Stacy Cole Emily Gardner Tiffany Jones Melanie Thong

1. Stacy Cole Emily Gardner Tiffany Jones Melanie Thong

2. 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

3. 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

4. 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

5. 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

6. Company Background • Leader for 140 years • Steinway Hall • Bought 400 acres • Multiple donations to the White House • Present in music schools • Unsurpassed quality

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. Strengths • Leader • Well known name • International • Quality • Product Expansion

15. Weaknesses • Slow production • Small investments • CBS changed quality • CBS expanded dealers • Andre Watts

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

17. Threats -competitors -long life -new technologies -prices

18. 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

19. Questions?