5. 1
Customer Profile
After countless hours of primary and secondary research, the purpose of this paper is to outline
exactly who the target customer is for CeraVe lotion. In the following pages, the marketing persona,
usage observation insights, shop along insights, secondary data, and Nielsen data will be examined in
great detail.
Amy Gilbert is a 35-year-old mother of three children. Amy lives a very busy life as she tends to
the needs of her children while supporting her husband Mike in his full-time career in finance. Mike and
Amy have been married for ten years and have an annual income of $90,000. Amy has some college
education and her husband Mike received his master’s degree in finance from Columbia University in
New York. As a family, they love to travel regularly, go camping, and spend quality time together.
A typical day for Amy is spent at home with her children while she helps them with their
homework and keeps them entertained throughout the day. Despite being so busy with her family, she
loves to browse social media and create content on various blogging websites. Amy feels that staying
connected with other people helps relieve her from day-to-day tasks. While the kids are home, Amy will
often find herself doing crafts and using Pinterest to find fun ideas of things to do. While juggling her
kids, her hobbies, and other responsibilities, she will often need to run a quick errand or go grocery
shopping. While she is out and about running errands, she is often exposed to billboards, television ads,
and in-store advertising.
In addition to these mediums of advertising, Amy also sees a variety of Facebook ads and other
social media advertisements while spending time at home. Because of her interest in blogging and being
a part of a social network, she is also involved in many community groups such as book clubs, yoga
clubs, and her local church network. Her friends from these groups have a huge influence on what Amy
decides to purchase and very rarely she will make a purchase without consulting with her friends first.
Amy’s husband Mike does not have a huge influence in the minor purchases that she makes because he
trusts her to buy what is best for the needs of the family.
Amy believes that being actively involved in a good cause helps her to live a happy and eventful
life. She does her best to serve others around her and looks for opportunities to make a difference in the
lives of others. Occasionally she will get frustrated if something takes too long or if she unable to fit
everything into her schedule.
Claire, one of Amy’s children, suffers from severe eczema. Amy tried many different lotions in
attempt to find one that worked well with her daughter. After countless hours of searching, Amy was
introduced to CeraVe by her dermatologist and she has used it ever since. Not only does Amy use the
lotion for Claire, but she also began using it for herself. Originally, she purchased CeraVe for her
daughter but very quickly found that she loves what it does to her skin. Because of the immediate
effects of CeraVe, she very quickly became a very loyal customer and started telling her friends via social
media about her experience. She feels that CeraVe is a great lotion but she wishes that more people
knew about how well it works. Occasionally, she will buy other brands such as Aveeno, and Cetaphil just
because they are a more well-known brand. She also discovered that most of her friends use other
brands because they see a lot of people buying Aveeno and Cetaphil and so they assume that it works
very well. Despite Amy’s use of other brands, she is particularly fond of CeraVe because when she uses it
she feels that it is not as oily as the other brands. After she is done using CeraVe, she notices a big
difference and her hands feels very smooth. Her biggest reason to believe that the lotion works so well
is because of the improvements that it had on her daughter’s eczema.
Amy loves that the lotion is not as oily as other competitors and that her dermatologist
recommended CeraVe and not any other lotion. Because her dermatologist recommended CeraVe, she
feels a strong desire to continue using the lotion and to share her experience with her friends. She wants
to share CeraVe with her friends and have them try it and so she wishes that there were trial sizes
6. 2
available that she could give to other people to try. Not only would this help her friends, but it would
help Amy feel that others use CeraVe as well and that would boost her confidence in the product even
more that it already is.
Amy plans on using CeraVe for the rest of her life because she has found great value in many
different features of the product. The lotion has provided many benefits in her life and her family. She
loves that the lotion helps her daughter Claire to live a happy and healthy lifestyle despite her severe
eczema. To Amy, the lotion is much more than just a typical lotion but it is a lotion that provides relief to
her and her family which helps them to feel secure as they overcome issues with dry skin. Everyone in
her family uses CeraVe to one degree or another and they are happy to share their wonderful
experience with those they interact with. Amy’s biggest hurdle is that she wants to be able to bring
CeraVe with her wherever she goes so that her and her family can have the relief they need regardless
of where they might be.
As part of our primary research, a usage observation was conducted where each one of our
team members observed different ways that a CeraVe customer uses the product. From each of the four
observation studies, we learned that most CeraVe customers have difficulty finding out about CeraVe. In
most cases, a consumer will search around for quite a while and will try many different lotions before
finally resorting to their dermatologist’s recommendation—CeraVe. After the initial trial of CeraVe, the
consumer is very likely to become a loyal brand user and continue that way for the rest of his or her life.
Regarding the value of CeraVe’s products, consumers have found value in the fact that the lotion really
helps dry skin and eczema. In addition to the effects of the lotion, consumers place very high value on
CeraVe because it is highly recommended by dermatologists.
The typical CeraVe consumer, like Amy, stores the lotion in a variety of different locations
throughout their home. There is not one single place that fits every consumers needs and it isn’t
uncommon for consumers to keep multiple bottles of CeraVe spread out in different places throughout
their home. As the life style of a middle-aged woman is very busy and constantly changing, the
consumers tend to want their CeraVe in many locations so that when they need the lotion, it is
accessible. Many consumers are looking for an easier way to carry CeraVe with them as they go about
their busy day-to-day lifestyle. If they put a big pump bottle of lotion in their bag to take with them, they
feel that the bottle will leak lotion all over their belongings.
Another key insight from the usage observations regarding how the consumers use the product
is that generally, the consumer will wash his or her hands or body prior to applying the lotion. They feel
that doing so will help the lotion soak in better and help their skin retain the moisture from both the
hand washing and from the application of the lotion. One of the main reasons why consumers love
CeraVe so much is that because after each use, there is not a super oily feeling left on their hands or
body. For this reason alone, many CeraVe users have hard time returning to previous brands they used
prior to using CeraVe. Consumers love the fact that they can apply the lotion at any time of their day
and continue with their routine without having to wait a long time before their fingers don’t leave oily
fingerprints on everything.
For consumers, applying CeraVe is a daily routine that they look forward to each morning or
evening. What consumers struggle with is that if they want CeraVe during the day or when they are out
of the house, it is often hard to get a hold of because the bottles are too big and they leave them at
home. When dry skin starts itching and needs relief, consumers want to have CeraVe close by so they
can get immediate relief from their dry and itchy skin. The typical consumer enjoys traveling and going
on adventurous outings and wants to bring CeraVe with them wherever their heart takes them. The
pump bottles are great for when the consumer in in his or her home because it is quick and convenient
but they want to bring that convenience to their lives outside of the house.
There are many different ways that CeraVe is used and some of them might not be as expected
as you would think. Because CeraVe consumers use the lotion primarily for severe skin conditions and
7. 3
eczema, they often use the lotion on most of their body. For the middle-aged women who use CeraVe
on their children, this is especially common. Many consumers love that CeraVe is kid friendly and this
caused them to apply lotion over their baby’s entire body. Consumers love the fact that CeraVe is not
just a hand lotion but that it can be used for dry skin on the legs, arms, hands, chest, etc.
In wrapping up the insights about the consumer from the usage observations, one of the final
and most important items to be discussed is that of how the typical consumer first encounters CeraVe.
For most customers, CeraVe doesn’t find them but rather they have to search extensively before they
find CeraVe. In some situations, a consumer will not even go to the dermatologist until he or she is in
dire need of a good lotion to help with severely dry skin. Another common method that consumers are
discovering CeraVe is that a parent will bring their child into the dermatologist and then the
dermatologist will recommend CeraVe for the child’s use. From there, the parent will begin using his or
her child’s lotion and then becomes a loyal customer. Consumers are having to search for CeraVe and
they want CeraVe to become a common household lotion and they want their friends to know about
how well the product works.
In addition to the usage observation studies, each team member performed a shop along and
observed how CeraVe consumers behave in the buying situation. The following paragraphs will discuss
the major insights found in the study that help define further who the target consumer is and how they
behave when purchasing CeraVe. Every single consumer that discovered CeraVe because of a
dermatologist recommendation values that recommendation very highly. The impact that the
dermatologist recommendation has on price sensitivity shows that consumers value the
recommendation. Many consumers were asked how much they would be willing to spend on CeraVe
and it was not uncommon to get an answer such as “If a dermatologist recommends it, how much it
costs doesn’t really matter, I will buy the product”.
