final project cerave pdf

December 1, 2016

Cedric Huntington, Tyman Weiler, Kezlie Pollmann, and Daniel Goodrich

Project Table of Contents

Section 1: Summary of the Entire Project

Customer Profile ............................................................................................................................. 1

Product Analysis, Market Analysis, and Marketing Framework Analysis ........................................ 5

Customer Insight--Recommendation and Justification ................................................................... 8

Section 2: Team Summaries

Team Summary Usage Observation ............................................................................................... 12

Team Summary Shopalong ............................................................................................................ 14

Team Summary Secondary Data Insights ...................................................................................... 16

Team Summary Nielsen Data ......................................................................................................... 19

On-the-Go Bottle Experiment Summary ........................................................................................ 20

Purchase Intention and Quality Measures Survey ......................................................................... 21 Eye Tracking Summary ................................................................................................................... 22

Section 3: Each Individual Student’s Summaries and Raw Data

Cedric Huntington

Product Usage Observation ........................................................................................................... 24

Summary ........................................................................................................................... 24

Profile of Customer Observed .......................................................................................... 25

Transcript of Usage Observation ...................................................................................... 25

Paragraph of Insights ........................................................................................................ 28 Usage Flow Diagram ......................................................................................................... 29

Shopalong ...................................................................................................................................... 30

Summary ........................................................................................................................... 30


Transcript of Shopalong .................................................................................................... 31

Paragraph of Insights ........................................................................................................ 34 Nielsen Data ................................................................................................................................... 34

Demographic Multiple Measures View ............................................................................ 34

Executive Consumer Snapshot.......................................................................................... 35

Summary of Secondary Data Insights ............................................................................................ 36

Tyman Weiler


Summary ........................................................................................................................... 37




Shopalong ...................................................................................................................................... 42

Summary ........................................................................................................................... 42



Paragraph of Insights ........................................................................................................ 45

Nielsen Data ................................................................................................................................... 46

Who Are the Buyers .......................................................................................................... 46


Kezlie Pollmann


Summary ........................................................................................................................... 48




Shopalong ...................................................................................................................................... 52

Summary ........................................................................................................................... 52




Which Channels are Strongest .......................................................................................... 55


Daniel Goodrich


Summary ........................................................................................................................... 57




Shopalong ...................................................................................................................................... 62

Summary ........................................................................................................................... 62




Product Multiple Measures .............................................................................................. 66


Appendix

References ..................................................................................................................................... 69

Figures ............................................................................................................................................ 70

Images ............................................................................................................................................ 76

Tables ............................................................................................................................................. 80

Section 1: Summary of Entire Project

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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

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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

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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

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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.

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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

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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

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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.

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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

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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.

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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.

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Section 2: Team Summaries

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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.

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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.

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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

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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.

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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

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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

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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.

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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.

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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.

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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.

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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.

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Section 3: Each Individual Student’s Summaries and Raw Data

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Cedric Huntington Product Usage Observation Summary

Heidy is a stay-at-home mom who takes care of her 4 children while her husband is at work.

Heidy is of Puerto Rican decent and spent part of her life in Puerto Rico and part of her life in New York City. She is 28 years old and has a very busy lifestyle as she take care of her children, her husband, and keeping the home in order. Not only does she do all of these tasks, but she also enjoys traveling and going on adventures with her family. With such a busy lifestyle, Heidy generally uses CeraVe in three different situations: (a) after she does the dishes she applies CeraVe on her hands and arms, (b) after her daughter Alana takes a bath, Heidy applies CeraVe all over Alana's body, and (c) right before she goes to sleep she will sometimes rub CeraVe on her hands. While observing Heidy use CeraVe in these three different usage situations, I found two major insights that I will discuss in the following paragraphs.

