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 -Unit sale of Steinway grand pianos dropping from 3,576 units in 1990 to 2,698 in Yamaha, Japanese powerhouse -Introduction of the Boston Piano, taking away from image

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  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 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

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  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  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  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  Pianos sold through dealers 95% of all piano sales were sold through 1,000 dealers  Used Pianos year life For every new Steinway purchase, five Steinway’s have been exchanged

The CBS Years  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  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 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

Strengths  Leader  Well known name  International  Quality  Product Expansion

Weaknesses  Slow production  Small investments  CBS changed quality  CBS expanded dealers  Andre Watts

Opportunities -expand market to Asia -target younger generation and higher incomes -more advertisements

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

Questions?