It is 1995 and Steinway & Sons has just been purchased by two young entrepreneurs. For 140 years, Steinway has held the reputation for making the finest quality grand pianos in the world. The past 25 years have proven to be a challenge, however. First, the company has changed hands several times and product quality has become a concern. Second, the worldwide market for pianos has been in a steady decline, and competition for high-end grand pianos has increased. Finally in 1992, Steinway took the questionable steps of introducing a mid-priced line of grand pianos under the brand name "Boston." Designed by Steinway, but manufactured by a Japanese piano maker, the Boston line represented a major shift in strategy for the company. Within this context, what do two young entrepreneurs (with little or no experience in the piano industry) hope to accomplish in buying Steinway? In particular, what value do they bring to the company and what decisions should they make?

3. Status as the
world's elite
piano
manufacturer
Known for its traditionally made
Grand pianos ,the keystone of the
Steinway strategy was and remains
Over 160 YEARS of masterful craftsmanship

4. “to build the best
piano possible”
Henry E. Steinway
(1797 - 1871)
Steinway and Sons was established in
New York City in 1853 by Henry
Engelhard Steinway, an immigrant from
Germany.

5. Introduced the
cross-stringing
technique in a
piano with a
cast iron
frame, an
innovation that
is now
universal in
all grand
pianos
Each Steinway grand piano is a
unique masterpiece produced from
the best materials by the hands
of craftsmen.
The Steinway tradition
Excelled because of it technical
brilliance

6. Its status as the world's elite piano manufacturer has been secured in part because of the
success of marketing strategies such as “The Steinway Artist program”, which was invented in
the 1870s by William Steinway

8. After 120 years of being a closely held
family operation, it was decided Steinway
and Sons could no longer survive in this
manner.
The company was sold to the
CBS Musical Instruments Division in 1972
for $21 million .
The primary reasoning for the
sale was associated with
finances which hadn’t changed in
the following few years

9. The CBS Years
1972-1985
CBS wanted to increase revenue
and decrease manufacturing costs
by increasing production.
This damaged the reputation of
Steinway and Sons
Over the next 10 years, CBS
appointed a series of presidents ,
each of whom ran into problems of
one sort or another.
Critics and buyers began to
challenge the quality of
Steinway and Sons’ pianos.

10. As a result,
In November of 1984, CBS announced the sale
of Steinway and Sons for $50 million to John
and Robert Birmingham
The company now became refocused on
quality and returned to what had made
them so successful

11. The Birmingham years

13. Despite these positive changes
by , the running
of Steinway and Sons was once
again constrained by limited
financial resources.

14. The company was again sold on April 18, 1995 to
Dana Messina and Kyle Kirkland, owners of the
Selmer Company for $100 million.
Steinway and Sons merged with
the Selmer Company formed the
musical conglomerate Steinway
Musical Instruments Inc.
1995-Present
Selmer was a leading
manufacturer of musical band
instruments

16. Problem statement
Steinway & Sons faced a
declining piano market and
increased competition from Asia
piano manufacturers.

18. Messina and Kirkland bought a Legend
Could these two young
investment bankers get this
one great company back in
tune?

19. CHALLENGES
How should
melissa and
kirkland go
about the
Boston range
of pianos?
Should
Steinway
continue its
high end niche
strategy or
market its
pianos more
aggressively?
How to
further
enhance or
increase
revenues?
What roles
Messina
and Kirk
should
play?

20. Lets see
the
situation
first

21. Segmentation

22. The piano
industry
Over the years,
piano sales have
increasingly dropped
from as high as
223,000 units in the
1980s to nearly
100,000 in 1994
the growing
popularity of the
electronic keyboard.

23. Initially, the United States and Western Europe were the main
markets in the piano industry.
By the 1990s, newer markets were opening up in countries such
as “Japan, South Korea, and China”
Emergence
of
several
Asian
manufactu
rers who,
by the
1990s
combined
for 75%
of global
sales

24. SWOT ANALYSIS

25. STRENGHTS
•Established brand reputation
of quality and durability
•The Steinway Concert and
Artist program has around
850 artists whom choose the
Steinway and Sons piano
•Traditional handicraft
production techniques
WEAKNESS
•Saturated market
•Major Competitor is their
own used pianos
•The durability and quality of
their products limits the
concept of repeat buyers
OPPORTUNITIES
•Use name to push other
music products
•Lower prices and cut in on
competitors
•Have new famous composers
represent Steinway
•Establish a larger customer
base in Asia to increase
market share
THREATS
•Technology, rise of the
electric piano
•There are levels of
inexperience of the current
younger owners/CEOs
•Expansion of Asian
manufacturers

26. Solutions

27. Since the introduction of the Boston piano in
1992 the sales increased from 2.7 million in
1992 to 16.7 million in 1994
The Boston piano which is produced by
Kawai in Japan enables Steinway to sell
a mid priced piano with through the
Steinway name.
Importantly, the Boston piano line was
“designed by Steinway & Sons”

28. Offering limited edition Boston
pianos in the mid-market price
range can help Steinway retain some
of the exclusivity it boasts of in
the high end segment.
•Ensure high quality and
restrict the exclusive no of
dealers Steinway has.
•Advertise the brand
excessively ensuring the
customers its high quality.
•Introduce this range of mid-
prices pianos in Asian market
to make it available to those
who can’t afford to buy a
Grand
What can
be done?

29. Effective Advertising
They need to take advantage of the
fact that fine artists such as Duke
Ellington, Vladimir
Horowitz, Cole Porter, Arthur
Rubinstein and many more use their
products.
When you connect a superior product
with a well known name the product is
going to sell.

30. There are also other
instruments that have high
quality standards and
which have high sales and
growth rates, e.g.
guitars.
These may be areas which
offer new opportunities
for the enlarged firm.
Sell guitars under Steinway
brand name ensuring high
quality standards and high
initial advertising
Expand the product line

31. Role of Messina and
Kirkland
Have financial
expertise
In 1993,
They had put in $25,000 and came
away with 23% of the Selmer company
which shows their ability to
structure deals without much money.
As Messina and Kirkland lack
experience in the piano industry,
they should hire a professional
team from the piano industry
Also, they have a successful track
record with Selmer

32. As a result of their
decline in sales due to the
rapid change of the piano
industry, technology,
expansion of new markets and
foreign competitors,
Steinway and Sons will need
to make some drastic changes
to utilize these industry
trends

33. Steinway and Sons need to take steps
towards:
• Using technology to enhance their
products while maintaining their
traditional brand reputation.
•By Introducing a mid-priced line, reach
more of the markets demand
•Targeting the emerging Asian market
In order to restore their historical success
while implementing changes and preparing for
growth, Steinway and Sons will have to use this
declination of the piano industry to their
advantage.

34. •Steinway & Sons Intro
•The Steinway Tradition
•Steinway through the years
•Problem Statement
•Challenges
•Situation Analysis
•SWOT Analysis
•Recommended Solution
•Conclusion