steinway-buying a legend
TRANSCRIPT
STEINWAY & SONS
BUYING
A
LEGEND
Founded by Henry Engelhard
Steinway in 1853
Purchased by CBS and owned from 1972-
1985
Owned by Birmingham brothers from
1985-1995
Bought by Selmer company in
1995
In April 1995 STEINWAY&SONS
was brought
By
DAN MESSINA and KYLE
KIRKLAND
For
$100MILLION!!
How was this purchase for $100million justified???....
TYPES OF PIANOS
VERTICAL PIANO GRAND PIANO
90%
10%
Vertical Piano Market
Home/Private Market
Institutional Market
80%
20%
Grand Piano Market
Home/Private Market
Institutional Market
5,40,000 were sold in 1994
60,000 were sold in 1994
4 major trends
1 Downturn in the Piano industry, with global
sales dropping by 40% since 1980
In the U.S., sales plummeted, from 2,33,000
units in 1980 to less than 1,00,000 units in 1994 •Affected by the growing popularity of computers
and increasingly sophisticated, low-priced electronic keyboards
•Affected terribly by the global recession of the early 1990s
4 major trends
2
Consolidation of the Piano manufacturing industries in the U.S. and Europe In the U.S., where there were
several hundred piano makers initially, there were
only 8 Piano makers by 1992
4 major trends
3 Emergence of several strong Asian manufacturers such as Yamaha, Kawai, Young Chang and Samick
The 4 Asian piano powerhouses combined for
75% of global sales by the 1990s
From a near zero share in 1950, Asian
imports achieved a 35% unit share of the U.S. vertical piano market by 1994
From a near zero share in 1950, Asian
imports achieved a 80% unit share of the U.S. grand piano market by 1994
4 major trends 4
Emergence of new and potentially
large markets with promising
prospects
Countries like Japan, South Korea and China now represented huge
opportunities for the piano makers
COMPETITORS
YAMAHA, BALDWIN KAWAI ,FAZIOLI
USED TRADITIONAL CRAFT METHOD
KEPT A CLOSE WATCH OF STEINWAY AND COPIES SOME OF ITS POLICIES
Baldwin was the only other manufacturer of high-quality grand pianos in USA.
was manufactured in highly
automated production facilities
Were very well respected by trained
musicians and official piano of many organisations
Kawai were manufactured on highly automated assembly lines
has a nice, resonant base, and the instrument sounds fine at low volumes
Fazioli produced very small volumes of top-quality grand pianos.
It seems Italian piano industry has finally been able to produce a concert instrument with its own
individual personality and worldwide marketability.
Used piano markets
For every 1 piano sold 10 pianos changed hands
A USED STEINWAY posed a serious threat to a
NEW STEINWAY
a well maintained 20-year old Steinway grand
could be expected to sell for 75% of the price of a
new Steinway grand of the same type
•EXPAND AND MAINTAIN THE BOSTON PIANO LINE
•TARGET THE ASIAN MARKETS
•GAIN MARKET SHARES IN MID-PRICED PIANO MARKET
WHAT TO DO ??
DEALER NETWORK
MAINTAIN A HIGH QUALITY AND FOCUSSED DEALER NETWORK
FREQUENT VISITS TO DEALERS ENSURES SENSE
OF RESPONSIVENESS TOWARDS THEM
CHOOSE DEALERS WHOSE PRIME PRODUCT LINE WOULD BE STEINWAY
DEVELOP PARTNERSHIP PROGRAMMES
WHAT TO DO??
•DELIVER HIGH QUALITY
PRODUCTS
•INVEST IN R&D DECREASE
COST OF MANUFACTURE AND
INCREASE QUALITY
THE POLICY OF INTRODUCING EVERY
TWO YEARS WORKED WELL
WHICH SHOULD BE CONTINUED
THE NAMES OF THE IMMORTAL
ARTISTS WERE ENGRAVED WHICH
WERE SOLD WITHIN HOURS
NOW IT ALL DEPENDS ON THE
TWO OWNERS TO CARRY FORWARD THE
COMPANY TAKING INTO COUNT
THE PAST EXPERIENCES AND
APPLYING THE RIGHT
STRATEGIES
THANK YOU
DISCLAIMER Created by E. Sai Charan, SVNIT
Surat , during a marketing
internship by Prof. Sameer Mathur,
IIM Lucknow.