Pearl River Piano Case Essay

5341 Words Feb 25th, 2011 22 Pages
Strategic Marketing Management
Written Case Analysis:
Pearl River Piano
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I. Background 3
II. SWOT Analysis 4
III. Issue Analysis 7
V. Alternatives: 11
VI. Decision Criteria 13
VII. Application of Decision Criteria on Alternatives 15
VIII. Recommendations – Global Diversification by Higher-Value Brand 18
IX. Conclusion 26
X. Appendices 27

I. Background

The Pearl River Piano group (PRP) had started as a Chinese state-owned firm in the mid-1950s. Due to low production cost and good access to raw materials, it enjoyed a price advantage and has successfully ventured abroad in the early 1990s. To further penetrate into the foreign markets, PRP has invited various expertises, upgraded its production methods and
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Perceived Poor Design & Appearance – As a mainland Chinese producer, PRP was perceived with poorer product appearance and lower quality of musical instrument than US producers.

Opportunities

After examining the external environment, PRP was facing the below marketing trends which increased its chance to meet its objectives.

i. Trading up to Grand Piano in US Market – Due to the falling average retail price (according to NAMM, down 5% in 2004), the grand pianos was gaining increasing popularity in US market. This “low-priced grands” lured some vertical piano owners to “trade up”. ii. Chinese Pianos to Substitute Used Pianos –There was a growing trend of customers buying used pianos, particularly in the US. As the price difference between used pianos and new Chinese pianos was slight, customers who preferred used pianos were being lured into buying new Chinese pianos instead. iii. Growing Top-of-the-line Musical Instrument in China Market – It was expected that as the income of Chinese Families continue to grow and parents were willing to invest heavily in their children’s cultural education due to China’s one-child policy, there was a growing trend of top-of-the-line musical instrument in China market.

Threats

The following uncontrollable external elements were identified that would prevent PRP from meeting its objectives.

i. Intense Local Competition – Since foreign players were marketing high-quality products at more affordable

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