Pearl River Piano Group

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• PRPG is a state owned company.
• Founded in mid-1950. Original name Guangzhou Pearl River Industrial Company
1987, and then Pearl River Piano Group in 1996.
• PRPG was subsidiary company under second light industry group.
• PRPG was formed by merger of state owned Guangzhou light industry group and
second light industry group.
• PRPG Product range :- pianos, violins and guitars

• PRPG advantage of low cost of production, but at same time provided good-quality,
inexpensive and entry level pianos.

• PRPG long term growth strategy will be export.

• US subsidiary in 2000; PRPG had advantage of low production cost in china

• EU subsidiary in 2003 in Germany, and had its sales network expanded to 14 EU by
2004.

• PRPG had co-operated with top-notch players in collaborative production and had
acquired foreign brands to upgrade its technical know-how, boost its brand image,
and develop its overseas distribution and service networks.
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PIANO’S: 

Acoustic Piano: 

Vertical piano: 
Upright
Studio
Console
Spinet

Grand piano: 
Small
Concert Grand Piano

Electric Piano: 

Electric pianos were the growing segment within piano segment.

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 Digital Keyboards: 

Electronic Keyboards: 
Used mainly to record and play popular music.
Trend’s in US PIANO market: 

• Numbers of pianos being imported were increasing.

• Number of customers purchasing used pianos was also increasing. These pianos were
mainly imported from Japan at about half the price new piano. But the market of used
piano also faced competition from Chinese products. Except for high end high end
brands, market for used pianos was shrinking.

Sales and distribution: 

• Pianos were distributed mainly through specialist piano dealers, second-hand piano
stores, general music stores school stores.
• Teachers and Technicians were the two most influencing decision makers in piano-
buying.
• Purchasing of pianos was influenced by word of mouth publicity.

• Piano companies used BTL advertising strategy (endorsements from pianist and
composers) as main tool to market pianos.
• Piano dealers used ATL advertising strategy (print ads/ TV ads/ radio ads/ direct mail/
• Piano retailers used promotion strategy (display of pianos in high profile, high traffic
facilities like malls, markets, clubs; school and demographic mailing; outdoor sales
event like county fair, home shows; rental programs for teachers and students)

Regional developments: 

• Global operations blurred the distinction between the origin of production and quality
of product.
• Global alliances created hybrid products in the market.
• Penetration of pianos in
• Japan: - 25%; EU: -30% to 40%; China: -1.8%

United States: 

• There was increase in unit sales but decrease in value of sales since Chinese
manufacturers had low-cost pianos. Due to this piano makers from Japan, Korea,
Taiwan lost market share.
• Increase in sales of grand and digital pianos while vertical pianos witnessed decrease
in sales.
• US manufacturers made acoustic pianos and did not have diversified range of pianos.

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sjain21.pune@rediffmail.com |
Japan: 

• Japan witnessed increased sales and production of pianos in year 2003. Also, unit
sales dropped in Japan but value of sales increased.

Europe: 

• The musical instrument market witnessed stable growth. Also locally produced
brands started importing products to remain competitive due to influx of Chinese
products
• Guitar was found to be the favorite musical instrument in UK.

Korea: 

• Local manufactures had advantage of high tariffs on import of pianos.

• Due to scarcity of production raw material domestic piano production dropped
considerably.
• In the US markets due to depreciation of Korean currency, Korean piano maker
competed neck to neck with Chinese and Japanese piano makers. Also the Korean
piano makers occupied the low end of piano market.

China: 

• China’s music market was 3.9% of global market. China was world’s largest
producers of pianos, guitars and violins.
• There were three type of music manufactures in china
1. Government owned.
2. Collectively owned.
3. Foreign invested.
• To promote pianos Chinese manufacturers established close relations with sultural
sectors and used social activities to promote music.
• To foster Chinese brand name the government allocated resources to companies to
improve on quality and boost exports.
• Piano was in infancy stage in China.

Production Stage: 

Design  Wood Selection  Natural/Artificial Drying  Making sound boards,

keyboards, frames, hammers and actions  Piano Assembly  Tuning and Regulation
 Completion and Test.

Competition: 

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• European piano makers :- skill and quality; Japanese piano makers :- modern
manufacturing
• Asian brands surpassed European and US brands combined.
• China accounts for half of the production of pianos each year.
• Due to China made piano the cost were reduced considerably and thus depressing the
industry price structure. Also the dealers and retailers found it easy to promote low to
mid quality product.
Japanese based companies: 
Yamaha
• World’s largest piano and music and sound equipment manufacturer.
• Plants in Japan, Europe, China and Taiwan. Operated 6000 music school.

Kawai
• Second largest musical instrument manufacturer in world.

Korea based companies: 

Samick
• Word Samick means three profits. (to employees; to investors; to Korea)

Young Chang
• Second largest piano manufacturer in world. Originally YC was distributor
of Yamaha pianos.

United States based companies: 

Steinway musical instrument incorporation

Baldwin piano and Organ Company

European based companies: 

L. Bosendorfer Piano
• Oldest piano manufacturer in the world
• Pianos still build by hands and managed by Austrians.

C. Bechstein
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(TILL HERE EVERY THING WAS CRAPPPPP!!!!!!!!!!!!!!! )
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Company Policies: 

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• Performance based salary; China’s economic reforms, long tradition of manufacturing
and vast pool of low-cost labor contributed to PRPG’s steady growth in its home
market.

Foreign sales and Marketing:

• Support to DEALERS:  Good margins to dealers; generating higher profits for
dealers even better than industry returns; motivation of dealers; autonomy and
supported by decision making process to dealer.
• Localization scheme; performance based increment in salary.
• Quality of products, consistency of supply, and good service and logistics were the
major winning factors for PRPG. Indeed, a good servicing team was something that
many Chinese companies lacked.

Foreign Expertise: 
• Use of automation; improvement in product design and quality.

Branding: 
• Invested in trade, educating about piano. Relied on public relations and event
sponsorship.
• By sponsoring events; forming join ventures.
• Collaboration with best piano manufacturers helped PRPG learn new techniques and
coupled them with Chinese production methodology.

Pricing and Costing: 

• PRPG piano was six to seven time cheaper w.r.t. production cost but in no way it was
low quality.
• Hired trained staff, large pool of quality labor; got certification from ATN, France
thus trying to prove cheap and grand co-exist.

Management: 
• Kaizen approach is visible due to which PRPG emphasizes on learning and
improving.
• Empathy towards staff at all level; two way communication with staff; providing
transportation, lunch, medical expenses, retirement plans, housing at nominal cost to
employees.
Looking Ahead: 
• “It doesn’t matter whether the cat is black or white, as long as it catches mice.”
• Till now tapped the cost sensitive customers art low end; now PRPG wants to target
mid to high end sector.
• Compete head to head with big well established players in global competitive market.

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  Problem Statement 
Could PRPG continue its export business?
 Answer 
Yes, due to increasing global market size, improving brand image of the company
globally, global tie-ups with world leaders, expansion of overseas production house to tap
premium segment and position itself as premium brand.

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