Case of Steinway & Sons

1640 Words Jun 16th, 2012 7 Pages
Case of Steinway & Sons: Buying a Legend

In the case of Steinway & Sons, two investment bankers, Dana Messina and Kyle Kirkland are faced with the question of how to build on the business. Steinway & Sons was established in 1853 in New York City, by Henry Engelhard Steinway, a German immigrant who became well known for his technical excellence in piano production. It is a 140 year old company, and has been recognized as a leader in the market for high quality grand pianos. The primary problem facing Messina and Kirkland is whether they should continue producing high-end, top quality vertical and grand pianos or pursue a more aggressive plan, including the mid-priced line of Steinway pianos. Does it make sense to sell a mid-priced
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Firstly, by expanding the Steinway brand on to a mid-line product, you are eliminating the high status linked to the Steinway name. The Steinway name may no longer be considered exclusive and may begin to erode. This will also hurt sales, Steinway products are already more expensive than their competitors because of their brand equity, if it is reduced, consumers may no longer be willing to pay more for an ordinary brand. Another disadvantage is the smaller profit margins associated with the lower priced pianos. In order for Messina and Kirkland to maintain their current profit earnings they will have to sell two mid-priced pianos, for everyone one Steinway piano not sold due to promotion of the Boston line. Finally, the typical buyer for a Boston piano is only 5 to 10 years younger than a Steinway buyer, and is slightly less affluent. There may be an increase in market share; however there is a large portion of the market unaffected bye the promotion of this mid-priced Boston line. These are some of the risks involved in promoting the Boston pianos. The third alternative is that Steinway should maintain their current production lines and introduce a third line of pianos that are fairly inexpensive and more affordable to a wide variety of consumers. With this alternative Messina and Kirkland should continue to produce both the Steinway and Boston pianos and introduce a third entry level piano line for the

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