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IDS 594 / MS 582 Mid-Term Examination
(Read the case study, and then answer the subsequent questions.)
Contemplate, for a moment, the story of piano maker Yamaha. The company would successfully
branch into snow skis, motorcycles, jet skis, tennis rackets, golf clubs, industrial unmanned
helicopters, and machine tools, but originally was founded in 1887 by Torakusu Yamaha to
make pianos. The company built up an enviable reputation for quality (it won prizes at the 1904
World‟s Fair for its pianos and organs), but suffered with the rest of Japanese industry during
World War II. When president Genichi Kawakami took over Yamaha in 1950, it only made a
few pianos, mouth-organs, and wind-up gramophones.
1954, Kawakami began to
develop a market for pianos as
well as the Yamaha brand.
started a music class for young
children that evolved
musical instruments). By the late
1980s, Yamaha had become the
musical instruments of all kinds,
not just pianos. Yet, the ultimate
brand recognition – the sort of
example, a Steinway piano – eluded Yamaha. “A Steinway is a Steinway,” said John Steinway.
It was an arrogant pronouncement that struck a faultless chord with Steinway‟s public.
Acoustic tests and painstaking consumer trials assured Kawakami that Yamaha pianos sounded
superior to Steinways. Indeed, Yamaha pianos earned a loyal following among jazz musicians
for their superiority. But that mysterious quality – prestige – bedeviled many Japanese
manufacturers who set out to conquer the world. Japanese cameras are the most technologically
advanced available. Yet, for rich Japanese, Germany‟s Leica carried the real prestige. Yamaha
motorcycles are known for their handling, reliability, and style. Who would prefer a finicky
Ducati or cumbersome Harley-Davidson to a stylish, powerful Yamaha sportbike? Unfortunately
for Yamaha, quite a lot of people.
Yamaha‟s painstaking attention to product quality and consumer preference has made its name,
arguably, synonymous with quality, design leadership, and performance. Consumer magazines
and product testing assure that the public is aware that Yamaha makes the best pianos. Yet, the
exclusivity of a Steinway, Fazioli, or Bösendorfer has assured the latter brands a mystique that
eludes Yamaha. It is obvious that branding is not just a way of signaling (that is, influencing
perceived quality) when a particular firm has a better-quality product. There are also effects at
the opposite ”luxury” extreme. These are called Veblen effects (a term for “conspicuous