The first insight that I gained is in regards to the packaging of CeraVe. As you can see in the previous paragraph, Heidy uses CeraVe in a variety of different ways and in different locations throughout the house. When I asked her why she kept the lotion in many different places around the house she responded by saying “Because it is more convenient to have it everywhere.” With this insight in mind, I recommend that CeraVe creates a travel size container such as a squeezable plastic tube. I understand that CeraVe currently has a travel size bottle but finding where to buy it can be extremely difficult. In addition to having a travel size bottle, putting a clip on it would enable consumers like Heidi to clip it onto their keychain, put it in their purse, or in their backpack. Creating a packaging like this would enable Heidy and other consumers like her to carry CeraVe with them wherever they go.

Another recommendation with regards to packaging is to change the logo or design colors so that CeraVe stands out more from its competitors. Heidy said that she has noticed that CeraVe is always on the bottom shelf at Walmart and it is difficult to find because the packaging is so similar to competitors such as Cetaphil and Vanicream. Heidy recommended that perhaps using a brighter color for the package would help it stand out more. She used Aveeno as an example. Because of the cream-colored bottle, customers can more easily recognize Aveeno. Heidi likes that the package is simple and professional in appearance but she feels that it blends in too much with competitors. Changing the color alone would make the bottle remain simple and professional while making it more noticeable to the eye of the consumers.

The second insight that I gained was regarding the advertising of CeraVe. Most customers find out about CeraVe through a dermatologist recommendation. This is beneficial because it adds a great mount of credibility to the product. However, many people have never heard of CeraVe because nobody has seen commercials on TV for it. When I asked Heidy if there were any things that she would like to be changed about the product she responded by saying “if they (CeraVe) did a freaking commercial for it, maybe that would help. I don’t even know if CeraVe has any ads.” She continued to say that many of her friends use CeraVe’s competitors because that is what they know about the most. Heidy’s daughter has severe eczema and Heidy couldn’t find a good working lotion until her brother-in-law recommended her to use CeraVe. This goes to show that most people who know about it is because someone referred it to them, either friends, family, or a dermatologist. So, I strongly recommend that CeraVe focuses on additional marketing methods to reach their consumers such as online marketing or commercials on TV.

In closing, I recommend that CeraVe considers including an additional packaging style in their product line up, specifically a squeezable plastic tube. Doing so will enable busy consumers, such as Heidy, to take CeraVe wherever they need to go. Second, I recommend that CeraVe explore additional methods to build awareness of the product, such as more commercials on TV. Applying both of these recommendations will increase current customer satisfaction as increase market share in the skin care category.

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Profile of Customer Observed

Heidy Anderson is a perfect representation of the life of a stay at home mom. Being only 28 years old and having four children, she spends most of her time tending to the needs of her children while doing her best to also take care of herself. Heidy was born in New York City and is of Puerto Rican decent. She was raised as the oldest of six children in her family and when she was just five years old, her parents got divorced and Heidy moved with her mother to Puerto Rico. She lived in Puerto Rico until she turned 18 years old and then she decided to move to the United States of America. Shortly after arriving in the U.S.A. she met her husband Eric while working as a teachers’ aid at Timpanogos High School. Heidy has a high school education and she supported her husband through college as he got his master’s degree in accounting. Eric is now a full-time accountant and a part-time Marine. Being part of a military family, Heidy loves to travel and does so quite frequently. In addition to traveling, Heidy spends most of her time cooking, cleaning, and taking care of her children.

Transcript of Usage Observation

Questions Asked Before Observation Interviewer: How did you first hear about CeraVe? Respondent: I heard about CeraVe through my brother-in-law. I tried many different brands and I could not find one that worked. My daughter Alana had severe reaction to Aveeno and other brands and so I asked my brother-in-law what his family uses because their whole family suffers from severe eczema Interviewer: Why did you first purchase it? (TV ad, coupon, friend recommended it, etc.) Respondent: Because I asked my brother-in-law what he recommended and he told me to buy a small bottle of it and try it out for a while to see if it works Interviewer: When did you begin using CeraVe? Respondent: I began using it about 9 or ten months ago. Right after my baby was born in about December 2015. Interviewer: Who got you started using it? Respondent: My brother-in-law Interviewer: Did they use it in the same way you do now? Respondent: Yes, they use it on their children right after they get out of the bath. We dab our children dry and then rub the lotion all over them. I also personally use it all day long when I am cleaning. Interviewer: What was it like using the product for the first time? Respondent: I thought the lotion was oily at first and then after a while it became less oily. I didn’t really have a pleasant feeling when I first used it. Once it sits on your skin for a while it starts to feel better. I really had to rub the lotion into my skin. CeraVe really makes you work it into your skin. I remember thinking it was a bit slimy and didn’t smell very good Interviewer: Were the instructions clear? Respondent: Yes. Oh yeah. Interviewer: Did you like it / dislike it?

