This presentation analyses a Harvard Business School case study on "Steinway & Sons: Buying a Legend".

2. SITUATION

3. The New York Times Article, April 19, 1995

4. And who purchased
This Legendary Piano Manufacturer?
Owners of this company were…

5. Dana Messina & Kyle Kirkland
Two 33 year-old investment bankers

6. Wait a minute…!!
Before we puzzle ourselves
into their problems,
Why shouldn’t we look
at the background of
Steinway & Sons

7. Rewind

8. Established in New York City by Henry Engelhard Steinway
Sold to Birmingham Brothers for $50 m
Bought by Selmer Company for $100 m
Purchased by CBS in $21 m

9. The Establishment
1853

10. Henry Engelhard Steinway
Established by

11. Build the best piano possible and
sell it at the lowest price
consistent with quality
Henry Engelhard Steinway

12. The Tradition
1853-1972

13. 1Attention to details
assembled by CRAFT METHODS

14. 2Value of employees
Many workers represent
2nd or 3rd generation

15. 3Exclusiveness
no two pianos would sound same

16. 4Social Responsibility
Award-winning sustainable forestry program
to establish forests through tree planting
and educational forest management projects

17. The CBS Years
1972-1985

18. • Financial reasons
• Ownership was spread
among many family
members.
• Some partners were
mostly interested in
income, but not in
investments for
improvements.

19. So, the company was sold to CBS
For $21m

20. • CBS did heavy
investment in capital
improvements.
• Increased production to
get return on
investments.
• Increased visibility in the
market to increase
sales.

21. BUT…!!!
Critics began to question
quality of the
Steinway pianos.

22. The Birmingham Years
1985-1995

23. In 1985
For $49m

24. And they brought
some improvements!
Despite having lack of industry experience

25. 1 Back to Quality
Unboxed 740 pianos prior to shipment,
and re-tuned & re-voiced
Each One

26. 2Technology and Innovation
Upgraded and modernized
the manufacturing facilities
to eliminate any question on quality

27. 3Sense of Responsiveness
Visited dealers, heard concerns
and explained future plans

28. 4The dealer network
•Reduced dealers to improve sense of
exclusivity
•Developed “partnership program” with
dealers.

29. 4The dealer network contd…
within the dealer’s retail space
A separate “Steinway Showroom”

30. 5stretching product line
to induce upselling
to target more market

31. 5Increased product line contd…
Launched in 1992,
to cover Middle-priced market
Launched in 1993,
to encash the brand name of Steinway
Launched in 1994,
to offer something different

32. As a result
• Boston Pianos helped Steinway capture mid-priced market.
• They improved the sales and increased the revenue.
• “Limited Editions” and “Crown Jewel Collection” gave
Steinway
points of difference
to sell, and capture the market and helped it
increase its brand equity.

33. Global Appearance

34. And… in the US
Steinway’s top ten American Markets in 1994; source: Steinway Company Records

35. Purchase by Selmer
1995

36. Despite the positive changes
Financial constraints forced
Birmingham brothers
to sell the company

37. On April 18,1985
For $100m

38. The Piano Industry

39. Types of Pianos

40. Industry Trends
Piano sales in the US; Source: Piano Manufacturers Association International

41. Reasons
• Rise of computer as home entertainment device
• Growing popularity of low-priced electronic keyboards
• Global recession in the early 1990s

42. Competition of Steinway
• Baldwin Piano and Organ Company, United States
• Yamaha Corporation, Japan
• Kawai Corporation, Japan
• Bosendorfer, Austria
• Fazioli, Italy

43. The Used Piano Market
Long life & fine reputation
of old pianos hit the market of new pianos

44. Problems

45. Role of
Dana Messina
&
Kyle Kirkland

46. #1
Whether Steinway should continue
its niche strategy of being world’s pre-eminent maker of
High quality pianos?

47. OR
Should it go with some more aggressive plan?

48. Steinway should stick to
its core values, which
have given it a brand
image.

49. It should focus on
producing quality
pianos…

50. …And serve its target
segment, which is affluent
people, having a great
taste in music…

51. … and make them feel that
they deserve something
different and exclusive,
and leverage the Steinway
brand name.

52. #2
What to do with Boston pianos?

53. Boston brand
proved its worth
And achieved its goal…
Sales of Boston Pianos

54. But it diluted the brand
image of the name
“Steinway & Sons”

55. So Steinway should drop
Boston to regain its
brand image
And
exclusivity

56. #3
What are the alternatives?

57. Steinway should continue to
innovate, and serve its elite
customers with new products
by extending its product line
for elite class

58. And it should come up with
new products for mid-priced
market to
target new market,
and increase its
Revenue and visibility

59. But…!!!
be careful
Steinway should not sell the
new products under the
umbrella of its brand name

60. Recap#1
#4#3
#2

61. References
steinway.com

62. Thanks
This presentation
was created during a marketing internship,
under the guidance of
Professor Sameer Mathur
IIM Lucknow
Ph.D.: Carnegie Mellon University
by
Abhishek Gupta
IIT Guwahati