Another feature that consumers value highly is the National Eczema Association seal of
acceptance because it shows consumers that the lotion is credible and that it actually does what it
claims to do. Even though a typical consumer likes the seal, many find it difficult to locate the seal when
looking at CeraVe packaging because the seal is on the back. The seal is awarded to some other
competitors as well but it still elevates CeraVe to higher point and builds credibility. The seal stands out
to consumers and they feel that because CeraVe has the seal on the packaging, that the product is a
great lotion.
The CeraVe consumer is different from the consumer of other competitors such as Aveeno and
Cetaphil. The biggest difference between CeraVe consumers and other consumers is that most users of
CeraVe use it because of a medical condition, like eczema. The lotion itself is not usually used unless it
was first recommended for a specific skin condition. Although, after initially being introduced to CeraVe
for a specific skin condition, many CeraVe consumers end up using the lotion as a day-to-day lotion. The
competitors like Aveeno are more considered for their everyday use for any type of skin and not
specifically for eczema. Another differentiator of the CeraVe consumer is that most CeraVe users are
very loyal to the brand because it is the only product that works for them. Many consumers of the
competitors are not as fiercely loyal to their products because they merely use the lotion for day-to-day
use and just want a lotion that feels good and doesn’t necessarily need to cure a skin condition.
Some of the major challenges that the CeraVe consumer faces are issues with packaging. As
discussed earlier, consumers want to be able to see the seal of acceptance from the National Eczema
Association more clearly. The part of the packaging that the consumers love is that it is simple,
professional, and not too cluttered. CeraVe consumers feel that the packaging of other competitors such
as Neutrogena gives them the appearance that they are fake or that they need to be flashy and exciting
because the lotion won’t sell itself. For CeraVe, the packaging helps the consumer feel that the lotion
truly works and is recommended by the people with the credibility to recommend a great lotion. In one
specific shop along study, the major insight was that lotion consumers in general assume that the more
8. 4
elaborate and pleasing the look of the packaging, the higher the quality of the lotion itself. Another
specific consumer said that CeraVe packaging reminds her of a prescription—it has the feel of a
“medicated lotion”. This is in line with where CeraVe is trying to position itself. The assumption is that
the packaging is well liked by consumers and they want to more clearly see the seal of acceptance on
the bottle.
In search of more details regarding who the target consumer is, secondary research was
conducted and there were many insights found in a variety of databases. The following paragraphs will
discuss some of the major insights about CeraVe consumers which was found using secondary research.
One of the key insights we discovered is that consumers of lotion as a whole are looking for accessibility,
affordability, and awareness in the lotion that they choose to use. CeraVe consumers feel that CeraVe
can improve in these areas, but they especially want the lotion to be more accessible. Many consumers
have expressed that finding CeraVe is a difficult process and that they had to spend a lot of time and
money on other lotions before their dermatologists recommended them to CeraVe.
In addition to accessibility, affordability, and awareness, lotion consumers want lotions that
include simple usage instructions, easy storage, easily resealable, and controlled dosage. CeraVe
performs very well in these attributes and the voice of the consumer goes to show that CeraVe is very
simple and easy to use. However, consumers have voiced their opinions that they would like packaging
that is more convenient for them to use in their daily routines. Not only do CeraVe consumers show that
packaging is important but that the ingredients used in the lotion are important. The ceramides used
within the CeraVe lotion give consumers an even stronger reason to believe that the lotion works well
because of the science that backs it up.
One of the sources used for secondary data was from Nielsen’s database. This information was
found to be helpful in defining who the target customer currently is, and where there is opportunity to
grow within other segments of the market. The data shows that anywhere between 75 percent and 80
percent of all CeraVe users are Caucasian. The other 20 percent of the consumer base is made up of
Hispanics, African-Americans and other ethnicities. In terms of geography, the data goes into detail
about where CeraVe consumers live and a whopping 41 percent of them live in the southern census
region of the United States. consumers in the southern regions of the United States are exposed to more
heat and sun and perhaps this is a primary reason for the large consumer base found in the south.
The Nielsen data also shows that the CeraVe consumers make up a very small percentage of the
total United States. With only .3 percent of U.S. households having used CeraVe at least once, this gives
a lot of room to grow and expand into new households which is what many consumers want. Of the
households who use CeraVe, a majority of them purchase CeraVe from drug stores as opposed to many
competitor’s consumers who purchase their lotion primarily in club stores.
The biggest insight from all of the Nielsen data is that over one third of current CeraVe
consumers are over the age of 55. There seems to be two major branches of who the CeraVe consumer
currently is. There is the older generation of consumer who have used CeraVe for many years and have
remained loyal to the brand because they love the effects that come from using the lotion. The second
group of consumers is the target market that we have chosen to focus our efforts on, which is middle-
aged women. This target consumer base is full of potential and we will be focusing on how to reach this
target market throughout this report.
In summary, CeraVe’s target consumer is a middle-aged woman who lives a busy lifestyle as a
mother, a wife, and an active member of the community. She values CeraVe as it brings great relief to
her, her daughter, and her entire family. As an adventurous person who loves to travel, Amy wants to be
able to bring CeraVe with her wherever her life takes her family. The information, recommendations,
and justifications, following this consumer profile are based on this target market and are focused on
improving the entire experience of consumers within while at the same time generating profits for
CeraVe.
9. 5
Product Analysis, Market Analysis and Marketing Framework Analysis
CeraVe is not a widely-recognized brand. However, amongst its current users, there is a large
“love group.” CeraVe holds a small market share within the health and beauty category, yet it maintains
a fairly strong presence within its niche market for consumers with extremely dry skin—specifically
those with eczema and psoriasis. CeraVe’s strengths lie in its actual product. They boast an advanced
formula with a non-greasy feel which converts most customers after their first use. However, many
consider CeraVe’s weakness to be its lack of versatility among travel size containers and “on-the-go”
packaging. Because of its small overall market share within the beauty industry, CeraVe spends little on
advertising and generates most of its business through referrals. This presents opportunities to grow the
product and expand its reach. The threats of the company lie within its lack of distinguishability from its
competitors—many of whom are large players in the beauty industry. Within its industry, CeraVe is
small, but growing. The actual product is the brand’s greatest asset, and by developing more accessible
products and expanding their reach to a broader audience, CeraVe can gain market share and become
the ultimate leader in the dry-skin category.
CeraVe’s lotion and moisturizer are among the best in the entire $3.45-billion-dollar health and
beauty industry—just ask your local dermatologist. CeraVe’s greatest strengths lie in its love group,
which are its current users and essentially all dermatologists. The most common form of customer
acquisition is through referrals. Most of their new customers have heard of the moisturizer from either a
friend who currently uses it, or a dermatologist/doctor who recommended it. We found that after
receiving a referral from one of these sources, most users quickly purchased and tried the
product. Friends, and educated and experienced dermatologists are trustworthy. CeraVe does an
incredible job of marketing through these sources. Because of these means of acquisition, consumer
price sensitivity is very low. We spoke with one current consumer who explicitly said she would pay up
to $300 for a single bottle! Most consumer thinking goes as follows: if my friend can afford it, I can
afford it. And, if my dermatologist recommended it, it must be the best—therefore, it is worth the price.
In addition to peers and physicians, customers trust accreditation. On each of its products, CeraVe
boasts a seal of acceptance from the National Eczema Association. This provides efficacy to the product
and further validates its price point. CeraVe’s greatest strength, however, is the product itself. The
biggest pain point among lotions is the post-application greasy feeling. CeraVe has nearly eliminated this
problem with its moisturizing cream, and customers love it. In the usage observations and shopalong
interviews we conducted, we found that this is the main feature of the product that creates brand
loyalty. Many customers, especially those with dry skin, find a brand they like and stick to it. One
member of our group who is an active CeraVe user has been using the product for four years, and has
no plans of switching brands. CeraVe’s strengths lie in its love group, its word-of-mouth marketing
tactics, its low-price sensitivity, and it’s soothing, non-greasy feeling.
Although the product is effective, it is not flawless. CeraVe customers love the product, but not
the size of the containers. A weakness for the brand is the lack of availability in travel sizes and “on-the-
go” packaging. The CeraVe website boasts travel size containers and accessible bottles, yet not one of
the current customers we associated with even knew travel size containers were available. A few
customers even created their own “on-the-go” bottles. Rather than choosing a CeraVe branded package,
he carries around a small, green container that contains CeraVe lotion. This is the only lotion he uses in
public, so his CeraVe branded bottle stays at home, unseen. Large containers lead to longevity of the
product. This quality is good for the customer, yes, but bad for the company. Many customers take nine
to twelve months to finish a single container, which leaves long gaps between purchase experiences and
creates opportunities for competitors to exploit. By increasing promotion for travel size containers,
CeraVe will increase their interactions with customers while simultaneously increasing profits. We found
that most customers use CeraVe in the morning and at night, because their CeraVe bottle stays at
10. 6
home. However, dry skin is an all-day affair. Many customers expressed a desire for lotion that they can
keep in a purse, backpack, or car to keep their skin hydrated throughout the day. Some consumers
expressed the concern that when traveling on vacation or on camping trips, their CeraVe was either
forgotten at home, or intentionally left at home because they didn’t want the lotion to spill in their bag.