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Respondent: I didn’t like it very much but I was giving it a try. It wasn’t my favorite. I wanted to see how it did and how it worked Interviewer: Did you use a competitor's brand previously? If so, how was your experience with each of the competitor’s lotion? Respondent: Yes I did. I first used Cetaphil which gave a bad reaction to my daughter Alana. Then I tried using Aquaphor which did not do the job at all. Aquaphor felt like Vaseline and really didn’t feel good. After that I tried Aveeno which also gave a bad reaction to my daughter. The last one I tried before trying CeraVe was Vanicream. Vanicream didn’t do anything and I can’t remember if it gave my daughter a reaction or not. Interviewer: Why were you willing to try the product? Respondent: I had to because Alana’s skin is really really sensitive and so I needed to figure out what kinds of lotion she could use Interviewer: How did this new product compare to the other, similar, products that you used previously? Respondent: Well, compared to Cetaphil, CeraVe is not as oily. CeraVe is a lot softer and less oily. Compared to Aquaphor, CeraVe is a lot smoother. Aquaphor is rough and you can only use a tiny bit and it goes a long way. Even though you need to work CeraVe in it is so much softer. Aquaphor and CeraVe both smell horrible but Aquaphor smells a lot worse. Interviewer: For what occasions do you use the product? Respondent: I use it after I wash dishes and when my skin feels dry. I also use it after I get out of the shower. I use it more in the winter than I do any other time of the year. Interviewer: Specific times of the year? Days of the week? Times of day? Respondent: I use it more in the winter time. Skin gets a lot worse and dry in winter. A LOT more in winter! I use it a lot every single day, especially on Alana. I use the product more in the evening. When I am calm and after I shower I use it the most. Interviewer: Who in your family uses it the most? Why? Respondent: Alana, my daughter. Her skin is a lot more sensitive than anybody else’s in the house. Interviewer: Is there any prep work you do before you use the product? Respondent: Other than showering and trying not to get completely dry, no. Interviewer: Can you show me where you normally store this product? Respondent: Under the sink in the bathroom. Right next to the dish soap in the kitchen. Night stand. Interviewer: Why do you store it in that place? Respondent: Because it is more convenient to have it everywhere. Once I am done bathing Alana I put her on the ground outside the bathroom door and so I am right there. I always dry my hands after washing dishes and then I immediately put on the lotion and continue what I was doing before. I put it on my night stand so if I feel that the first application didn’t do its job after I showered I will re-apply it before I fall asleep.

