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Published byErnest Hensley Modified over 9 years ago
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Stacy Cole Emily Gardner Tiffany Jones Melanie Thong
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Introduction In April of 1995 Steinway & Sons was sold to Selmer Company for $100 million Article in the New York Times says Steinway was overpriced Issues: -No synergies between Selmer and Steinway -Unit sale of Steinway grand pianos dropping from 3,576 units in 1990 to 2,698 in 1994 -Yamaha, Japanese powerhouse -Introduction of the Boston Piano, taking away from image
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Introduction Cont’d Opportunities -Steinway was the pre-eminent brand name in the music business and held the reputation of producing the highest quality grand pianos -Economic conditions were improving in Steinway’s two largest the markets, the U.S. and Europe -Growing Asian market
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The Steinway Purchase Kirkland and Messina formed Steinway Musical Instruments, Inc. Selmer Company Selmer lead manufacturer of band and orchestral instruments in the US and was acquired by Kirkland and Messina in 1993 -Selmer -Bach -Glaesel -Ludwig
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Selmer vs. Steinway in 1994 Selmer Sales of $100 million 130,000 instruments (student and professional) 85% sales in the US Steinway Sales of $100 million 5598 pianos (grands, verticals, and Boston Pianos) 58% sales in the US
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Company Background Leader for 140 years Steinway Hall Bought 400 acres Multiple donations to the White House Present in music schools Unsurpassed quality
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The Piano Industry Two Types of Pianos Grand Piano In 1994, 60,000 sold worldwide Vertical Piano In 1994, 540,000 sold worldwide Two Types of Industries Private Institutional
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Industry Trends Global sales drop Popularity of electronic keyboard Low-priced Growing Asian market Japan, South Korea, and China are exhibiting an increased interest in the piano industry
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Competition Baldwin Only other American manufacturer of high-quality grand pianos Yamaha Largest producer of pianos in the world Kawai Highly automated assembly lines Bosendorfer and Fazioli Focus exclusively on top- quality grand pianos in very small volumes
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Reaching the Consumer Pianos sold through dealers 95% of all piano sales were sold through 1,000 dealers Used Pianos 70-80 year life For every new Steinway purchase, five Steinway’s have been exchanged
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The CBS Years 1972-1985 CBS purchased Steinway for $21 million Increased the number of independent Steinway dealers from 110 to 153 Four presidents 13 years corporate management
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The Birmingham Years 1985-1995 Bruce Stevens CEO and President of Steinway First 6 months had to reassure employees, dealers, and customers that Steinway was committed to quality Personally visited dealers “sense of responsiveness” Upgraded manufacturing process since 1980s Reduced independent dealers from 153 to 93 Remaining dealers had “Partnership Program” Lost potential endorsement of Andre Watts
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The Product Line The Boston Piano Manufactured in Japan by Kawai Limited Editions 140 th Anniversary in 1993 – and every 2 years after Crown Jewel Collection Finished in exotic woods instead of classis ebony In 1995, represented 30% of unit Steinway unit sales
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Strengths Leader Well known name International Quality Product Expansion
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Weaknesses Slow production Small investments CBS changed quality CBS expanded dealers Andre Watts
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Opportunities -expand market to Asia -target younger generation and higher incomes -more advertisements
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Threats -competitors -long life -new technologies -prices
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Recommendations Continue to offer mid- grade price and high quality pianos Discount to schools Emphasize trade of pianos Market research for South Korea, Japan, and China Home décor Steinway should produce Boston piano instead of Kawai
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