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"It's a Steinway"

Topics: Corporate Mission; Competitive Advantage; Distinctive Competencies; Achieving Superior Quality, Innovation, and Customer Responsiveness; and Nonprice Competition

Company: Steinway Piano

Length: 15:00

Chapters: 2, 4, 5, 6, and 7 (See "Key Concept Integration" section for details)

Case: 12 "Steinway & Sons"

Teaching Objectives:

  1. To illustrate how students can discern a company's corporate mission from the products the firm manufactures.
  2. To show how a firm creates value for its customers and how it prices its products accordingly.
  3. To reveal how a company can maintain a competitive advantage for a century and more.
  4. To discuss the importance of distinctive competencies.
  5. To review what it takes to achieve superior customer responsiveness.
  6. To show students how they can discern nonprice competitive strategies in action in the marketplace.

Key Concept Integration: 

Key Concept Chapter

Mission Statement 2

Competitive Advantage 4

Value Creations 4

Distinctive Competencies 4 and 6

Durability of Competitive Advantage 4

Sustaining Competitive Advantage 4

Achieving Superior Quality 5

Achieving Superior Innovation 5

Achieving Superior Customer Responsiveness 5

Product Differentiation 6

Nonprice Competition 7

 

Content:

This informative promotional video begins with:

"In a time when assembly line, mass production is king and the skills of craftsman quickly fade away, one tradition survives. For more than 135 years the symbol of how a piano should look, play, and sound . . . with a touch and tone no other piano can offer. Built on exacting standards of excellence handed down over five generations . . . standards that will not be compromised. At Steinway, piano making is an art."

The video then goes on to discuss the company's reputation of creating what many concert and other pianists consider the highest quality pianos in the world. It builds a convincing argument by weaving statistics such as, " . . . at Carnegie Hall where the world's most talented pianists come to perform . . . 9 out of 10 perform on a Steinway," together with scenes of internationally acclaimed artists performing on Steinway pianos. Even world-renowned pianist Van Cliburn is seen highly praising Steinway and its consistency.

The video shows the quality of the Steinway's components; the skilled care, craftsmanship, and attention to detail in the manufacturing process; the number of steps and length of time required to manufacture a Steinway; the difficulty involved in the manufacturing process; and it explains a number of the firm's patented components. It does all this while again showing scenes of highly acclaimed artists playing Steinways. The video makes clear Steinway's philosophy: " . . . to build the finest quality pianos in the world."

Even finance majors will be impressed when they see the investment performance of a Steinway piano. For example we hear that as an investment, Steinway pianos have increased 200% over a ten-year period. We're also told that when resold, grand piano owners received an average of 430% of original cost.

The above, combined with the image of a "product of enduring value" . . . indeed a cherished family heirloom that represents The Standard of Excellence . . . the piano preferred by over 900 of the best classical, jazz, and popular musicians . . . and so on, will cause some viewing the video (including even some who don't play the piano) to want to own one.

Introductory Exercise:

In that some students believe that "low price" is the key to building and maintaining a competitive advantage, it might be interesting to ask the students (prior to showing the video or assigning the case) how they would go about building a competitive advantage if they were to start a company that manufactured pianos. Alternatively, you might make the question more generic by asking them how they would go about building a competitive advantage if they were to start a company that manufactured "musical instruments." After this initial discussion, you might ask them how they would go about maintaining their competitive advantage.

Discussion Questions:

  1. Although the video does not expressly specify Steinway's mission statement, it can be discerned in the video. Based on the video, what would you say is Steinway's mission?
  2. How does Steinway go about creating a value for its customers that is high enough for the product to be so expensively priced?
  3. What are Steinway's distinctive competencies? Why are they important?
  4. How long has Steinway maintained its competitive advantage? What three factors have enabled it to do so in face of significant competition?
  5. In terms of focusing on the customer and satisfying customer needs, what evidence do you see in the video that Steinway has achieved superior customer responsiveness?
  6. Which of the four nonprice competitive strategies based on product differentiation is Steinway using to manage rivalry within the piano industry?

WWW Connection:

You may wish to link the use of the WWW with this video exercise. An interesting exercise would be to ask students to research the firm on the Web and find out more about the company and issues related to the video. An excellent place for general company information is Steinway's Web page (http://www.steinway.com/).

As might be expected, this Web site is an artistically pleasing one. Its sections and sub-sections include:

Concert Hall

Technical Information

Showroom

Factory Tour

Boston Pianos

Whether you provide students with the above address is a matter of choice. A good compromise might be to suggest that they use a search engine (i.e., Yahoo, Excite, or Infoseek) within their Web browser to search for information about the company.

 

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