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Questions Asked During Observation Interviewer: What are you thinking about as you are using the product? Respondent: I am thinking that my elbows need it more than anything. I am looking at my hands to see where I need it more. Right now I rub it in more on the back of my hand and the tips of my fingers. I am thinking about what I need to do next. Interviewer: What sort of emotions are you feeling? Respondent: Relief, like I feel like it is actually working. My hands won’t hurt in a second. Interviewer: Is this the most common way you use this product? Respondent: Yes, for me personally this Is when I use it the most (washing dishes) Interviewer: How else do you use it? Respondent: I use it to wash my baby Alana. Interviewer: How often do you use it each way? Respondent: Maybe 10 times or more a day when I am in the kitchen. Interviewer: How did you learn to do it this way? Respondent: Because my hands are so bad and they get dry really quick. My hands sting bad when they crack. My hands feel like a paper cut if I don’t use it. Interviewer: Do you know of other people who use it differently? Why do you think they use it differently than you do? Respondent: Justin and Laura just use it when their kids bathe. Justin uses it more for his own hands. They use it differently because they have more kids than me. When the kids bathe they put the lotion on. They can’t have them put on kids constantly because I always need to remind them to use it. As an adult, you know when to use it more. Interviewer: What do you usually do right after using the product? Respondent: I continue to clean. I try to keep up with my children. And hopefully find time for me to eat. Interviewer: How do you feel after using the product? Respondent: After a while my hands start feeling softer. I constantly am rubbing my hands to see if I need more lotion. I pause and see if I need more Interviewer: When do you dispose of the product? Respondent: When it is completely empty. Because it is so expensive. 60 dollars a month. Use Q-tips to get out the last little bit and then I throw it into the recycling. Interviewer: How do you know it’s time to dispose of the product? Respondent: When there is absolutely nowhere I can get any more of it! Shake it! Hit it! Grab a Q-tip! Interviewer: What do you do to dispose of the product (recycle? Do you reuse any part of the product?) Respondent: I recycle it. Interviewer: Do you wish the product was capable of something else?

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Respondent: No. I mean; I’ve never thought of that. For Alana, I wish there was an actual shampoo and condition for girls’ hair. I wish they had the body wash for adults and not just babies. I wish that CeraVe had a lot bigger bottles! Like Aveeno. We use it a lot! Like maybe unhealthy a lot. Interviewer: Do you wish the product was simpler in any way? Respondent: No. It is simple enough. Most of the competitors have the tubs but CeraVe can pump it and put it on. Perfect the way it is. Interviewer: Is there anything about how the product is used that is uncomfortable or that you wish were different? Respondent: No. Interviewer: Is there anything about the design of the product that could be changed to make it easier for you to use? Respondent: Not really, but I feel that people would know CeraVe more if the bottle was more attractive. A different logo form or different color than people would see it more. CeraVe is so small and most stores like Walmart have CeraVe at the bottom. It is always hidden. Needs brighter colors so that people will notice it! And if they did a freaking commercial for it, maybe that would help. I don’t even know if CeraVe has any ads. I think CeraVe just came out. It hasn’t been out for very long. Interviewer: Is there anything that you wish were different about the product? Respondent: No not really. Maybe make it a little less oily. Interviewer: Which competitor do you feel has the most similar design to CeraVe? Respondent: Cetaphil, Aquaphor, and Vanicream. Aveeno sticks out the most and all the other ones have the same similar looks. Interviewer: Is there anything else that you would like me to know about CeraVe? Respondent: It really does the job and I am grateful for it and I am glad I am done buying and experimenting with different lotions. Interviewer: Who do you feel would benefit the most from using CeraVe? Respondent: People with eczema. Some people react differently and so some people use CeraVe and some use Aveeno and it is different for everyone.

Paragraph of Insights

Heidy is a stay-at-home mom who takes care of her 4 children while her husband is at work. She generally uses CeraVe in three different situations: (a) after she does the dishes she applies CeraVe on her hands and arms, (b) after her daughter Alana takes a bath, Heidy applies CeraVe all over Alana's body, and (c) right before she goes to sleep she will sometimes rub CeraVe on her hands. To dispose of the product, Heidy literally squeezes every last drop of the lotion and even uses a Q-tip to get all of the lotion out before she recycles the bottle. Heidy uses this product because it is the only one that works for her daughter Alana. Although Heidy originally bought CeraVe for her daughter Alana, Heidy personally uses it more than she realizes. One of the key insights that I discovered is that Heidy uses the lotion frequently and in many different areas of her home. CeraVe appears to be an on-the-go lotion for her and her busy life style. I also learned from Heidy’s own words that CeraVe can improve on its packaging design to make it stand out compared to competitors. Perhaps the biggest insight from this product observation is that CeraVe should have more commercials on television.