These are all problems that could be solved with a more widely distributed “on-the-go” package.
With its dermatologist recommendation and eczema association accreditation, CeraVe is
promoted as a medicinal and prescribed lotion. Although this is a great niche, this reputation also leads
to a problem at the store shelves. CeraVe does not generate much business from the consumer who has
never heard of the brand. With plain packaging and essentially no advertising, CeraVe does not stand
out amongst the Neutrogena’s, Aveeno’s, and Nivea’s of the skincare industry. CeraVe doesn’t even
stand out from its closest competitor, Cetaphil, who is also not an industry leader. Although Cetaphil
holds only 3.4 percent of the market share (compared to CeraVe’s 3.3 percent), many consumers
mistook CeraVe for Cetaphil and some even considered them to be the same product. This poses a
problem for CeraVe and calls a need for more developed marketing and packaging. If CeraVe can
further distinguish itself from Cetaphil, CeraVe will be able to gain a greater market share as new
consumers do not mistake the two competitors as the same company.
As a company, CeraVe does recognize many of these opportunities. Just within the past two
months, CeraVe has introduced a new healing ointment with more advanced packaging. Their new
product boasts a deep blue container, compared to their typical white container. This new line of
healing ointment stands out from their other products, and from most of their competitors—but this
does nothing for their flagship lotions and moisturizers. If CeraVe is going to increase point-of-purchase
sales, they must improve and distinguish their packaging from their competitors, especially Cetaphil.
Additionally, CeraVe must embrace the opportunity to increase margins with smaller, more accessible
packaging. This will maintain and establish brand loyalty among customers who already have CeraVe in
their home. Other opportunities for the product include expanding into new categories, such as soap.
With body wash and moisturizers, CeraVe can grasp the dollars of consumers already invested in their
moisturizing products. The largest opportunity for growth for the brand is in advertising. The brand’s
online presence is weak, and its television and social media advertising is non-existent. Prospective
customers do not know about the product, and instead choose market leaders whose products are less
effective. CeraVe holds a solid grasp on its small niche market, but must embrace these opportunities if
it desires to grow into a market leader.
Within the hand and body lotions category of the health and beauty industry, Aveeno is the
market leader, but holds only 5.5 percent of the market share. In 2014, Aveeno grossed approximately
$100.1 million dollars in revenue and saw an 8 percent growth that year (Statista, 2016). Although
Aveeno leads the market, Cetaphil is CeraVe’s closest competitor. Both Cetaphil and CeraVe are
considered medicated lotion, and appeal to the markets for eczema and psoriasis relief. This distinction
sets them apart from the scented lotion category. Unfortunately, companies like Aveeno tend to steal
the majority of the market share because of their large advertising budgets. Although these scented and
well-exposed lotions are well known among consumers, their product is not nearly as effective. They do
not have the seal of acceptance from the National Eczema Association, and they are certainly not being
recommended by dermatologists. Fortunately, in its medicinal category and compared to Cetaphil,
CeraVe is on the rise. From 2013 to 2014, CeraVe saw a 17 percent increase in sales compared to
Cetaphil’s 9.4 percent growth (Statista, 2016).
Although Cetaphil’s growth isn’t as rapid as CeraVe, Cetaphil does hold some advantages in their
war for market share. Despite Cetaphil’s market share being only 0.1 percent larger than CeraVe, the
Cetaphil brand is more widely recognized amongst consumers. In most grocery stores, the two brands
are found side-by-side with similar bottle sizes, similar logo fonts, and white containers. Color scheme is
the main differentiator, with Cetaphil’s green logo and CeraVe’s multi-colored triangles associated with
11. 7
each product line. Amongst their similarities, Cetaphil dominates in container size options. Like other
market leaders, Cetaphil broadly distributes small and convenient packages to supplement its regular
sized bottles and tubs. For consumers looking for an “on-the-go” solution, Cetaphil will earn their
dollars. When it comes to advertising, Cetaphil is also dominant compared to CeraVe. Although their
advertising spend is still dwarfed compared to the big players in the hand and skin care industry,
Cetaphil has established a more solid brand presence and, in turn, grasps more point-of-purchase
customers.
Despite Cetaphil’s convenient packaging and advanced marketing efforts, we found through
product usage observations that consumers are switching from Cetaphil to CeraVe. Why? It’s all about
the experience. Cetaphil is greasy, but CeraVe isn’t. Our group member with eczema is part of this
category. After using Cetaphil for several months, he was introduced to CeraVe and immediately made
the transition. With similar price points and identical target markets, the medicated lotion with the best
overall feel will come off champion. This, we believe, is the reason for CeraVe’s rapid growth—growth
that is double that of Cetaphil. This point of difference will serve CeraVe well moving forward.
In the marketing framework, CeraVe holds a strong position. They understand value as indicated
by the previous analysis of their customers, company, competitors, and context. Their marketing
strategy is successfully creating value for customers in the dry skin segment, and they specifically target
those with eczema and psoriasis. They position themselves amongst dermatologists, who are respected
and trusted with knowledge and experience in skincare. The CeraVe product has proved to be effective,
as evidenced by their substantial growth and revenue. The brand rarely holds promotions, which is a
byproduct of their consumer’s low price sensitivity. An effective and dermatologist “prescribed” product
which is embraced by the National Eczema Association need not be discounted, as that would only
decrease its value. Within the minds of its members, CeraVe is nearly invaluable. The product is
becoming increasingly more accessible, and can be found throughout the United States and Canada in
Target, CVS, Walgreens, Walmart and more. It’s price point is on par with its closest competitor,
Cetaphil, yet more expensive than the cheaper and less effective scented lotions. CeraVe acquires
customers through referrals from friends and dermatologists and retains them with their effective and
non-greasy product. The combination of these efforts led to a $60-billion-dollar revenue year in 2014,
and is fueling their hyper-growth trajectory (Statista, 2016).
CeraVe’s goal is to become the market leader among medicated lotions. By disregarding flashy
packaging, elaborate advertisements, and cheap price points, they are separating themselves from the
recreational lotion category. Through introducing new “healing ointments” and boasting seals of
approval from respected associations, and marketing through educated doctors, CeraVe is attempting to
build a web of trusted sources. CeraVe wants to become the moisturizer which can be trusted with
tackling skin care issues, and can relieve the pains, anxieties, and inconveniences that accompany
diseases like eczema and psoriasis. Their strategy is proving effective; however, their efforts are not
enough. To obtain this lofty goal, CeraVe must increase their brand awareness, customer interactions,
and profit margins by more widely distributing an “on-the-go” package. They do currently offer these
smaller packages in a few of their products, but their sales are minimal and awareness is even worse. In
order to gain market share, CeraVe must combine their reputation as a medicinal lotion with the idea of
becoming an “every day” lotion as well. By taking this stance, CeraVe can expand their target market
into the younger generation. Currently, the majority of CeraVe consumers are older than 55. However,
we have learned that most CeraVe users stick with the product for life after their first use. By
penetrating this new market, they can make it their niche. If implemented correctly, CeraVe could
obtain their goal of becoming the dominant medicinal and “every day” lotion. By embracing
opportunities to grow, they can increase their trajectory and continue to grow and dominate their niche
category.
12. 8
Customer Insight—Recommendation and Justification
Through our research, we have discovered some insights into the positive and negative aspects
of CeraVe products. We have performed a variety of different research methods, both qualitative and
quantitative, including shopping with consumers, observing their product usage, and some initial eye
tracking and purchase intention surveys. We also performed a small test of packaging size to test the
effectiveness of “on-the-go” packaging. This document will summarize the main insights we gained from
these interactions as well as outline several recommendations we feel address these insights. These
recommendations are designed to improve the profitability and market penetration for CeraVe
products.
