Case Study - Steinway & Sons (Buying A Legend) This particular presentation is one in a series of presentations I had worked on during my Marketing Internship under Prof. Sameer Mathur, IIM Lucknow, in June, 2015.

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’

19. Selmer Company
Records

20. Selmer
Company
Records

21. Steinway Company
Records

22. Steinway
Company
Records

23. Steinway
Company
Records

24. Steinway
Company
Records

25. Steinway
Company
Records

26. Steinway
Musical Instruments
Inc.
Post-Acquisition

27. Steinway
Company
Records

28. THE
PIANO INDUSTRY

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

42. Major
Competitors

43. High Volume Producers of both,
Vertical and Grand Pianos
Low Volume Producers of primarily
high-end Grand Pianos
Types

44. Yamaha
Kawai
Baldwin1

45. Bosendorfer
Fazioli
2

46. Price
Comparison

47. The
Used Piano Market

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

56. 1853
1853-1972
1972-1985

57. 1853
1853-1972
1972-1985
1985-1995

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

72. Deliver
High-Quality Products

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