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Usage Flow Diagrams

Using After Doing the Dishes:

1. Rolled up sleeves. 2. Doing dishes. Washing everything. She uses really hot water which makes it worse for her dry

skin. 3. Flicks water off of her hands. 4. Dries hands with a hand towel. 5. Cleans counter a little bit with a disinfecting wipe. 6. Washes another dish that she found 7. Dries hands again. 8. Squirts CeraVe into her hands 9. Rubs the lotion in to her hands very firmly 10. Puts lotion all the way up to her elbows 11. Applies in circular motion on dry area spots 12. Looks at the back of her hands repeatedly to check to see if she needs more 13. Looks around the room to see what she needs to do next

Using On Her Baby Alana:

1. Dries baby off by dabbing with towel 2. Leaves some water on baby 3. Lays baby on her back on the carpet just outside the bathroom door 4. Grabs the CeraVe lotion from beneath the sink without even looking 5. Applies the lotion under all over the baby’s legs 6. Applies onto baby’s arms 7. Applies lotion onto back side of knees with more force 8. Rubs lotion on where fat is on baby 9. Massages baby’s feet 10. Pulls baby closer and tickles her 11. Rubs under neck and baby starts laughing. 12. Goes over whole body of baby from bottom to top 13. Rubs leftover lotion on face 14. Lifts up baby

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Shop Along Summary

While conducting my shop along with Sheryl Gibbs, I found many insights regarding CeraVe lotion. The four major insights that I received are the following: (a) The dermatologist recommendations of CeraVe create an immense amount of value for the consumer, (b) the seal of the National Eczema Association is important to consumers but none of them can see the seal because it is hidden on the back of the bottle, (c) a travel size package would greatly increase the amount of CeraVe consumed by the consumers, and (d) offering a scented lotion and a non-scented lotion would help customers have more reason to believe CeraVe really works. In the following paragraphs, I will discuss in detail these insights and the recommendations I derived from them. The main channel of advertising CeraVe is done through the recommendation by dermatologists. As I conducted a shop along with Sheryl, I was very surprised to see the affect a dermatologist recommendation has on consumer price sensitivity. Sheryl was willing to pay a very high amount for CeraVe, solely based on the fact that her dermatologist recommended it to her. For example, when I asked Sheryl a question regarding pricing, she responded by saying, “If a dermatologist recommends it, I would spend $50 for it. Pricing doesn't matter if I was recommended to it.” Sheryl places a large amount of value on CeraVe because her dermatologist recommended CeraVe to her. Having CeraVe recommended by dermatologists increases brand loyalty and decreases the chance that a consumer will leave CeraVe for another brand. Based off this major insight, I recommend that CeraVe capitalize more on advertising the fact that CeraVe is recommended by many professional dermatologists. Doing so, will potentially decrease price sensitivity among CeraVe consumers and foster an atmosphere of brand loyalty. CeraVe prides itself in having been awarded the National Eczema Association Seal of Acceptance. However, during my shop along experience I quickly discovered that Sheryl did not know CeraVe had been awarded the seal of acceptance. When I asked her if the information on the package was clear and what her thoughts were about claims made by CeraVe she said, “the package is not clear that the lotion is endorsed by National Eczema Association. Put the certification on the front of the bottle.” She continued to explain that she values the fact that CeraVe is endorsed by the National Eczema Association but she wishes that it was easier to see on the bottle because that would help new consumers believe that CeraVe is a more credible brand. With this insight in mind, I 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. Advertising travel size containers and making them more available would increase the amount of CeraVe consumers use each year. During my shop along with Sheryl she told me that she only uses CeraVe in the winter time and a 12-oz. bottle will generally last her at least one year. Once I found this out, I dug a little deeper to find that Sheryl would use CeraVe daily and year-round if she had a travel size container that she could carry in her travel bag. Because the 12-oz. package stays at home, Sheryl is not reminded often to use CeraVe. If CeraVe were sold in travel size bottles within the store, many consumers would purchase it and they would use more CeraVe per year on average. Not only does the size of the package play an important role in how much CeraVe consumers use, but also the smell of the lotion plays an important role. Sheryl mentioned that her daughters only use lotion if it smells good because if the lotion smells good, it is a reason to believe that the lotion is working. Perhaps using a mint or natural tea tree scent would be an appropriate smell for CeraVe. I understand that having “fragrance-free” lotion is important because it helps avoid allergic reaction, but I also feel that CeraVe is missing out on a lot of customers because scented lotion is not offered. My recommendation is that CeraVe offers a scented lotion and a non-scented lotion. By implementing these recommendations, CeraVe will ensure that CeraVe consumer will maintain a positive attitude towards CeraVe and continue as loyal customers for the rest of their lives.

