and sold as a
special edition at for many environmentalists or scrap them
for parts to use again.
Evidence:
For one estimate, for every new piano sold in the U.S., 10
used pianos also changed hands. Also, 50,000 used pianos were
sold by second hand dealers that specialized in used pianos.

14. PossibleDecisions
Target the Asian Market with their products especially
Vertical Pianos.
Evidence:
The Worldwide Market for Vertical and Grand Pianos in 1994
shows that South Korea, China and Japan had a large sales in
Vertical Pianos. Japan was also behind the U.S in the sales
of Grand Pianos

15. PossibleDecisions
Increase the no. of dealers present all over the world to
improve the sales numbers which in turn would result in a
large profit
Evidence:
Under the CBS ownership, with the introduction of more
dealers, the sales volume and profits increased relative to
the early 1970s.

16. PossibleDecisions
Reduce the line extension to include only the grand and
vertical pianos
Evidence:
The Steinway & Sons has always wanted to stay in the
exclusive niche, selling only high level pianos.

17. Hypothesis

18. BestPossibleOption
Down Stretching seems to be the most logical option since
many companies have achieved a good percentage in the piano
market with their entry level pianos because of market demand
and the industrial trends. This can be done along with
increasing the number of upright piano being sold. The buying
of pianos is also a viable option since old Steinways also
pose a major difficulty to new Steinways.

19. Proof

20. WHY?
Many companies have used their sales of the entry-level
pianos to gain leverage in the target market. Yamaha has a
35% share of the world market, most of which were vertical
pianos and small grand pianos. Kawai is considered as a major
competitor in the piano industry even though it is not known
for its concert grands because of its vertical and small
grand pianos.

21. WHY?
The Asian market is more inclined towards Vertical and Small
Grands rather than High Level Grand Pianos. One of the
reasons that Yamaha was able to get 35 % of the global piano
market share and 50 % of the Japan piano market.

22. Statically –VerticalPianosaleshighinAsia

23. WHY?
The typical buyer of a Steinway piano was over 45 years old,
had an annual income in excess of $100,000, and had a serious
interest in music. The Boston piano was 5 to 10 years younger
was was slightly less affluent. With an entry level piano ,
they might be able to target those even younger and less
affluent while also promoting Keyboard playing among the
youth.

24. WHY?
With brands of piano lasting 40 or more years, over 40
million pianos were believed to exist around the world. A
Steinway was known to last 70 to 80 years without a
restoration. Hence , with every new Steinway piano sold,
about five other Steinways also changed hands.

25. Alternatives

26. SingleLineofProducts
A single line of products will keep the tradition of the
Steinway & Sons in line since it was to be for the exclusive
niche, selling only a top-of-the-line prestigio piano. This
might help raise its brand equity and in turn its profits.

27. UsedPianos
Steinway is known for its quality. Its Brand mantra is to
build the best quality piano possible and sell it at the
lowest price consistent with quality. Their attention to
detail contributed to its legendary sound and durability of
Steinways. This cannot be assured with a already used piano.

28. Dealers
The increase in the number of dealers even with the supposed
program might result in a bad name of Steinway similar to
what Andre Watt caused because the increase in the number of
dealers might result in improper functioning of the
Partnership program.

29. Disclaimer
Created by Pratheek Denny, NIT Trichy during a marketing
internship by Prof. Sameer Mathur.