Our research yielded three main insights for CeraVe. First and foremost, through our interviews
during product usage and shopping experiences, we found that every person we interviewed discovered
CeraVe after a visit to a dermatologist. This recommendation was not only the start to using CeraVe
products, but also carried great weight in valuation and brand decisions. We found that our consumers
were willing to pay a much higher price than CeraVe is currently retailed, some speculating they would
pay twice as much (or more) for CeraVe. This authority figure also presented a barrier to competitors, as
several of our interviews revealed that they would need an alternative recommendation before
considering a switch. Clearly, authority carries weight in our consumers purchase. Consumers rely on
this authority to compensate for their lack of understanding of chemistry and lotion ingredients. To
explore this recommendation element further, we created a survey utilizing a purchase intention scale
developed by Putrevu and Lord testing whether a friend’s recommendation had a similar effect on
purchase intention. Using an imaginary situation where consumers were referred to a lotion by a friend
or found CeraVe on the shelf. We found that when CeraVe was suggested by a friend, survey takers
were on average one point higher on each aspect of the purchase intention scale then those who just
found CeraVe on the shelf. Though not as strong an influence as dermatologists, friends and family still
have a positive impact on purchase intention. CeraVe can capitalize on this insight by more effectively
utilizing the reputation they have with dermatologists in their brand messaging.
A second insight we found comes in the area of packaging. From those we interviewed, we
found that many of our consumers are pleased with the current packaging sizes for home use. They use
CeraVe in a variety of situations and have different uses for each package type. The consensus we found
is that these same consumers would like a CeraVe package for their needs outside of their homes. They
would like a tube they could take with them as they leave their homes. CeraVe currently produces a
travel package but those we spoke to were unaware of the travel size options existence and therefore
completely unable to purchase this option. Despite traveling to many different stores in our area, we
were unable to find the travel size lotion in any size store format. The lack of availability creates a
barrier to purchasing that prevents purchasing for these consumers. They want to be able to buy their
lotion in the same place as the rest of their shopping needs. They are currently unable to fulfill this need.
From our interviews, we do not believe this will interfere with consumers purchasing larger containers
for their homes, but will act as an additional purchase for these brand loyal consumers This insight
represents an opportunity for CeraVe to expand their product offering and improve profitability.
A final insight we garnered from our research is in the age of consumers we spoke to. The
CeraVe users we spoke to were all mothers with children. These mothers were between the ages of 35
and 50 and were generally fairly socially active in their communities. They were apart of neighborhood
social groups with women of similar ages and family status. In analyzing the data available from Nielsen,
we found that CeraVe’s primary market fall in the 55+ age range. As discussed before, as we talked to
these mothers we found that they would remain brand loyal unless prompted by a large price increase
or a new recommendation from their dermatologists. These mothers represent a new market for
13. 9
CeraVe to capitalize on. These mothers will remain loyal and flow into CeraVe’s current core consumer
group.
Based on these insights we have two major recommendations we feel would help increase
CeraVe’s market penetration and profitability. The first recommendation is that CeraVe should increase
the availability of “on-the-go” packaging. Our justification for this comes from a test we performed to
check the usage of “on-the-go” type packaging. We purchased two different packages, filled them with
CeraVe and recorded the weights. The first type of packaging was a plain, clear bottle with a simple
squeeze out top. The other was another clear package with a similar squeeze out cap. This package had
a carabiner attached to it and was intended for “on-the-go” situations. We distributed 10 of these
bottles, evenly split between the two packaging types and delivered two sets of instructions to the
participants. For our control group, we instructed them to place the lotion at a place in their home
where they would use it. We asked them to keep this bottle at home and not take it with them
throughout their day. We then asked the “on-the-go” group to put his package in their purse or clip it
onto their backpack, essentially keeping the lotion with them and in a place where they would see it as
they went about their day. After a five-day period, from Friday morning to Tuesday evening, we
gathered the lotion samples and re-weighed the samples. The at home container participants used on
average 7.67 grams of lotion whereas those with the “on-the-go” containers used 10.25 grams of
lotions. This represents a difference of 2.58 grams (see page 20). This difference is pronounced and still
only represents a small usage time frame. We believe this difference would hold true to longer time
frames as well. This increased usage would increase the demand for CeraVe as consumers began using
CeraVe throughout the day which would decrease the number of days in the purchasing cycle.
CeraVe currently offers a 2-ounce package of their moisturizing lotion, which means they have
the manufacturing processes available to create “on-the-go” packaging so costs to produce this travel
size will be minimal. In a discussion we had with a store manager of a local Walmart, we learned that
merchandising decisions for Walmart are made in Bentonville, Arkansas, but that individual stores are
given autonomy to stock items based on the store manager and region buyers preference. The manager
said that as long as you can convince him and the buyer that your product will benefit his store, there is
no cost to stock a new item. With minimal costs in production and merchandising, the attention turns to
the profit margins for putting this size container in more stores. A 12-ounce bottle of CeraVe retails at
Walgreens for $13.99. This price point calculates to $1.17 per ounce. Compare this to the 2 ounce
container available at Walgreens.com which retails for $5.99. This represents a cost per ounce of almost
three dollars. The travel size has a price per ounce 2.5 times bigger than the 12-ounce bottle. This larger
margin paired with the increased usage makes this an attractive product offering for CeraVe. Expanding
this usage research to further prove this increased usage would give CeraVe a persuasive argument to
convince retail decision makers of the benefits of giving shelving space to this new product offering.
Our second recommendation is rooted in the insight about the value of a recommendation. The
quality of the products offered by CeraVe win brand loyalty. Those consumers we interviewed said that
they love CeraVe because it works, unlike the other lotions they had tried. These consumers also found
CeraVe through their dermatologist. CeraVe has the national seal of acceptance from the National
Eczema Association. It is also clearly a preferred lotion for dermatologists. Because of the complex
nature of the skin and lotion composition, our consumers will rely on the heuristic of authority or
expertise to help inform their decision. A brief scan of any cosmetics shelf reveals a laundry list of
features and ingredients promoted as the cure for the all that ails your skin. We recommend highlighting
these authoritative recommendations in CeraVe’s branding. Specifically, we suggest a package change to
stick out from competitors and to capitalize on our earned authority. We designed a mock-up of a
package that only contains 3 simple elements, the branding, a frame of reference, and our major
endorsements. We then submitted this new packaging to two separate tests.
14. 10
Our first test utilized eye tracking technology. We tested a current CeraVe package alongside
our newly designed package. Though more subjects are needed to fully establish the results, our initial
findings were that our new packaging did increase focus on our brand and on our major point of
difference, our endorsements. The current packaging had a more evenly spread heat map as the
participants scanned all the items on the package. With our new package, participants had two major
focus points. The first was on the brand name, the second on the endorsements. Obviously, this
increased focus was strongly influenced by the simplicity of the new package but this test was important
in showing us what consumers focused on, setting the context for the second test we conducted.
The second test conducted was part of the aforementioned survey. Using the purchase intention
scale mentioned previously and a product quality scale developed by Keller and Aaker we tested our
redesigned label against the current package. Our survey was designed to randomly assign each person
to see either the original package or our redesigned package. They were asked to imagine they had just
found this product in a store and were asked to give their ratings on the scales provided. The
participants were evenly divided between each package path and our survey received over 100
responses. We found that our redesigned package had a slight edge in the area of purchase intention,
with each measure in the scale improving by at least .1 rating point and by at most .21 points on the
aggregate (as shown in Tables 1-7). Our package scored slightly lower on the product quality scale, this
result was however in question due to a high disparity in variance between scores of the two packages.
A third purchase intention scale was also presented where the participants were prompted to imagine a
friend suggesting an unnamed lotion brand to them.
Looking at these two tests provides justification for our recommendation. First, we notice from
the eye tracking, that people are impacted by the increase in prominence of the endorsements and the
removal of the claims. Looking then at the survey data, it seems that though the number of claims on
the packaging does slightly improve the perception of quality, purchase intention is improved by
highlighting authority. We submit that further testing on various levels of feature inclusion, while
maintaining the prominence of these influential endorsements will allow CeraVe to generate greater
market penetration and therefore greater profit.
By averaging the purchase intention improvements increases and dividing by the average
purchase intention rating of the original packaging, we see a 5 percent increase in purchase intention.
Taking this improvement and applying the increase to market penetration and total revenue figures we
find market penetration increases from .3 percent to .315 percent. This increase translates to a new
revenue figure of $68,083,050, an increase of $3,242,050 (as shown in Figure 6). Through further testing
of packaging variations, we believe this number could be improved upon to further improve revenue
and market penetration.
We believe that combining both of these recommendations together would create an even
larger improvement to CeraVe’s revenue figures. As lotion usage increases due to increased availability
of “on-the-go” packages and as consumers begin to buy these higher margin products, CeraVe will see a
decrease in their purchase cycle, which currently sits at 82.7 days (as shown in Figure 6). Our small test
saw an increased consumption of almost 33 percent. Even cutting this increase by a third to compensate
for our small test and product wear-in, when applied to our current purchase cycle, we see our purchase
cycle decrease to 73.6 days. This translates to consumers buying consumers buying CeraVe products
1.12 times more often. Factoring out the higher margin, this decreased purchase cycle adds another $8
million, approximately, in revenue for CeraVe. These figures, though hopeful, do not represent the full
benefit for CeraVe as they exclude the profit margin improvements as people begin to purchase. We
believe that CeraVe should immediately begin steps to further utilize their authoritative
recommendations through packaging and evaluate merchandising options to put their “on-the-go”
package sizes in front of consumers.