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Profile of Customer Observed Sheryl Gibbs is a 49-year-old woman living in Kaysville, Utah. I know Sheryl because I am a co-

worker of her daughter Kinley. Sheryl has been married to her husband Cory for over 25 years and they have three children together. Her youngest child lives at home and her oldest child just moved back in as well. For work, Sheryl is a professional hair stylist and her husband Cory is a pharmaceutical representative for Johnson & Johnson. Sheryl loves to read garden, shop, swim, hike, and go on vacations.

Transcript of Shop Along Screening Interviewer: Why did you choose this specific store to shop at (or why this type of channel—mass, grocery, drug, club)? Respondent: This is the store I come to buy a few things! I only come here from specific specialty items. Interview: Did you come with a list of items? Respondent: No, it's all in my head. Pre-shopping Interviewer: Did you come to the store today already planning to purchase that specific item/brand? Respondent: Yes, I will buy make up, Halloween candy, and lotion. Interviewer: What things influenced that decision? Respondent: Today is Halloween and we have a party. I need to buy treats for the kids. I need makeup because I am out of foundation. I come to this store because it is close to my house. Interviewer: Did you see ads? What do you remember about the ads? Any emotions associated with the ads? Respondent: No, I'm not a couponer. I love looking at ads but I never buy. I always lose the coupons if I clip them. Interviewer: Was it recommended by a friend or family member? Respondent: No, CeraVe was recommended by a dermatologist. Interviewer: Had you searched for it extensively before coming to the store? Respondent: No.

Brand Loyalty Interviewer: Do you always buy the same brand? Respondent: No, I also buy Cetaphil. Interviewer: How often do you buy that CeraVe vs. other brands? Respondent: CeraVe lasts me about a year. So, I buy it once a year. Interviewer: How long have you used CeraVe? Respondent: 1-2 years. Interviewer: What would persuade you to switch brands? Respondent: If someone told me to. If they said there was a lotion better than CeraVe. I am a huge word of mouth person. I don't believe everything on TV and in ads.

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Interviewer: Would you consider the Private Label product? Respondent: Yes, I would. Interviewer: What do you like/dislike about the CeraVe? Respondent: I buy CeraVe for my dry skin but my daughters like the smell of lotions in general and so they use it too. If it works, I'll use it. My daughter Marley was told to use it by a dermatologist because it's the best lotion. Her dermatologist Raved about CeraVe and how good it was! CeraVe irritated my daughter’s skin and so she doesn’t use it anymore. I got a coupon from my dermatologist but I still would have bought CeraVe without the coupon because the coupon was expired by the time we used it. CeraVe is very valuable because it was recommended by a dermatologist. I Listen to my other friends about their recommendations as well but it takes a couple of friends to recommend it before I would switch. Interviewer: How about the competitors—what do you like / dislike about them? Respondent: I only like Cetaphil because doctors recommend it but I don't like it because it is boring! The cleansers don't lather. The lotion is too thin and I like a heavier feeling. I like thin lotion on my face and thicker lotion for my hands. Interviewer: What would you change about the product? Respondent: CeraVe Looks too much like Cetaphil. I think they are made by the same company. Too much alike. As far as the product, I know it is a medicated lotion but they should put a different smell to it. Add some sort of smell to it. I am a hairstylist and my customers love the smell of tea tree because the smell helps them feel like the product is working. Maybe CeraVe could have one bottle with smell and one without. Interviewer: What do you like/dislike about CeraVe? Respondent: I like that it works. It heals. I only use it in winter on the top of my hands because I do hair and my hands get dry after I get them wet.

