Steinway & Sons:

Buying a Legend (A)

A Harvard Business School Case Analysis

Shubham GoswamiJadavpur University

The Case Protagonists

Dana Messina &

Kyle Kirkland

Who are they ?

The Selmer

Company

Steinway &

Sons

SituationAnalysis

3 Central Questions

Key Insightsfrom

Case Exhibits

Selmer generated $100m in revenue and $3m in profits

in the previous year

Steinway too had sales

of $100m in the previous year

Steinway derived these $100m dollars from the sale of2698 Steinway grand pianos, 600 Steinway verticals and 2300

Boston Pianos

Understanding the Piano Industry

Verticals Grands

What are the major trends

in the Piano Industry ?

Probable reasons for downturn:

South Korea and China are lucrative Piano markets

Who are Steinway’s biggest

competitors ?

Pricing of Steinway’s Competitors

The Steinway Tradition

“To make the best piano possible and sell it at the lowest

price consistent with quality”

Steinway History

Central Managerial

Issues

1. What is the Best Strategy for Steinway and Sons ?

1. What is the Best Strategy for Steinway and Sons ?

1. What is the Best Strategy for Steinway and Sons ?

But the decline in unit sales of Steinway

Grands points towards an increasing

skepticism regarding Steinway’s quality

Steinway should continue its high end niche

strategy and position itself as the world’s pre-eminent maker of

high quality pianos

Any aggressive move to improve profitability by increasing

production may dilute quality and reduce brand equity

2. What should be done with the Boston Pianos ?

2. What should be done with the Boston Pianos ?

2. What should be done with the Boston Pianos ?

Steinway

SteinwayLimited Editions

Crown Jewel Collection

The Boston Piano

Steinway ConsumerThe 45 plus,

affluent music lover

Boston ConsumerThe slightly younger, not so affluent music

lover

Boston :Steinway’s mid-priced product line

Hence, Steinway is justified in introducing a mid-priced line of pianos under the brand name

‘Boston’.

It results in market expansion and generates additional revenue without affecting the market for

Steinway Pianos

Addressing the issue of the used piano

market

Steinway should keep innovating in the design and technology of its

pianos.

This will keep consumers interested in new Steinway

products.A new product should offer

features and advantages that make it preferable to

a 40-year old used piano.

3. What role should be played by Messina and Kirkland in running

Steinway ?

Role ofMessina and Kirkland

1. They must make sure that Steinway does not shift from its core brand value of making the

world’s finest pianos

Even the mid-priced line of pianos, which is manufactured by Kawai on contract, should not fall

short on quality.

2. They should improve customer service and focus on customer retention through relationship

marketing.

Maintaining a good relationship with “Steinway Artists” is also

integral to the brand’s promotion

3. They should be selective while forming their dealer network. An

over-extended distribution network will lead to loss of control

and poor service.

4. They should closely monitor the performance of the

competitors and try to retain dominance in their core markets

5. Finally, they should explore new market opportunities in Asian

countries like South Korea and China which have great growth

potential

Disclaimer

Created byShubham Goswami, Jadavpur University, during a marketing internshipunder the guidance of Prof. Sameer Mathur, IIM Lucknow(See www.IIMInternship.com)