Steinway Case Analysis
STEINWAY’S BACKGROUND AND THE DECISION ON HAND
In 1992, Steinway & Sons introduced the Boston Piano. The Birmingham brothers felt branding the product with a name other than Steinway will help retain the high end of the market while providing a lower priced piano for those who were not actually ready to commit to a Steinway. See Exhibit 1 for a brief yet rich history of Steinway & Sons. Steinway & Sons are reluctant however, to introduce a new, mid-priced piano. The decision at hand is whether or not Steinway should extend its brand by offering the Boston line of Steinway pianos.
This decision is important because pianos sales have only been falling since the 1980’s. See Exhibit 2. There could be several reasons for the decline in sales such as the rise of other home entertainment devices such as the computer or the electronic keyboard, that are more sophisticated and lower-priced. However, more importantly for Steinway, there are competitors who are producing more pianos using highly automated techniques, selling at lower prices, threatening Steinway’s market share.
Baldwin Pianos, Steinway’s biggest competitor, is the only other American manufacturer of high-quality grand pianos. In the early 1990s, through a network of 700 dealers, Baldwin sold 20,000 pianos domestically and internationally, generating revenues of $122 million. Yamaha is the largest producer of pianos in the world with a 35% share of the world market. Around the same time, Yamaha produced 175,000 pianos (half of which were sold in Asia). See Exhibits 3 & 4 for positioning map for Steinway’s Boston Piano and Major Competitors.
Additionally, another major threat is the used piano. Many brands are known to last more than 40 years, eliminating the market for new pianos as old pianos are generally available in acceptable condition and lower prices. Steinway has been successful because of its reputation for excellence. All Steinways are still assembled by craft methods, with
In 1992, Steinway & Sons introduced the Boston Piano. The Birmingham brothers felt branding the product with a name other than Steinway will help retain the high end of the market while providing a lower priced piano for those who were not actually ready to commit to a Steinway. See Exhibit 1 for a brief yet rich history of Steinway & Sons. Steinway & Sons are reluctant however, to introduce a new, mid-priced piano. The decision at hand is whether or not Steinway should extend its brand by offering the Boston line of Steinway pianos.
This decision is important because pianos sales have only been falling since the 1980’s. See Exhibit 2. There could be several reasons for the decline in sales such as the rise of other home entertainment devices such as the computer or the electronic keyboard, that are more sophisticated and lower-priced. However, more importantly for Steinway, there are competitors who are producing more pianos using highly automated techniques, selling at lower prices, threatening Steinway’s market share.
Baldwin Pianos, Steinway’s biggest competitor, is the only other American manufacturer of high-quality grand pianos. In the early 1990s, through a network of 700 dealers, Baldwin sold 20,000 pianos domestically and internationally, generating revenues of $122 million. Yamaha is the largest producer of pianos in the world with a 35% share of the world market. Around the same time, Yamaha produced 175,000 pianos (half of which were sold in Asia). See Exhibits 3 & 4 for positioning map for Steinway’s Boston Piano and Major Competitors.
Additionally, another major threat is the used piano. Many brands are known to last more than 40 years, eliminating the market for new pianos as old pianos are generally available in acceptable condition and lower prices. Steinway has been successful because of its reputation for excellence. All Steinways are still assembled by craft methods, with