Packaging Interviewer: What stands out on the packaging? Why? Do you like or dislike that? Respondent: The color in corner catches my eye. Because I look to the corner first rather than the middle like Cetaphil. Interviewer: Is this the right size of package for you? Too small/big? Respondent: It would be nice to have a variety of sizes. A travel size package would be nice to carry in my travel bag or to try out a sample. The current size is perfect for in home use. Interviewer: Do you like the colors and logos on the package? Respondent: I like the color because of its brightness. The CeraVe Logo is fine and simple. Interviewer: Should they change anything about the packaging? Respondent: The packaging is fine but CeraVe should distinguish more between Cetaphil. Interviewer: Is the information clear enough? What do you think of any claims on the package (Endorsement of the National Eczema Association)?

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Respondent: Yes. Although the package says, “non-irritating” but the lotion irritated my daughter’s skin. Also, the package is not clear that the lotion is endorsed by National Eczema Association. Put certification on front. Interviewer: are there things that you like about different brands’ packaging? Respondent: I love throw away packaging like for wipes. Maybe they could make CeraVe wipes. It could be a face wipe to wipe your face before you go to sleep. I like to be able to throw things away right after use.

Shelving Layout Interviewer: Take a step back and look at the whole category. Is it easy to find what you are looking for? Respondent: No, because the first time I came to the store to buy CeraVe, I couldn't find it. Interviewer: Does this brand stand out to you or is it difficult to find on the shelf? Respondent: It is difficult to find because it looks like everything else. Interviewer: What makes it more easy/difficult to find the product you are looking for? Respondent: It’s on the bottom of the shelf and because it’s white it blends into the shelf. Interviewer: Is there anything you would change to make it better? Respondent: Change the color of bottle to make it pop! Interviewer: Are you influenced by end-caps? Shelf coupons? On-package coupons? Respondent: No, if I need something I just get it. I never buy no-name brands. Pricing Interviewer: How do you know what a “good” price is for this product? Respondent: Because when I first bought CeraVe at Walgreens it was very expensive. I trust smiths and big stores more than I do specialty stores. Interviewer: How does pricing affect how you perceive the quality of the product? Respondent: If a dermatologist recommends it, I would spend $50 for it. Pricing doesn't matter if I was recommended to it. I might buy a coupon or Ask for a sample before I bought the whole bottle. Interviewer: How much would the price need to be changed for you to notice it? Would you notice a $1 increase in price? Respondent: A dollar wouldn't make a difference. I would notice a $3-5 difference. Interviewer: If your preferred brand was $2 more expensive, would you still choose it? How about $4 more expensive? How about $10 more expensive? Respondent: If the price changed $10 more I'd look for a coupon. Interviewer: What kind of discount would need to be offered to get you to change brands? Move to a more premium product within the same brand? Buy a larger package? Respondent: Once I find something I like I stick with it. Interviewer: Would a temporary price reduction at the shelf persuade you to buy it if you didn’t need it?

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Respondent: No, it would tell me that they need to get rid of it. For example, if CeraVe was changing packaging and getting rid of the old packaging. But, I would buy more than one. Interviewer: If it’s on sale, do you buy more of it? How much more? Respondent: Depends on how much the discount is. I don't stalk up on lotion because it goes bad after a while. I would never buy more than 2 bottles. Interviewer: If it’s NOT on sale, do you decide not to purchase it and wait until it goes on sale? Respondent: No, if I need it I buy it. Interviewer: When you put these products into your cart today, how many of them did you check to see how much they cost? Respondent: None of them. I only shop for brands and I am very brand loyal.