16. 12
Team Summary Usage Observation
Consumers use a multitude of different lotions for a variety of different reasons. Heidy, Karen,
Marge and Becca all use CeraVe, but all in different ways. After interviewing and watching them use the
lotion, we were able to discover a couple different things. We found the main consumer base and their
desire for new publicity. Consumers store CeraVe in various areas and find that the packing of the
product shows room for improvement. Interestingly, we found that consumers all have the same issue
(dry skin) but their methods of application and desire for use differ. With help from these consumers,
we have developed a few suggestions that could improve CeraVe products.
After concluding all of our interviews, it became apparent that our consumer base has a
substantial middle-aged women segment. However, not all middle-aged women know about CeraVe or
know where to find the product. For example, Becca, a current user, only knows that her dermatologist
can provide her with the lotion. She does not know where to buy it. This lack of awareness exhibits a
great need to create a new publicity platform based on our segment of middle aged women. For
example, middle-aged women are normally the ones to take children to doctor's appointments and to
go shopping. CeraVe can be placed in these areas and samples can be provided. This would require a
contact with the doctors’ offices and shopping centers, but this would create the needed awareness of
CeraVe lotion.
Once awareness increases, more consumers will take CeraVe into their homes. However, we
found that there is no particularly correct area to store lotions. Bathrooms, bedrooms, kitchens, work
areas, and a multitude of other areas become home to bottles upon bottles of lotion. Discovering where
CeraVe was stored showed to have the same result. Karen, a school teacher, stores her CeraVe on her
desk in her classroom. Marge stores it in her bathroom next to her sink. Heidy, a busy mom, stores many
bottles all over her house. She has one in her kitchen, one in her bathroom and one in her bedroom.
Becca, who uses the lotion primarily for her feet, likes to have it right on her nightstand to use as she
gets into bed. Since each consumer stores the product in a different location it becomes difficult to
create a certain feature for our product that eases a pain point of storage. However, a possible place to
look for improvements would be creating a feature for each popular place to store CeraVe such as the
kitchen, bathroom, worker’s desk and bedroom. Another idea for packaging would to create a travel size
bottle with a clip on it so that consumers can take CeraVe with them wherever they go. There are many
other different ways that the packaging could be modified to make it easier for the consumer, but we
recommend making some type of change that will make CeraVe a better lotion for every consumer.
Each consumer we interviewed provided a different pain point that could be solved through
packaging. Heidy and Marge both showed interest in “on-the-go” packaging. Heidy said that she would
love it for around the house and to keep with her as she runs errands. Marge said that it would be very
helpful, because she goes camping often and frequently forgets to bring her bottle of lotion. When she
does remember to bring her bottle, she is concerned that the lotion will spill in her bag. In addition to
travel size containers, Heidy also said that the CeraVe bottles are difficult to distinguish from their
competitors such as Cetaphil. Market share can be gained by distinguishing CeraVe from other lotion
brands. Finally, we noticed that Karen, who has a pump dispenser, doesn’t use a full pump of lotion.
Perhaps Karen would use more product if it was dispensed in a different manner.
Through our segment of middle-aged women, we discovered that many pain points can be
reduced or solved through redesign of the packaging of CeraVe. These insights were discovered from
CeraVe’s love group, Heidy and Marge and from the potential swing group, Karen and Becca. We also
discovered that awareness needs to be expanded through increased publicity. This could be through in-
store advertisements or contracts with doctors and shopping centers to have the product available for
consumers to use. We believe that the later would be effective since each of our consumers were highly
influenced after using the product.
17. 13
Usage Flow Diagram
After creating a flowchart, we realized that each consumer started with washing the part of the
body they desired to put CeraVe on. This creates an opportunity to possibly expand the brand into the
soap category. CeraVe users all use soap prior to using CeraVe. If CeraVe was offered in a soap, these
consumers would possibly use more since soap is used more frequently. In addition to that, they may
use the CeraVe soap in conjunction with the lotion, creating more sales.
18. 14
Team Summary Shop Along
CeraVe is known as a reliable lotion for those with dry skin. However, many different types of
people use it on a regular basis, from those with normally dry skin to those with severe eczema. In order
to gain deeper insights on how consumers interact with CeraVe, we conducted four shop along visits
with Sheryl Gibbs, Katie Cummock, Amber Leck, and Bill Wright. Sheryl, Katie and Amber are all middle-
aged women who consistently use CeraVe. We learned many key insights about buying habits from
these women as we discussed with them their thoughts and reasoning’s behind their purchasing
behavior. Bill is a middle-aged man who is in the market for a new lotion to help with his dry skin. While
he didn’t purchase CeraVe, we discovered thoughts that consumers have when purchasing a prestige
brand of lotion. Overall, we discovered that consumers use the packaging and labeling of the product to
make quick judgements about quality of the lotion. In addition to that, we became aware that
consumers are not price sensitive for products within this category. Finally, we noted a few key changes
that the brand “love group” would find beneficial.
Both Sheryl and Bill described CeraVe’s packaging as unclear. CeraVe prides itself in having been
awarded the National Eczema Association Seal of Acceptance. However, during our shop along
experiences, we discovered that many of our participants did not know CeraVe had been awarded the
seal of acceptance. For example, when Sheryl was asked if the information on the package was clear,
she said “the package is not clear that the lotion is endorsed by the National Eczema Association.” And
when asked what her thoughts were about these claims made by CeraVe, she said “put the certification
on the front of the bottle.” Bill also noticed the lack of clear labels. He was confused and overwhelmed
with the vast array of lotion choices but lack of clarity for their individual purposes. He mentioned that
each brand would benefit from a clear label identifying its point of difference--including their key
attributes. With this insight in mind, we recommend that CeraVe increase the visibility of the National
Eczema Association Seal of Acceptance. Implementing this recommendation will add credibility to the
CeraVe brand and perhaps lead to an increase in sales.
Contrarily, Katie feels that the current, simple packaging of CeraVe is important to some
consumers. Katie explained that the simple packaging gives CeraVe a professional look that other lotions
fail to achieve. This professional simplicity gives her a reason to believe that the product works.
Additionally, she mentioned that the plain look gives CeraVe a more “medicinal” feel, which is
completely opposite than the scented lotions with flowery noticeable designs. Amber also took notice
of the package design. She pointed out that while it is not an attention grabber, it does portray a more
medical and prescription feel. Based on these insights, we feel that CeraVe should maintain their clean
and professional look while more clearly displaying their seal of acceptance from the National Eczema
Association.
Through our shop along experiences, we learned that different consumers perceive price and
quality contrarily. Devout and loyal customers, like Katie, are essentially unaffected by price. After
using CeraVe for four years, she said that there would have to be an enormous price raise for her to
even consider using another brand. In fact, the number that she quantified “enormous” with was
$300. Although this may have been a bit of an exaggeration, she made her point. Katie went on to
explain that she does not perceive quality through price. Instead, she perceives quality based off of
experience. Because CeraVe has improved her skin condition so dramatically compared to competitors,
the product is nearly invaluable to her. Katie had experiences with other brands, and nothing compared
to the experience that CeraVe has provided for her skin. She uses the lotion on her face and hands, so
the investment is worth her dollars.
Customers like Bill, who are searching for a brand, are much more price sensitive. As Bill hunts
for a facial cream to treat his dry skin, his first instinct is to compare price. However, Bill does not
necessarily choose the cheapest option. In fact, Bill pointed out that he initially perceives quality solely
19. 15
based off of price. He said, “the more expensive it is, the higher quality it should be.” Bill went on to
compare lotion products with others that he felt were in the same subordinate category within the
superordinate lotion category. CeraVe does not do well in capturing customers like Bill. Bill is simply
not CeraVe’s target. Bill is seeking a lotion that will hydrate his skin, and most likely smell good. The
odds are that Bill will select a lotion that has impressive packaging, and is well known in American
culture through advertisements and media.
Although their outlooks on price differ, both Bill and Katie agreed that if a brand in the lotion
category is on sale, they will buy more of it. They also agreed that if the product is not on sale, they will
still make the purchase. The reason for this is that lotion and moisturizers are a need rather than a want.
