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Sample Answer #3 - Sample Answer#3(1(Business Model Design...

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Sample Answer #3 1 (1) ( Business Model ) Design a business model for Yamaha Pianos for 2008 (20) a. What should be Yamaha‟s “story”; who are their customers?; what is the “value” that Yamaha brings to each customer group? Yamaha targets consumers who require a piano with a consistent, dependable and high- quality sound, but do not want to pay a high premium for that sound. They are targeting what I would call the “value consumer” who favors quality over brand marketing. Yamaha hand produces grand pianos to showcase and build the Yamaha brand. These pianos are used by high-end performance artists as a way of advertising the exceptional quality of the brand. They then use this brand equity to sell mass-produced lower-end pianos to customers who need an affordable piano with a consistent (though perhaps not the finest) tone. The artists receive free use of a quality musical instrument, giving their concerts the best possible sound. Some of the lower-priced groups could include jazz pianists (who might want higher quality but can‟t afford it) and educational organizations (including K-12 schools and universities.) In fact, many institutes of learning have been heavily hit by the budgetary knife and require a less-expensive al ternative to “luxury” pianos, like Steinway, while sacrificing as little as possible in terms of sound quality. b. Identify where Yamaha incurs its costs, and estimate how much these might be, given that a typical Yamaha C-3 grand piano today sells for about $20,000, while a comparable Steinway Model A or Bösendorfer CS sells for around three times that much, and at the opposite end, some comparable Chinese pianos and piano-like objects are sold for under $3000. Yamaha appears to incur costs in two major areas. One of the major expenses for the company is in the area of brand marketing. In order to attract buyers, they have invested in starting and maintaining a music school, where students learn to play not only the piano but other musical instruments that Yamaha manufactures. In this case, Yamaha is looking to ensure future users (and customers) of their products. They also have a program for renowned artists to use their pianos free of charge, as a way to showcase their product to their target audience. The maintenance and use of these pianos can be a very costly, but necessary, expense to raise the brand awareness. Another major expense involves the location of Yamaha. The case states that two-thirds of imported pianos into the United States come from Japan. The expense of shipping and insuring the safe arrival of their product into the U.S. would seem to be a major cost to the company. A couple of other costs for the company might include the shipping costs of raw materials (especially lumber) into Japan. They may also incur high inventory storage
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Sample Answer #3 2 costs during down economic cycles, depending on their estimates and operational efficiency. Finally, the company may be exposed to currency conversion risk of the yen versus the dollar.
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