Relatively, Boston’s piano introduction also further eroded Steinway’s piano; a middle-range product an advance from the traditional offerings.
Strong competition stem from Yamaha and other Asian brand of piano. These new designs were built on highly automated systems and had quick assembly time than Steinways with a two year manufacturing time.
- Customer relations services
The competitors are better at rendering a highly valued after sales checks and feedback from their customers than Steinway. There is a track record of begrudged customers who have made official complaints about Steinway’s service level; an example in the case study is famous pianist Andre Watts who turned to a competitor (Yamaha) purely on this basis.
The frequent acquisitions and ownership change is a great challenge and pproduct quality has become a concern. This would possibly give rise to the problem of continuance of corporate mission. Therefore, it’s necessary for Steinway to retain its leadership position to fully understand and make attempt to maintain the core competences and brand image for customer retention and loyalty
What have been the recent challenges to Steinway’s Value Creation?
Competition
Main competitors are Yamaha – the largest piano manufacturer in the world.
Most pianos are vertical units - 90% - with small grand pianos making up the remaining 10%.
Their production is based on highly automated systems resulting in quicker assembly than Steinway, where a grand piano takes 2 years to manufacture.
To most users, other than classically trained pianists, Yamaha represents comparable quality to Steinway.
After-sales service is also an issue – the example in the case study is that of the famous pianist Andre Watts, who defected to Yamaha complaining of a lack of attention and support from Steinway.
Brand dilution
Steinway is the ‘Rolls-Royce’ of the piano market.
Throughout the CBS years (1972 – 1985), emphasis was placed on increasing levels of production. Critics began to question the quality of the pianos, and this filtered through to the customer. This ultimately led to a drop in sales and cancelled orders (at one point they had 740 boxed pianos left in stores awaiting shipment)!
The release of the Boston piano, in 1992, by the Birmingham Brothers (1985-1995) was a major shift in Steinway’s brand. This piano is a mid-range product, representing a significant break from tradition.
Perversely, Steinway’s quality has become a problem for them. Their pianos are so durable that the market for them is near saturation point. Second-hand units, that hold their value well, are now competing with sales of new units.
QUALITY now being diluted by QUANTITY!
Sustainability of hand crafted skills
Traditional labour practices, with employees staying with the company for many years, are now under threat from the modern working environment. People simply tend to change jobs more frequently. Furthermore, there is now a lack of skilled tradesmen.
External environment
On a wider scale, the piano industry has been in decline over recent decades. The introduction of new technology (electronic keyboards), as well as substitute forms of entertainment such as home computers, is thought by some to have contributed to this decline.
The longevity of Steinway’s piano: 70 to 80 years
Strict competition: The emergence of the Asian brand of pianos
Serwer, Andy, Happy Birthday, Steinway. ; 3/17/2003, Vol. 147 Issue 5, p94-97, 4p, 9c
Typical prices: Steinway Grand Piano ($26,000 to $70,000) – Boston Piano ($6,000 to $30,000).
Example: 20 year old Steinway grand piano will retain 75% of its original value.
Global sales dropped by 40% since 1980 (to 1994).