Dry skin doesn’t come and go with sales and promotions. It is constant, and for most people it is an issue
year-round. In addition to being a need rather than a want, many CeraVe consumers place a lot of value
on the dermatologist recommendation and so they are prone to be less price sensitive.
About price, we concluded that CeraVe must position itself against its closest competitors within
the “healing lotion” subordinate category. To maintain quality and provide value to its claim as a
dermatologist recommended product, CeraVe’s price must remain at a higher level than a “smell-good”
lotion. In addition, we learned that CeraVe need not promote its products often with sales and
discounts. Although it will help to acquire new customers, the loyal “love group” of CeraVe will continue
purchasing regardless of price or promotion.
Amber and Sheryl both mentioned a few things that would change their purchasing behavior in
a positive way. Amber was forced to stop at Walgreens to buy CeraVe--an extra shopping trip. She
prefers a one-stop-shopping at larger chains for her weekly needs. Amber’s high level of brand loyalty
and her insensitivity to price pushes her to overcome this hurdle. But for less dedicated consumers, lack
of convenience could be a major hurdle. Improving the selection and merchandising strategies in these
larger retailers could prompt increased purchasing.
Sheryl mentioned that she would appreciate a travel sized container of CeraVe. She said that she
only uses CeraVe in the winter time and a 12-oz. bottle will generally last her at least one year. In
addition, we found that Sheryl would use CeraVe daily and year-round if she had a travel size container
that she could carry “on-the-go”. Because the 12-oz. package stays at home, Sheryl is not reminded
often to use CeraVe. CeraVe does have a travel sized product, however, it is not well advertised and
consumers struggle to find it in the stores. CeraVe can push to make the travel sized packaging more
available for their consumers. In addition to increasing the availability of the travel size, it would also be
beneficial to add a clip to the travel size container. This would capture a large market, Sheryl included,
which would increase profit margins for the company while making the product more readily available.
Additionally, this would give customers more interactions and purchasing intention with the product,
which will further fortify the efficacy of the product in the consumer’s minds.
Sheryl also expressed a desire for a scented version of CeraVe lotion. As a hairdresser, she often
uses scented products with her clients. She explained that a calming scent is a reason to believe in a
product’s effectiveness. CeraVe most likely cannot add a scent to their classic formula because the
majority of their customer base suffer from sensitive skin. However, a possible solution is to create a
new “out and about” lotion. This lotion could be used to attract new customers who we could add to the
CeraVe “love group.” The concern with this strategy would is damaging the reputation that CeraVe has
built as a lotion primed for those with sensitive skin.
Through our shopalongs with Sheryl, Katie, Amber and Bill, we discovered the importance of
labeling, pricing, and merchandising. By highlighting the seal CeraVe was awarded by the National
Eczema Association and maintaining a professional, clean, and “healing” look, CeraVe can decrease the
price sensitivity of consumers. In addition to this, CeraVe need not use promotional based marketing.
Consumers consider this product as a “need” instead of a “want.” To increase consumer’s need for the
product and their usage situations, CeraVe could also consider implementing new scented products.
20. 16
Team Summary Secondary Data Insights
CeraVe is a small skin moisturizing brand with many competitors and just as many opportunities
to grow. Through database research we gained insights to the market trends and growth of the skin
care industry, the differentiation of prestige and mass brands, packaging and ingredient trends, and the
position of competing brands. In a market as saturated as skin care, consumer awareness is
key. Additionally, gaining favor in the eyes of the consumer requires constant interactions with the
product. Based on our research, we believe that in order to gain market share, CeraVe must increase
revamp their current packaging. Furthermore, we also advise considering a transition to all natural
ingredients, increasing marketing and advertising efforts, and exploring international markets.
However, as these last three insights are not in conjunction with our assignment, we will only leave
them as suggestions rather than hard recommendations.
The skin care product category ranks fifth amongst the leading health and beauty care product
categories in the United States, and generated approximately 3.45 billion U.S. dollars in sales in 2014
(Statista, 2016). This industry is a giant, claiming high-profile brands associated with monopolistic
companies. Entry into this market is meager, and many small companies find themselves crushed by the
Unilever-like giants of the industry. CeraVe holds a mere 3.3 percent of the market share of hand and
body lotions and moisturizers (as shown in figure 1). Although this seems insignificant, the leading
brand in the United States is Aveeno, which holds only 5.5 percent of the market share (as shown in
figure 1). With that 5.5 percent, Aveeno grossed approximately $100.1 million dollars in revenue in
2014 (Statista, 2016). Many consider Cetaphil to be CeraVe’s closest and most comparable competitor,
who held only 3.4 percent of the market share in 2014 (as shown in figure 1).
CeraVe’s presence is small, but growing. From 2013 to 2014, CeraVe increased sales by 17
percent to $60 million U.S. dollars (as shown in figure 1)–more growth than any other leading brand in
the U.S. market that year (Statista, 2016). During that same time, Cetaphil saw a 9.4 percent growth in
revenue, while Aveeno saw an 8 percent growth in revenue (as shown in figure 2). With nearly twice the
growth rate as Cetaphil, their closest competitor, CeraVe seems to be on the rise. However, in a survey
of U.S. households who were asked which brand of moisturizer/cream/lotion they use most often, only
0.92 percent indicated CeraVe as their brand of choice (Statista, 2016). In answer to this question, 7.61
percent answered with Aveeno, while 2.3 percent answered with Cetaphil, and 11.21 percent answered
with non-major or generic brands not included in the survey (Statista, 2016). The United States as a
whole saw a 2 percent growth in the skin care market while maintaining constant 2015 prices
(Euromonitor, 2016). The overall market for skin care products is already highly saturated, which limits
the potential for dramatic growth. However, the 2 percent growth seen in 2015 is twice the 1 percent
average from previous years. This leads us to believe that CeraVe is on the rise, and that their untapped
potential is available to be penetrated.
According to CeraVe’s website, their product is found only in United States and Canadian
markets. Although they are doing well and growing locally, CeraVe could be missing out on a large
international opportunity. From our research, we found that between 2011 and 2014, the market for
body care products hovered between $544 million and $569 million GBP (Great Britain Pounds), but a
large spike came in 2015, shooting market revenues up to $635 million (Statista, 2015). With brands like
Neutrogena and Nivea dominating the international market, it is obvious that if CeraVe increases its
international presence it will increase its market share (Statista, 2015). Although there are obvious
differences and preferences between American and international cultures, it seems that the benefits of
CeraVe are pretty widely felt. Most consumers use CeraVe because of its non-greasy feel, which is a
universal desire. Additionally, eczema and psoriasis—dry skin problems—are felt worldwide. This tactic
will most likely be realized eventually by the company. When it is, there will need to be a large budget
21. 17
set aside for R&D to determine the potential of the market. For now, we feel that it is a good thing to
consider for the future of the company.
In Mintel’s “Personal Care Consumer” study, common personal care products were examined to
gain insights about consumer’s reactions to prestige and mass brands. Overall, consumers rely on mass
brands such as Pantene and Dove for most of their personal care products. We believe that this is due to
the high amount of exposures that Americans face with these brands. However, it is shown that
consumer’s willingness to pay increases for some products like facial skin care. This allows for prestige
brands to capitalize on higher prices for a higher quality product. CeraVe’s strongest presence is in the
hand and body lotion category. Within this category, 56 percent of consumers rely on mass brands for
their purchases while only 19 percent buy prestige brands (Mintel, 2014). Unfortunately, this study did
not define exactly what was considered a prestige brand. It did, however, explain that mass brands are
more popular because of their “accessibility, affordability, and awareness” (Mintel, 2014). It makes
sense that these mass brands are more popular for personal care products since they are a low
involvement purchase. The key for CeraVe is to position themselves as a mass brand along with their
competitors. The issue with this, is that CeraVe does not market or advertise their brand congruently
with other mass brands. Their options are either to increase advertising, or find another way to increase
their brand awareness. Their current efforts are small scale through dermatologists.
In the skin care category, Johnson & Johnson is the market leader and boasted a 10 percent
value share in 2015 (Euromonitor, 2016). Johnson & Johnson primarily focuses on mass skin care with
products such as Neutrogena and Aveeno. The Aveeno brand itself maintained a 3 percent market share
in 2015. Although Johnson & Johnson thrived in 2015, the market was not as strong for other
competitors such as Avon. The value sales of Avon declined by 13 percent, which led to the selling of 80
percent of the business to a private equity firm in the end of 2015. According to Euromonitor
International, Eucerin and Cetaphil are CeraVe’s closest competitors (Euromonitor, 2016). Perhaps the
reasoning for this is because these competitors advertise similarly to CeraVe by focusing on gentle,
sensitive, and skin-friendly formulas and generate most of their credibility through dermatologist
recommendations.
