Steinway &

Sons: Buying a
Legend
PRESENTED BY: GROUP 4

A Little Introduction
Who are Steinway & Sons
o

Leader in the market for high-quality grand pianos

Established in New York City in 1853 by Henry Engelhard

Steinway

On April 18,1995 Steinway & Sons was Sold for $100 Million

Purchased by Dana Messina and Kyle Kirkland

Questions facing Messina and

Kirkland
o

Whether Steinway would continue its high-end, niche strategy of

being the worlds pre-eminent maker of high quality vertical and
grand pianos?

Might it make more sense to forego this long-standing strategy

to pursue some bolder, more aggressive plan?

Does it make sense for Steinway to sell a mid-priced line of

vertical and grand pianos?

In 1994, Steinway & Sons had

sales of $100 million
Sales
Boston pianos

Steinway vertical

2300

600

Steinway grand pianos

2698

500

1000

1500

2000

2500

3000

Market Share of Steinway and

Sons
Share in 1994
Switzerland 2.9

England

Japan

Germany

6.1

7.3

8.6

United States
0

58

10

20

30

40

50

60

70

Price Range in the year 1995

o

Steinway grands-$26,400 to over $70,000

Steinway verticals-$11,900 to over $17,000

Boston pianos-$6,395 to over $30,000

The Piano Industry

Worldwide unit sales
o

Vertical pianos-540,000 units

Grand Pianos-60,000 units

Industry Trends-1/4
o

Downturn in the piano industry-global sales dropping by 40%

since 1980

United States-No of units sold

1994

100000

1980

233000

50000

100000

150000

200000

250000

Industry Trends-2/4
o

Consolidation of the piano manufacturing industries

several hundred piano makers at the turn of the century

only eight piano makers by 1992

Industry Trends-3/4
Emergence of several Asian manufacturers
o

75% of global sales by the 1990s

Yamaha (~ 200,000 units) and Kawai (~100,000 units)

Young Chang and Samick (~ 75,000 to 100,000 units each)

Impact in United States due to

Asian Manufacturers
o

Zero share in 1950

By 1994
o

35% unit share of the vertical pianos

80% unit share of the grand piano

Industry Trends-4/4

Opening of new and potentially large markets.

Japan, South Korea and China now represented huge opportunities.

Major Competition is from

o

Baldwin

Yamaha

Kawai

Bosendorfer and Fazioli

Baldwin
o

High-quality grand pianos

In 1994-sold about 20,000 pianos-generating revenues of $122
million

Has a network of 700 dealers

Respected by trained musicians

Yamaha
o

100-year old Corporation

$1.0 billion in piano sales

35% share of the world market

50% share of the Japanese market

Unit Sales of piano producers in

1994
o

Baldwin- 20,000 pianos

Yamaha- 175,000 pianos

Kawai-100,000 pianos

Bosendorfer-400 grand pianos

Fazioli-60 grand pianos

Analysis-1/3
Strengths:
o

Brand name

Highest Quality

Traditional handcraft production techniques

Analysis-2/3
Weakness
o

too much cost is consuming( half of Lumber is being discarded)

The dealer network is reduced during Birmingham

Lack of diversity

Analysis-3/3
Financial capabilities
o

Owners has changed many times

Running in loss for two consecutive years 1992 & 1993

Seasonal downturn in demand

Suggestions
o

Continue making High Quality pianos

Market more aggressively

Continue Boston piano by maintaining its brand name

Expand into new Markets like Asia

Bring new products into the market like Steinway Limited Editions, The
Crown Jewel Collection etc..