Pearl River Piano Case Study

Pearl River Piano Case Study

1st Seminar Global Marketing

IMM 2018/19

Questions:

• Describe Pearl River Piano’s way of internationalization
• Why did Pearl River Piano internationalize?
• Compare Pearl River Piano’s way of internationalization with the Uppsala model
• Develop the Pearl River Piano (i.e. Asian Tortoise) model of internationalization
• What were the motives of PRP to acquire Ritmüller, a sleeping brand?
• What benefits does the Schimmel acquisition offer for Pearl River Piano?
• What benefits does the acquisition offer for Schimmel?

Task: Prepare 3 texts at home for in class discussion on above questions

1. Excerpt from Kumar, N., & Steenkamp, J.-B. E. 2013. Brand breakout: how emerging market brands will go global. Basingstoke: Palgrave Macmillan. (31-33)

“Consider China's Pearl River Piano Group, the largest piano manufacturer in the world. Fifty years ago, it made only four pianos a month. Today, it accounts for 18 percent of the American market and 15 percent of that in Europe. Its Asian Tortoise strategy? Make the cheapest pianos first, then the most pianos, then the best piano, and finally the most desired brand of pianos - a succession by no means complete. Yet an examination of the company's history demonstrates that corporate-level factors were mostly put in place.

        In 1994, Pearl River Piano formed a joint venture with Japan's Yamaha in Guangzhou, China, learned what it could from Yamaha, and then dissolved the relationship. The results were probably not what Yamaha expected. Wikipedia observes: "After learning and emulating Yamaha's production processes, the Pearl River Piano Group ousted Yamaha's ownership of the factory along with the backing of the Chinese government."

        To improve the quality, operations, and brand perception, Pearl River Piano also engaged many of the world's top designers and technicians such as Charles Corey (director of Wurlitzer Piano) and David Campbell (technical director of Steinway) for as much as RMB 20,000 a day, at a time when an annual salary of RMB 10,000 was above average in China. Lothar Thomma, a Swiss national and master piano designer who had worked for leading German manufacturers, was responsible for designing many of the more premium Pearl River pianos, and they carry his signature.

        Pearl River Piano first targeted the US [opening its first foreign office in Los Angeles in 1999], the largest piano market outside China. The company determined that Americans would be more willing than Europeans to try unfamiliar but good value brands. In 2000, a Pearl River piano cost a third of a brand new Yamaha piano ($9,000) and less than a second-hand piano. This lower price attracted enough people to try the Pearl River products; by 2003, Pearl River Piano had a US market share of 13 percent. [In 2004 it opened its first European brand in Munich.]