Product awareness is crucial in any industry, but in an industry as saturated as skin care, it
becomes even more important. According to IBISWorld, industry market leaders spend 16.7 percent of
their revenue on marketing activities. The average marketing spend of market leaders has steadily
increased by 3.3 percent for the past five years (Cohen, 2016). In a simple Google search, the most
recent advertisement found for CeraVe was produced in January 2013. The conclusion is that CeraVe
spends far less of their revenue on marketing activities than the market leaders. In such a competitive
market, the importance of emphasizing and amplifying point of difference becomes even more crucial.
IBISWorld further concludes that effective marketing strategies in this industry are targeted at either
upselling, highlighting quality, or highlighting convenience (Cohen, 2016). This further refines CeraVe’s
point of difference and specifically examines potential strategies which could grow awareness of the
brand.
As awareness of personal care products increases, different features are highlighted. According
to Mintel’s article titled “Skincare Ingredients and Format Trends” there are a variety of different
features that consumers are looking for in the packaging of skincare products. These include simple
usage instructions, easy storage, easy to reseal, and controlled dosage (Mintel, 2015). These trends
don’t come as a shock, as most consumers are looking for a convenient product to add to their daily
routines. Consumers want products that are easy to use and store in their bathrooms or bedrooms.
However, there is a segment of consumers that are looking for packaging innovations, specifically
younger males ages 25-34 (Mintel, 2015). Some innovations that were mentioned are built-in tools such
as facial scrubbers, and features that indicate when the product is running low and due to be replaced.
CeraVe currently does a good job including many of the aforementioned features in their products. The
22. 18
packaging is easy to use with convenient storage. In addition, CeraVe features products with controlled
dosages through a pump system. The largest opportunity to improve upon is implementing built-in tools
for the product packaging, and packaging that is easier to dispose of and recycle.
Another potential area for packaging improvements lies within the materials used to produce
the packaging. One industry trend identified by IBISWorld is an increased cultural concern surrounding
carbon footprint and eco-responsibility (Cohen, 2016). As most packaging for these products are
primarily plastic, this becomes a potential point of difference for CeraVe to claim. Since 2011, the U.S.
beauty market has been highly influenced by many South Korean brands. Many South Korean
companies have entered the market and gained ground by focusing primarily on their botanical
ingredients. The rapid growth of South Korean beauty companies entering the U.S. market has
contributed to the increasing focus on the ingredients of the skin care products domestically. In order to
preserve the ingredients in their natural state, the type of packaging that is being used is changing
towards airless packaging—mainly in squeezable plastic tubes. According to Nguyen of Euromonitor
International, “the squeezable plastic tube is the most purchased pack type within skin care, accounting
for 3.6 billion units in 2015. The pack type is expected to see highest growth in absolute terms between
2015 and 2020, generating an additional 829 million units. The use of the airless technology in
squeezable plastic tubes has grown and is expected to continue to expand within that pack type,
reflecting higher demand in premium and natural skin” (Nguyen, 2016). By creating eco-friendly and
reusable packaging, CeraVe could link their skin protection benefit to the value of protecting the earth,
thus differentiating themselves from the competition and increasing awareness.
Not only is the packaging of personal care products like lotions important to consumers, but the
ingredients are also influential in the purchase decision. Certain ingredients such as shea, coconut oil,
and aloe are closely associated with moisturizing (Mintel, 2015). This is evident in the number of
competitor brands such as Aveeno and Vaseline that advertise these ingredients in their deep
moisturizing lotions. However, the knowledge of aloe’s moisturizing power is more well-known than
other ingredients such as shea. Over 30 percent of male’s associate aloe with moisturizers while only 12
percent associate shea with moisturizers. While 20 percent of female’s associate aloe with moisturizers
and 11 percent associate shea with moisturizer (Mintel, 2015). Since aloe is more well-known than shea,
it is easier for consumers to be willing to put on their body. A well-recognized ingredient is typically
considered safer to use. By implementing these types of features into the current formulas, we feel that
CeraVe could improve product awareness.
The key to becoming a “mass brand” is having an effective product. The flagship moisturizer
and lotion that CeraVe boasts is second-to-none. It has conversion power that is not commonly seen in
the lotion and skin care industry. From our research, CeraVe products have the ability to catch and
maintain customers first from their dermatologist recommendation, and second from their actual
experience using the product. If the experience is phenomenal, then the loyalty will follow suit. As
CeraVe settles in to its place in the market, it will find its niche and attract more dry-skinned consumers.
If CeraVe can make efforts to focus on a younger audience, it can attract these soon-to-be lifelong users.
These efforts will be key to obtaining their goal of becoming a mass brand.
CeraVe is bursting at the seams with untapped potential. As the brand continues to grow and
innovate, it will eventually be considered a household name in the skincare industry. Although it is
currently considered essentially equal with Cetaphil, most consumers who have used both products
would staunchly disagree. CeraVe is superior, but their awareness of the brand lacks. The product is
effective, and the company has many opportunities to stand out and be recognized amongst the many
brand giants in the industry. Through expanding into new markets, innovating packaging and ingredient
formulas, and increasing advertising spend, CeraVe will gain market share and significantly increase
revenue in a competitive industry full of giants.
23. 19
Team Summary Nielsen Data
From the Nielsen data, we extracted insights for CeraVe lotion. Most of the comparison of the
brand is against their closest competitor, Cetaphil, who owns a similar share of the hand and body lotion
market. We examined the following reports: “who are the buyers”, “demographic multiple measures
view”, “executive consumer snapshot”, “which channels are strongest”, and “multiple measures
view.” Through this research, we gained a deeper understanding of their target market, distribution
channels, consumer purchase intention, brand performance and their competitive framework.
CeraVe attracts an older, middle-class, and predominantly Caucasian crowd. Across the entire
United States within the past year, 32 percent of CeraVe customers have only two members in their
families and a staggering 85 percent have no children under age 18. In this group, over one third are age
55 or older. Employment numbers, however, are nearly evenly split. Fifty percent of consumers are
employed, and 45 percent are unemployed. Of the employed, 23 percent make over $100,000 per year
and 41 percent are in a form of managerial position at work. Modest working towns and plain rural
living make up 40 percent of CeraVe’s consumers while a staggering 76 percent of consumers are
Caucasian (as shown in Figure 3). Geographically, 42 percent of CeraVe consumers live in the south
census region (as shown in Figure 4). Surprisingly, the one area of major diversity amongst
demographics is education. Among the three subcategories of high school graduates, college graduates,
and some college with no degree, each subcategory claims 25 percent of their market (as shown in
Figure 3). From these statistics, it seems that CeraVe’s target market is shockingly clear.
Hand and body lotion can be found in a variety of channels including warehouse clubs, drug
stores, super markets, mass mechanizing without super markets, total grocery, convenience and gas
stations, and dollar stores. CeraVe has the biggest presence, by far, in drug stores. Within the United
States, 52 percent of CeraVe’s dollars were spent in the drug store channel in 2012. This is 32 percent
higher than Cetaphil’s 20 percent. The biggest weakness for CeraVe is in warehouse clubs, which is one
of Cetaphil’s largest hubs (as shown in Figure 5). Over 40 percent of Cetaphil’s dollars were spent in
warehouse clubs in 2012. CeraVe spent a measly 5 percent (as shown in Figure 6). This, along with super
markets, are potential areas of distribution growth for CeraVe. Currently, CeraVe is spending the same
amount of money in supermarkets as Cetaphil and the category of hand and body lotions (as shown in
Figure 5). If CeraVe shifts some of their dominance in the drug store channel to supermarkets and club
stores, their reach could be more broadly felt and the gap between their competitor.
Of all U.S. households, only 0.3 percent have purchased CeraVe at least once and 852,000 buy it
regularly (as shown in Figure 7). Cetaphil holds 0.9 percent of households; a difference of 0.6 percent. As
small as that difference may seem, it translates to a revenue spread of approximately 114 million dollars
(see figure 4). On average, these households spend $17.72 each year and $13.47 per individual trip on
the product. This is $4 more than the average spending per trip of the lotion category. Overall, CeraVe
shows a dollar share increase of +0.8 pts meaning they are growing within the lotion category. However,
the trips per buyer is decreasing by one percent (as shown in Figure 7). To remedy this, CeraVe can offer
smaller packages, coupons, or on-packaging promotions.
