it is based on case study of harvard business school. These slides were created by sanket badhe, as part of an internship done under the guidance of Prof. Sameer Mathur (www.IIMInternship.com)".

1. Buying a Legend : Steinway & Sons

2. Sanket Badhe
INDIAN INSTITUTE OF TECHNOLGY
ROORKEE
B.Tech Student

3. Company Background

4. Steinway & Sons, producer of the highest quality
pianos in the world that has been a New
York institution since its founding by
Heinrich E. Steinway in 1853.

6. “build the best piano possible and sell it
at the lowest price consistent with
quality.”
Technical excellence continued to be
emphasized, with the firm taking out
over 120 patents in piano making over
the years.

9. Major music schools such as Juilliard, Oberlin and Indiana University each ownin
excess of 100 Steinway.

10. Why is Steinway legend?
What made it so a great
master?

11. All Steinways are still assembled by craft
methods, with limited use
of assembly-line techniques.
1.

12. 2.
Skilled labour was employed throughout the
production process.

13. 3.
Steinway used the highest grade of
Wood.

14. 4.
selling them through its own sumptuous
outlets and through a network of dealers, and
gaining exposure by encouraging premier
performing artists to use the pianos.

15. This attention to detail
contributed to the legendary
sound and durability of a
Steinway.

16. Timeline of
Steinway & Sons

17. After 120-years of family control, it was
decided that Steinway could no longer
survive as a closely-held family
operation. The factors leading up to
the sale of Steinway in 1972 were
primarily financial.
Steinway & Sons :1853-1972

18. The CBS Years :1972 - 1985
Company was sold to the CBS Musical
Instruments Division
in 1972 for about $21 million in CBS
stock.
On the positive side,
CBS did invest in Steinway’s aging
Long Island City and Hamburg
facilities. CBS took steps to increase
piano production, CBS also grew the
Steinway dealer network result of this
sales volumes and profits increased
relative to the early 1970s.

19. The CBS Years :1972 - 1985
On the Negative side,
increase in piano production and in
grew the Steinway dealer network
were not well received by
traditionalists. appointment series of
presidents, each of
whom ran into problems of one sort or
another.
result of this critics began to question
the quality of the Steinway pianos

20. The CBS Years :1972 - 1985
CBS’s management of Steinway came
to a close in 1985. In November 1984,
despite being
moderately profitable, CBS announced
plans to sell its Musical Instruments
companies and to focus
its efforts on broadcasting

21. The Birmingham Years :
1985 - 1995
Company was sold to the Birmingham
Brothers in 1985 for about $50 million.
One of the first tasks Birmingham
Brother's did was assuring Steinway’s
employees, dealers, and customers
that the new owners were
committed to quality.

22. The Birmingham Years :
1985 – 1995
Product line:
The Boston Piano :
Steinway’s first new product introduction
was a mid-priced piano under the brand
name “Boston.”
Birmingham's did something that
Steinway & Sons had resisted
throughout its history. They introduced a
mid-priced piano.

23. Steinway Limited Editions
The Crown Jewel Collection
The Birmingham Years :
1985 – 1995
Product line:

24. In spite of the positive changes made
by Stevens and his management
team, by the mid-1990s, the running of
Steinway was constrained by limited
financial resources. Finally, in late-
1994, for personal reasons, the
Birmingham's decided to sell the
company.
The Birmingham Years :
1985 - 1995

25. The company was again sold on April 18,
1995 to Dana Messina and Kyle .Kirkland,
Messina & Kirkland :
April 18, 1995

26. Background of
Messina & Kirkland
purchased controlling interest in Selmer (in 1993),
a meat processing company (in 1992), and a paper
company (in 1993). the purchase of Steinway &
Sons, Kirkland and Messina formed Steinway
Musical Instruments, Inc., with Steinway & Sons
and Selmer as wholly-owned subsidiaries.
+ =

27. Problem and issue:
Many question faced by Messina &
Kirkland after they bought Steinway &
Sons.

28. Problem and issue:
they needed to decide whether Steinway
would continue its high-end, niche strategy of being
the world’s pre-eminent maker of high quality
vertical and grand pianos?
Might it make more sense to forego this long-standing
strategy to pursue some bolder, more aggressive plan?

