Steinway & Sons, a leading manufacturer of high-quality grand pianos established in 1853, was purchased in 1995 by Dana Messina and Kyle Kirkland. They faced questions about whether to continue Steinway's niche strategy of crafting high-end pianos or pursue a bolder plan like a mid-priced line. While Steinway dominated the US market, holding 58% domestic share, the global piano industry was in decline and facing increased competition from Asian manufacturers like Yamaha and Kawai. Messina and Kirkland weighed options to maintain Steinway's brand and quality while more aggressively marketing and expanding into new markets like Asia.

1. Steinway & Sons:
Buying a Legend
HARVARD BUSINESS SCHOOL CASE

2. A Little Introduction
Who are Steinway & Sons
o Leader in the market for high-quality grand pianos
o Established in New York City in 1853 by Henry Engelhard Steinway

3. On April 18,1995
o Steinway & Sons was Sold for $100 Million
o Purchased by Dana Messina and Kyle Kirkland

4. Questions facing Messina and
Kirkland
o Whether Steinway would continue its high-end, niche strategy of
being the world’s pre-eminent maker of high quality vertical and
grand pianos?
o Might it make more sense to forego this long-standing strategy to
pursue some bolder, more aggressive plan?
o Does it make sense for Steinway to sell a mid-priced line of vertical
and grand pianos?

5. Types of Pianos
o Steinway grand pianos
o Steinway vertical
o Boston pianos

6. A Typical Grand Piano
A Typical Vertical Piano

7. In 1994, Steinway & Sons had sales
of $100 million
2698
600
2300
0 500 1000 1500 2000 2500 3000
STEINWAY GRAND PIANOS
STEINWAY VERTICAL
BOSTON PIANOS
Sales

8. Market Share of Steinway and Sons
58%
8.6%
7.3%
6.1%
2.9%
0 10 20 30 40 50 60 70
UNITED STATES
GERMANY
JAPAN
ENGLAND
SWITZERLAND
Share in 1994

9. Price Range in the year 1995
o Steinway grands-$26,400 to over $70,000
o Steinway verticals-$11,900 to over $17,000
o Boston pianos-$6,395 to over $30,000

10. The Piano Industry
Worldwide unit sales
o Vertical pianos-540,000 units
o Grand Pianos-60,000 units

11. Industry Trends-1/4
o Downturn in the piano industry-global sales dropping by 40% since
1980
233000
100000
0 50000 100000 150000 200000 250000
1980
1994
United States-No of units sold

12. Industry Trends-2/4
o Consolidation of the piano manufacturing industries
o several hundred piano makers at the turn of the century
o only eight piano makers by 1992

13. Industry Trends-3/4
Emergence of several Asian manufacturers
o 75% of global sales by the 1990s
o Yamaha (~ 200,000 units) and Kawai (~100,000 units)
o Young Chang and Samick (~ 75,000 to 100,000 units each)

14. Impact in United States due to
Asian Manufacturers
o Zero share in 1950
By 1994
o 35% unit share of the vertical pianos
o 80% unit share of the grand piano

15. Industry Trends-4/4
o Opening of new and potentially large markets.
o Japan, South Korea and China now represented huge opportunities.

16. Major Competition is from
o Baldwin
o Yamaha
o Kawai
o Bosendorfer and Fazioli

17. Baldwin
o High-quality grand pianos
o In 1994-sold about 20,000 pianos-generating revenues of $122
million
o Has a network of 700 dealers
o Respected by trained musicians

18. Yamaha
o 100-year old Corporation
o $1.0 billion in piano sales
o 35% share of the world market
o 50% share of the Japanese market

19. Unit Sales of piano producers in
1994
o Baldwin- 20,000 pianos
o Yamaha- 175,000 pianos
o Kawai-100,000 pianos
o Bosendorfer-400 grand pianos
o Fazioli-60 grand pianos

20. Analysis-1/3
Strengths:
o Brand name
o Highest Quality
o Traditional handcraft production techniques

21. Analysis-2/3
Weakness
o too much cost is consuming( half of Lumber is being discarded)
o The dealer network is reduced during Birmingham
o Lack of diversity

22. Analysis-3/3
Financial capabilities
o Owners has changed many times
o Running in loss for two consecutive years 1992 & 1993
o Seasonal downturn in demand

23. Suggestions
o Continue making High Quality pianos
o Market more aggressively

24. Suggestions
o Continue Boston piano by maintaining its brand name
o Expand into new Markets like Asia
o Bring new products into the market like Steinway Limited Editions,
The Crown Jewel Collection etc……..

25. Disclaimer
 "These slides were created by Suneel Anumolu as part of an
internship done under the guidance of Prof. Sameer Mathur
(www.IIMInternship.com)"