In conclusion, CeraVe targets an older, affluent, and Caucasian market. Most of their current
consumers do not have young children. They target this group by emphasizing drug store sales, and
using minimalist package design and virtually no online advertising. Comparatively, CeraVe and Cetaphil
are close. Cetaphil dominates large format stores while CeraVe controls small format. Lastly, CeraVe
claims larger repurchase numbers. After analyzing this data, we feel that CeraVe could penetrate and
steal market share from Cetaphil by expanding into large format stores and reaching into a younger
market by targeting middle-aged mothers with children. These younger consumers will have more
access to the product and will become life-long buyers, increasing CeraVe’s market share and revenue.
24. 20
On-the-Go Bottle Experiment Summary
Consumers, such as Heidy and Marge, are always on the move. Running to kids’ appointments,
going grocery shopping, and stopping off at a friend’s house all take consumers away from their home.
Unfortunately, the home is where consumers keep their bottles of CeraVe. Currently, CeraVe owns a
spot of consumers’ kitchen counters, bedside tables and next to bathroom sinks. To encourage more
consumption, we discussed creating more accessible travel sized bottle of CeraVe. The company claims
to currently offer more convenient packaging, although they are nearly impossible to find. Multiple
consumers who we interacted with had been customers for more than four years and had never heard
nor seen of this type of packaging. Implementing this strategy would make CeraVe far more portable
(and profitable) than ever before.
After doing initial research, we discovered that CeraVe produces a 3oz bottle of lotion. However,
it is only available online. And even on the official CeraVe website it is not easy to find or purchase. It
became apparent that something about the travel sized bottle had to be improved in order to make it a
product worth merchandizing. However, a little 3oz bottle of lotion is prone to being lost in the wide
variety of things that consumers take with them. To prevent a travel sized version of CeraVe lotion being
forgotten at the bottom of a purse or backpack we discovered the benefits to adding a clip (or small
carabiner) to a travel sized bottle. A simple clip would make the bottle more accessible to the consumer
at all times.
Our hypothesis was that a bottle with a clip would generate more use of the lotion compared to
the bottle without the clip. We created ten travel sized bottles of CeraVe lotion. Five of the bottles were
3oz empty, squeeze travel sized bottles that we purchased at the local Walmart. We called these bottles
“travel size”. The other five bottles were called “on-the-go”. These bottles were 1.5oz bottles with a
carabiner clip. These bottles were originally hand sanitizer bottles from the travel section at Walmart.
We cleaned the bottles and removed the hand sanitizer labels before using them for the study. All ten
bottles were completely filled with CeraVe lotion and given out to ten participants. Participants were
chosen based on a convenience sample. Those who were given the “travel size” were told to use the
lotion as much as they desired. Those who were given the “on-the-go” bottles were told to attach the
bottle onto their purse, backpack or other bag and use as much as they desired. Participants had the
bottles from Friday, November 18th
through Monday, November 21st
. The following Tuesday we
collected all of the bottles from each of the participants.
In order to measure the amount of lotion each participant used, we weighed a full bottle of the
testing lotion and then the test bottle on a food scale. We subtracted the weight of the test bottle from
the full bottle to see how much lotion was consumed. Finally, we converted the amount used into a
percentage form.
After measuring each bottle, our hypothesis was proven to be correct. We discovered that
consumers used more lotion when the bottle had a carabineer clip. Therefore, the product is more
effective when it is more accessible. Those who had the “on-the-go” bottles used 22.3 percent of the
lotion while those who had the “travel size” only used 7.7 percent. That is a 15 percent difference
between the two different types of bottles. This test proved our hypothesis valid; consumers use more
lotion when they can clip the lotion in an accessible location (as shown in image 3).
Our hypothesis and the results of the test run freely with all logic. The more accessible the
lotion, the more it is used. It is the exact opposite of the common phrase, “out of sight, out of mind.”
The current role of CeraVe lotion is certainly “out of sight, out of mind,” except for the morning and
evening routines of waking up and getting ready for bed. Dry skin, especially eczema and psoriasis, is a
24-hour 365 days per year problem for most victims. In order to squeeze the potential out of their
market, CeraVe must implement this effective and accessible “on-the-go” bottle strategy.
25. 21
Purchase Intention and Quality Measures Survey
After creating our new packaging and discussing the power of dermatologist recommendations
we wanted to see if we could quantify the benefits of our new package design. Using Qualtrics, we
created a survey that consisted of three parts. The first portion of our survey utilized a purchase
intention scale developed by Putrevu and Lord to test whether recommendations by friends or family
carry similar weight to those of a dermatologist. We asked participants to imagine a friend or family
member giving a suggestion of a lotion. We didn’t specify the lotion to try to avoid biasing the data in
that regard. The second portion of our survey contained a randomization element, which evenly divided
our consumers into two groups. Each group was shown either a current bottle of CeraVe or our
redesigned label and asked to imagine they just noticed this bottle on the shelf at their local grocery
store. This same purchase intention scale was used to rate these two types of packaging, as well as a
brand quality scale developed by Keller and Aaker. Finally, we gathered basic demographic information
including year of birth, gender, and marital status.
Our survey provided some interesting insights to justify our recommendations and quantify our
results. Using the current CeraVe packaging as our baseline (as shown in Table 1), we found that when
CeraVe was suggested by a friend, survey takers were on average one point higher on each aspect of the
purchase intention scale than those who just found CeraVe on the shelf (as shown in Table 2). Though
not as strong an influence as dermatologists, friends and family still have a positive impact on purchase
intention. Due to the lack of imagery or specific brand connections this figure is likely to be inflated but
still represents a positive association between this type of recommendation and purchase intention.
In the next portion of the survey we tested our redesigned packaging against the current CeraVe
label. We found that our redesigned package had a slight edge in the area of purchase intention, with
each measure in the scale improving by at least .1 rating point and by at most .21 points on the
aggregate (as shown in Table 3). Averaging these improvements together gives us an improvement to
purchase intention of five percent. Using the quality rating scale, our package scored slightly lower on
the product quality scale (as shown in Tables 4-5). One data point became corrupted which weakens this
result. This result is also in question due to the higher levels of variance in the original packaging results.
Flaws aside, based on our data, it seems that the number of arguments on a bottle of lotion,
does positively influence the perception of the quality of that lotion. Purchase intention appears to be
more positively influenced by the new packaging, which highlights the endorsements CeraVe has from
dermatologists and the National Eczema Association. From our data, we conclude that while the number
of arguments increases perception of quality, due to the low levels of understanding the general public
has surrounding chemistry and lotion ingredients, they will rely on authority figures to help inform their
purchase decision. This justifies our recommendation for a packaging change that further highlights the
endorsements.
The final portion of our survey gave us the demographics of our survey sample. We received 113
responses to our survey, with those responses split close to evenly between both package paths. Some
variation occurs due to incomplete surveys. 69.91 percent of our respondents were Female (as shown in
Table 6). 46.02 percent of our respondents are currently married while 50.44 percent have never been
married, with 3.54 percent divorced (as show in Table 7). Our survey captured an age range of 45 years,
spanning 1955 to the year 2000. Our age ranges are very right skewed within this range, with the
majority of our respondents being born between the year 1992 and 1996 (as shown in Figure 11).
Though sample provides a starting point, but should be tested with a more randomized sample to
ensure validity.
26. 22
Eye Tracking Summary
In order to test how effective a simplified package would be, we created a new package design
and use an eye tracking system to see where potential consumers looked on each package. To make the
new package, we used Adobe Illustrator and made a close replica of the current sticker on the package
(as shown in Image 1 and 2). However, we removed a few elements from the original package. The
biggest element that we removed was a lot of the text that cluttered the bottle. Another thing that we
did to change the sticker design was add two seals. One seal is the National Eczema Association seal of
acceptance. The other seal is a Dermatologist Recommended seal. Both of these seals add authority to
way the lotion works and should be considered. Another thing that we changed is the size of the brand
name and product. CeraVe is now almost 25% bigger and more centered on the bottle. In addition,
“Moisturizing Lotion” is about 10% bigger and is located closer to the center of the bottle as well. The
last thing that is on the new bottle is a grey oval that highlights that the lotion is specifically for those
with “Normal to Dry Skin”. In addition to changing the front of the bottle, we also made slight
modifications to the back of the bottle (as shown in Image 2). The changes that we made were minor
and were not tested in the eye tracking study.
During the eye tracking study, participants were shown 2 different images. The first image
participants viewed was the original label of CeraVe. While viewing this image, participants tend to look
all over the bottle, not focusing in any one area (as shown in Image 4). The second image that
participants viewed was of the new label. While viewing this image, participants focused mainly on the
brand name, “CeraVe” (as shown in Image 5). This was a good change as consumers were more likely to
notice the brand of the lotion with the simplified label.
