Question

In 1995, two dermatologists, Dr. Katie Rodan and Dr. Kathy Fields, developed what they believed was a medical breakthrough in fighting acne. Their mission: to help millions of people rid themselves of acne and acnerelated problems. They named their product Proactiv Solutions. This name was chosen because the product could heal existing blemishes and proactively help prevent new ones from forming.

Today, Proactiv is the number-one-selling acne product in the United States. It’s a three-part acne treatment kit that includes a cleanser, toner, and treatment. It’s not sold in stores. Instead, it is sold via infomercials, the company’s website, a subscription service called the “Proactiv Solution Clear Skin Club,” and in select upscale boutiques and kiosks. The way Proactiv reached the point it currently occupies is an interesting story. Early in its life, Proactiv was shaped by three critical marketing decisions, from which the company has not wavered, even to this day. This case recounts these decisions and discusses how the decisions shaped this entrepreneurial venture’s future.

How It Started

Katie Rodan and Kathy Fields met while they were working summer jobs at a cardiovascular research lab in Los Angeles. The lab was developing a drug to treat post– heart attack patients. Both Rodan and Fields enjoyed the exciting pace of the work as well as the camaraderie they shared with the lab’s researchers and doctors. After earning their college degrees, they both went to medical school and became dermatologists. They stayed in touch and often shared with one another how surprised they were at the number of acne patients they were seeing. At the time, the medical research said that only 3 percent of the adult population had acne, but Rodan and Fields became convinced that the number was higher. They were each seeing acne patients on a daily basis, and they weren’t just seeing teenagers. They were seeing women in their 20s, 30s, 40s, and even in their 50s who were suffering from acne and acne-related problems.

Rodan and Fields decided to form a partnership to further investigate the acne issue. They started by talking to their patients, asking them a wide range of acne-related questions. What they found was that the vast majority of their patients hated the acne products on the market. The most common complaints were that the products were very drying and they were very irritating. Worst of all, patients told Rodan and Fields, the available products did not work. At this point, the two physicians started thinking there might be an opportunity for them to create a better product.

Rodan and Fields spent the next couple of years thoroughly investigating the acne products on the market. After testing many of the products on their patients, they made what they believed was a shocking discovery. All of the products on the market were designed to spot-treat a pimple—none were designed to stop the pimple from forming in the first place. This just didn’t make sense to the two dermatologists—from both a practical and a medical standpoint. By the time you see a pimple, whatever treatment you administer, it’s too little too late. In their judgment, not taking steps to prevent acne from developing was akin to not brushing your teeth and instead just going to the dentist to fill cavities. Why not brush your teeth and floss and try to prevent the cavities from developing in the first place?

This revelation motivated Rodan and Fields to start working on a product of their own—one that would be more proactive in preventing acne and acne-related problems. They hired a chemist, and the three worked together for another couple of years. Finally, they had a product they were happy with and that seemed to work and to satisfy their patients.

Important Revelations

To get ideas about how to market and develop their product, which didn’t have a name yet, Rodan hosted dinner parties at her house and conducted brainstorming sessions with the guests. The guests included business executives, market researchers, marketing consultants, an FDA regulatory attorney, the chief financial officer of a major company, and others. One of the things the participants in these sessions stressed to Rodan and Fields was the importance of marketing research. In particular, the group urged Rodan and Fields to hire an unbiased third party to validate their findings. Rodan and Fields took this advice to heart and hired an outside consultant. In focus groups that the consultant led, Rodan and Fields learned two important things about older women. First, evidence suggests that many women who do have acne as a medical condition refuse to believe that such is the case. Second, people don’t like to talk about their acne with others. Rodan and Fields also learned that their product still needed work. There were several aspects of the product that needed improvement, a need that Rodan and Fields fully intended to address and satisfy.

Three Critical Marketing Decisions That Shaped the Future of the Firm

Critical Marketing Decision 1: We’re a Skin Care

Company

After Rodan and Fields reformulated the product again, they hired another marketing consultant to advise them as to how they should proceed to successfully market their product. The first piece of advice they got from the consultant was to think of their product as a skin care product rather than an acne product. At the time, the acne market in the United States was about $250 million a year, a low number by consumer products standards. In contrast, the skin care market was several billion dollars a year, making it much more attractive. The consultant told Rodan and Fields to think of their product as a skin care system that just happens to treat acne, rather than an acne medication alone. This recommendation obviously caused Rodan and Fields to have a much broader vision for the scope of the market for their product.

Critical Marketing Decision 2: Our Name Is Proactiv

After Rodan and Fields started thinking of their product as part of the skin care market, they got advice from a marketing specialist about what to name their product. The name the specialist recommended was Proactiv

(proactive without the e). Looking back, Rodan and Fields admit that initially they didn’t get the reason for this recommendation. They were hoping for a more cosmetic-sounding name, like Dermo-Beautiful. The name Proactiv turned out to be perfect. It captured the essence of what Rodan and Fields were trying to accomplish—to create a product that would be proactive (rather than reactive) in dealing with acne and acne-related issues. In other words, the name Proactiv captured the entrepreneurs’ interest in signaling to customers that their product was intended to prevent the occurrence of additional acne-related problems for them.

