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Stacy Cole Emily Gardner Tiffany Jones Melanie Thong. 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

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stacy cole emily gardner tiffany jones melanie thong
Stacy Cole

Emily Gardner

Tiffany Jones

Melanie Thong

introduction
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

introduction cont d
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

the steinway purchase
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

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

Selmer vs. Steinway in 1994
company background
Company Background
  • Leader for 140 years
  • Steinway Hall
  • Bought 400 acres
  • Multiple donations to the White House
  • Present in music schools
  • Unsurpassed quality
the piano industry
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
industry trends
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
competition
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
reaching the consumer
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
the cbs years 1972 1985
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
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

The Birmingham Years 1985-1995
the product line
The Product Line
  • The Boston Piano
    • Manufactured in Japan by Kawai
  • Limited Editions
    • 140th 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
strengths
Strengths
  • Leader
  • Well known name
  • International
  • Quality
  • Product Expansion
weaknesses
Weaknesses
  • Slow production
  • Small investments
  • CBS changed quality
  • CBS expanded dealers
  • Andre Watts
opportunities
Opportunities

-expand market to Asia

-target younger generation and higher incomes

-more advertisements

threats
Threats

-competitors

-long life

-new technologies

-prices

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

Recommendations