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Yamaha Midterm - Student ID Student Number IDS 594 MS 582...

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Student ID _________________________ Student Number _____________________ Page 1 of 12 IDS 594 / MS 582 Mid-Term Examination Yamaha ’s Pianos (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. In 1954, Kawakami began to develop a market for pianos as well as the Yamaha brand. He started a music class for young children that evolved into the worldwide chain of Yamaha music schools (as well as showrooms for Yamaha‟s musical instruments). By the late 1980s, Yamaha had become the world‟s leading maker of musical instruments of all kinds, not just pianos. Yet, the ultimate brand recognition the sort of prestige that went with, for 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 “conspic uous
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Student ID _________________________ Student Number _____________________ Page 2 of 12 consumption” after Thorstein Veblen who wrote about them at the turn of the 20th century in The Theory of the Leisure Class). As a good becomes rarer or more exclusive, the price of the good rises, which some customers may see as a premium signaling greater quality.
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