Critical Marketing Decision 3: Infomercials

To get their product on the market, Rodan and Fields initially tried to raise investment capital. They were repeatedly turned down. The biggest objection they encountered was the sentiment that if their product was so good and so obvious, why hadn’t Procter & Gamble or Johnson & Johnson already thought of it? “Surely those companies must have dermatologists on their advisory boards telling them what to do,” was the comment repeatedly expressed to Rodan and Fields as they talked to those with investment capital. After giving up on raising capital, Rodan and Fields approached Neutrogena to try to get a licensing deal. Neutrogena passed on the deal but did make a suggestion that resonated with Rodan and Fields. Neutrogena said that the most effective way to sell the product would be via infomercials. Initially, Rodan and Fields were shocked, because they had a fairly low opinion of infomercials. But there was one company, according to people at Neutrogena, named Guthy-Renker that made highquality infomercials for professional products such as Proactiv. Rodan and Fields also got to thinking that an infomercial might be the best way to educate people about their product. The following list lays out the points in favor of using infomercials to sell a product in which Rodan and Fields had a great deal of confidence.

Why Infomercials Have Worked for Proactiv (Infomercials Are 30–60 Minute Programs That Are

Paid for by an Advertiser)

■■ People need to be re-educated about how to treat acne.

■■ The re-education can’t be done in a 30-second or 60-second television commercial, or in a print ad.

■■ Acne is an embarrassing problem, so people will be most open to learning about it in the privacy of their homes.

■■ The demographic group that spends the most time watching infomercials, women in their 20s, 30s, and 40s, are Proactiv’s market.

■■ Infomercials provide Proactiv the opportunity to show heartfelt testimonials of people who have used the product. Showing “before” and “after” pictures of people who have used the product and have experienced dramatic results has been a particularly persuasive tactic.

Guthy-Renker

After being turned down by Neutrogena, Rodan and Fields were about ready to throw in the towel when they met, simply by chance, a person who introduced them to Guthy-Renker, the infomercial company that people at Neutrogena recommended highly. After several meetings, Guthy-Renker offered to license Proactiv and to create an infomercial to sell the product. It also put up the money to buy the media time needed for

the infomercial to be televised. The initial infomercial was targeted toward women in the age group most ignored by the present providers of acne products. The 30-minute spot carefully explained what acne is, how it can affect older women, and how Proactiv was the only product available that potentially prevented acne from occurring. It also offered a complete money-back guarantee. The first infomercial sold twice as much Proactiv as expected, and Guthy-Renker and Proactiv remain close partners today.

It was also Guthy-Renker’s idea to get celebrity endorsements for Proactiv. The first celebrity endorser was Judith Light. Light was followed by Vanessa Williams, and now a number of other celebrities endorse the product.

Proactiv Today

Today, Proactiv is strong. The first Guthy-Renker infomercial ran in 1994, and the product has steadily gained market share since. The company now sells acne treatment in several varieties, including Gentle Formula, Extra Strength, and Proactiv+. Face masks, body washes, and other skin-care products are also sold under the Proactiv name. Proactiv products are now being sold worldwide. Proactiv’s marketing strategy has not substantially changed since the company started. The three marketing decisions described in this case set the direction for the company, and the company remains fully committed to taking only the actions suggested by these decisions.

question: 11-36.

How has Proactiv gone about establishing its brand? To what degree do you believe Proactiv is important in its customers’ lives?

11-38.

Describe Proactiv’s positioning strategy. To what extent did the three critical marketing decisions discussed in the case shape the evolution of Proactiv’s positioning strategy

Answer 1

11-36

Proactiv was invented by two dermatologists who understood that acne and acne-related problems are common in people of all ages and in the market there are medicines to cure the problem but not to prevent it. Hence bringing such products in the market that can solve this issue of the people dealing with skin problems related to acne was the strategy of the doctors. Proactiv is important for the customers because though acne does not harm the person like a disease but is painful and makes the person feel ugly and irritating with a long term problem. People dealing with it have no option than just to get treatments done when it occurs and a product that will help them to fight this problem at all will be very much liked by them. Hence people of all ages suffering from this problem require this product as their essentials.

______________________

11-38

Proactiv's positioning strategy was to focus on women of ages 20-50 who face acne and acne-related problems and make them realize how instead of being treated later on these problems can be prevented by the use of this product. The three marketing decision helped in the positioning of the product in the following manner-

• We are a skincare company- The criteria here was that not to categorize Proactiv as an acne-related product but give it a larger market by categorizing it as a skincare product which further could be sub-categorized as a product to work for acne prevention.
• Naming the product Proactiv- This name itself cleared the purpose of the product as the product worked proactively and not reactively. It is used before the problem starts for avoiding it to start hence the name given a clear meaning to the customers helping in the right positioning of the product.
• Infomercials- The product was new in the market and re-educating people about it wasn't possible through a short and brief advertisement on tv or on print. Hence infomercials were the best way to advertise the product explaining every detail about its unique and helpful features. Also, this way it could target the customers who would actually buy the product.