29. Problem and issue
Regarding Boston:
did it make sense for Steinway to sell a
mid-priced line of vertical and grand
pianos?
if it did make sense,
might there be other ways to leverage the
Steinway brand name to further enhance
revenues?

30. Analysis

31. 1 Market behaviour
• Steinway had yet to take full advantage of a growing Asian
market.
•Sustaining downturn in the piano industry (global sales
dropping by 40% since 1980).
•Selmer revenues had dropped from $86
million to $80 million between 1989 and
1990.

32. 1 Market behaviour
•The impact by an active market for used
pianos is considerable Because of the
extremely long life, duration of piano threat
to the piano industry seriously.

33. Sales had decrease

34. 2 Competitor
behaviour
Baldwin: sole remaining large-scale
producer of vertical and grand pianos in the United States.
More importantly to Steinway,
it was the only other American manufacturer
of high-quality grand pianos.

35. 2 Competitor
behaviour
Yamaha: The 100-year old Yamaha Corporation, was the
largest producer of pianos in the world. Yamaha also produced
a limited number of concert grand pianos using traditional craft
methods. The goal of this effort was to produce the best grand
piano in the world.

36. 2 Competitor
behaviour
Kawai: Manufactured on highly automated assembly lines.
Produced good quality verticals and small grand piano.
Manufactured Boston piano on behalf of Steinway.

37. 2 Competitor
behaviour
Bösendorfer and Fazioli : In contrast to the high-volume
strategies of the Asian manufacturers, Bösendorfer of Austria
and Fazioli of Italy had taken a different approach. Both
focused almost exclusively on very small volumes of top-
quality grand pianos.

38. 2 Competitor
behaviour
VS.
Yamaha has a far greater share of the overall piano market than
Steinway and even has more diversity of grand piano price. Steinway,
to broaden its market share, should diversify own product because
brand choice is driven by product quality, prompt delivery and
competitive price. Steinway needs to reinforce marketing activities
into Asian market, so more competitive priced product is material to
it.

39. 3 Consumer
behaviour
Consumer behaviour Brand choice is driven by product quality,
prompt delivery and competitive pricing.

40. Evaluation for alternatives
or solutions

41. Focus on Asian market
Market more aggressively Economic conditions is improving
and more focus on growing Asian market will cause
higher profits .The piano industry is going downturn and
the impact of the used piano market is strong.
To reinforce marketing activities into Asian market, Steinway
should introduce new lower-priced piano to Asian market as
a flanker to compete against low-price competitors.

42. Focus on Asian market

43. Brand strategy
Nowadays, one of company’s valuable
assets is their brand. Otherwise, how many
brands does Steinway have? We suppose
that the shortage of brands is a main cause
of Steinways sales reduction.

44. Brand strategy
This is the time Steinway should implement
brand extension strategy. Steinway has
strong power of brand itself, so with a
brand extension, consumers can make
inferences and form expectation as to the
performance of a new product based on
what they already know about the parent
brand itself.

45. Brand strategy
Brand extension :Steinway Musical
Instruments, Inc. With piano they also
start to manufacturing Of other musical
instrument with salmon.

46. Brand portfolios
Different brands may be designed and
marketed to appeal to different market
segments, So the important point to design
a brand portfolio is to maximize market
coverage.

47. Brand portfolios
Boston: Steinway should maintain its
high quality niche market for reputation of
great master and keep going mid-priced
Boston line.

48. Role of Messina & Kirkland
As both Messina and Kirkland lack
experience in the piano industry, they
should hire a professional team from the
piano industry and they itself have gain lot
of experience from financial sector from
salmon so they handle financial activities.

49. Thank
you

50. “Created by Sanket Badhe, IIT
Roorkee, during an internship with
Prof. Sameer Mathur, IIMLucknow,
www.IIMInternship.com ”