Strategic Management. CASE STUDY - Steinway and Sons. 9 th April, Submitted by: Naeem ul Hassan MBA- Weekend

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1 CASE STUDY - Steinway and Sons 9 th April, 2016 Submitted by: Naeem ul Hassan MBA- Weekend Sources of Brand equity for Steinway

2 Steinway & Sons - one of their major strength and value addition is their brand equity, which is built into the long established and traditional brand identity and the perceived brand quality and image of the Steinway pianos. The Steinway piano over the years has been identified as one of the topline premium and high priced piano with a market niche and high market share. Their Quality and differentiation have been the key strategic elements in the brand strategy of Steinway, which has been very successful and made them pioneer in the higher end markets. This strategy should not be diluted. This identity of Steinway pianos should be maintained and kept separate from other brands. At the 1867 Paris Exhibition - The jury awarded Steinway the prestigious Grand Gold Medal of Honor for excellence in manufacturing and engineering. SWOT Analysis Strengths Steinway and Sons have an established brand reputation of quality and durability There are minute differences between the sound of each crafted piano which allows for differentiation and customization of the product The Steinway Concert and Artist program has around 850 artists whom choose the Steinway and Sons piano Weaknesses CASE STUDY - Steinway and Sons Page 1

3 The durability and quality of their products limits the concept of repeat buyers and brand loyalty The average customer is over 45 years old and earns in excess of $100,000/year With the introduction of the Boston piano line, Steinway and Sons image took a step away from tradition Growing technology and innovation has taken toll on traditional pianos; they have been replaced by keyboards and other computer technology Opportunities Establish a larger customer base in Asia to increase market share Steinway and Sons could increase their industrial market by offering discounts to universities or concert halls and/or being more customer service oriented Using innovative technology, Steinway and Sons could potentially Threats increase markets by appealing to lower and middle class purchasers with low to mid-priced products With the expansion of Asian manufacturers, global market share is no longer being controlled by American manufacturers There are levels of inexperience of the current younger owners/ceos Business Level Strategy Steinway should continue its high end niche strategy by brand extension strategy and also should start marketing its pianos more aggressively. As the market is more favorable now, and more focus should be on the growing Asian market will give higher profits. The Pricing strategy needs to be modified as the Pianos are costed very high. Check to be made on the Production Control system to reduce the cost of the Pianos. Poor executive management and poor customer service CASE STUDY - Steinway and Sons Page 2

4 ensued; potentially damaging the Steinway brand should be given more concentration for areas of improvement. Promote the uniqueness in sound of each Steinway piano by leveraging the existing relationships with current professional musicians and aggressively seek to forge the relationships with them. The Goal of the new leadership team must be propagated from Production shop floor to the boardroom floor. Stretching the Brand Steinway and Son's which has a good brand equity should maintain the reputation of its existing brand and should focus more on implementing brand extension strategy. Steinway with a proper brand extension strategy, consumers can make inferences and form expectation as to the performance of a new product based on what they already know about the base brand itself. Different brands may be designed and marketed to the market segment, keeping in mind to design a brand portfolio there by aid in maximizing market coverage, by clearly differentiating each brand. They should focus more on the growing sales by maintaining quality in the niche market segment by reinforcing mid-priced Boston and introducing new lower-priced piano to Asian market to compete against low-price competitors. Low Price addition to the product line. They should introduce another low prices line of pianos below the Boston Line. The mid-priced instrument manufactured by Steinway, Boston piano made by Kawai in Japan to specifications described by Steinway. CASE STUDY - Steinway and Sons Page 3

5 Although Boston piano line represented a significant break with tradition, these mid-price Pianos are mainly for the customers who were not yet ready to acquire a Steinway. Moreover, Boston made big revenue over 600% from 1992 to To make more money Steinway needs lower price of piano than Boston. Hence they should introduce new lower-priced brand through cooperation with other Asian manufacturer except for Kawai for technology protection. CASE STUDY - Steinway and Sons Page 4