CASE QUESTIONS
MARKETING WITHIN THE SEX INDUSTRY CASE STUDY
According to the Economist (1998), the sex industry is worth at least US$20bn (£11bn) a year and probably many times that figure. There are different categories of what may be called services, e.g. prostitution, striptease and telephone sex. There are also products which include pornography and sex aids. Currently the international sex business is being transformed from a largely amateurish approach associated with small business to more professional and imaginative offerings which offer products such as up-market escort agencies through the Internet or which exploit niches in the market. Globalization is a major factor, with hundreds and thousands of women from poor countries imported to wealthy countries where they work longer hours for less money and less concern for safety than their Western counterparts. A second trend is commoditisation, with prices being ratcheted downwards in a buyers' market. The same trend is happening with products, where sex videos feature more and more Central and Eastern European (CEE) actors who ‘cost less and do more'. The article discusses various options for the sex entrepreneur; for the ruthless, workers are treated abominably, smuggled and sold as sex slaves. However, in the long term the prospects for this form of cut-price prostitution look bleak.
One response (the more intelligent one) to global competition and price pressure is to go up market. Prostitutes in hotel bars and nightclubs charge five or six times as much as their sisters on the street. Upscale prostitution is safer; customers may be nicer, hotels offer more protection than a pimp. The same applies to pornography where the bottom end of the market is hopelessly oversupplied and most videos are boring, ‘barely distinguishable with feeble plots and dialogue'. It is argued that what really makes money is building a brand or finding a familiar face, like Tina Orlowske, the Hanover-based porn star who now runs one of Germany's largest sex video businesses. Differentiation by offering customers something new or different works too, catering to fetishes. In the US the San Fernando valley on the north side of Los Angeles's Santa Monica mountains has become home to the US adult film business. This is beginning to imitate the mainstream Hollywood industry, with its own Oscar ceremonies and studio system. Another fast-growing part of the US porn business is the home video industry, which has even lower costs. However, it is the Internet which offers the greatest prospects for growth.
1. Describe, using examples drawn from the case, how Columbia's sales and marketing department could be described as being myopic in Levitt's sense of the word
2. What deep seated problems underlie these instances of myopia?
3. List each problem and discuss the possibilities of addressing it.
4. How relevant is the case to the way in which the record industry operates today?