While doing a shop along with Sheryl Gibbs, I gained 4 insights regarding CeraVe. The first insight that I gained was that because her dermatologist recommended CeraVe to her, Sheryl is willing to pay just about any price for the lotion. Sheryl told me that she would even buy it for $50. This goes to show that the dermatologist recommendation is very valuable to our customers. Second, the National Eczema Association should be on the front of the bottle to make the seal more visible to customers. Third, changing packaging to include a travel size bottle would increase the amount of CeraVe that the customers would use. For example, Sheryl said that she would use CeraVe every day if she could carry a little travel size bottle in her travel bag. The final insight that I found was that most women love the smell of lotion. Sheryl further described that if she can smell her lotion, she has more reason to believe that it is working. Sheryl recommended having a scented lotion and a non-scented lotion. All of these insights lead me to believe that the implementation of one or all of these recommendations would greatly benefit CeraVe.

Nielsen Data Summary: Demographic Multiple Measures View

For CeraVe lotion, the target market is very specific in its nature. In the following paragraph, the statistics found within the demographic multiple measures report from the Nielsen data will be set forth. CeraVe’s target market is predominately made up of older people who are over the age of 65 and who make anywhere from $70,000 to $99,999 a year. Out of all the CeraVe users, a whopping 85.2 percent of them do not have children under 18 years of age. 50.2 percent of all CeraVe users are employed and 45.15 percent are not employed. Out of the consumers who are employed, 40.9 percent of them work as professional or are in some type of managerial position at work. In addition to their employment, 50.2 percent of CeraVe customers have graduated college with a degree. When it comes to race and, 79.9 percent of the customers are Caucasian while the remainder of the consumers are spread out among different racial groups. As far as geographical information goes, 41.7 percent of CeraVe consumers live in the census region of the south.

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Nielsen Data Summary: Executive Consumer Snapshot

In the following paragraph, the statistics found within the executive consumer snapshot report from the Nielsen data will be set forth. From this data, there are 4 major points that should be addressed. First, out of the total U.S. households, only .3 percent have purchased CeraVe at least once. For those households who have purchased CeraVe at least once, they have spent an average of $17.72 each year on CeraVe. On average, the number of occasions they purchased CeraVe was 1.2 times. This means that many consumers are only purchasing CeraVe once and then not returning to purchase it again. Finally, the data explicitly shows that almost all of CeraVe consumers live in “affluent suburban spreads” or “modest working towns”.

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Summary of Secondary Data Insights

I collected secondary research from the Euromonitor data base. My findings can be categorized into three different categories: market trends, competition, and packaging trends. In the following paragraphs, I will go into further detail regarding these three categories.

Since 2011, The US beauty market has been highly influenced by many South Korean brands. Many South Korean companies have been entering the market and gaining grounds by focusing primarily on their botanical ingredients. In the world that we live in today, many people want to know exactly where their products come from, what it is made of, and they want to know that the product was not made in a way that is damaging to the environment. The rapid growth of South Korean Beauty companies entering the US market has contributed to the increasing focus on the ingredients of the skin care products here in the US. The US 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 and so this limits the potential for dramatic growth. However, the 2 percent growth seen in 2015 is greater than the 1 percent average from previous years. CeraVe does not have a huge market share in the skin care category but it definitely has the potential to grow with the market and even take market share from competitors by focusing more on the natural ingredients used to produce CeraVe. In the skin care category, Johnson & Johnson Consumer Products leads as the market leader with a 10 percent value share in 2015. (Euromonitor, 2016) Johnson & Johnson primarily focuses in mass skin care with products such as Neutrogena and Aveeno. The Aveeno brand itself maintained a 3 percent market share in 2015. While 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 was significant enough that they sold 80 percent of the business to a private equity firm in the end of 2015. According to the research I found, the companies that are our closest competition are Eucerin and Cetaphil. Perhaps the reasoning for this is because these competitors advertise similarly to CeraVe by focusing on gentle, sensitive skin-friendly formulas and generate most of their credibility through dermatologist recommendations. If CeraVe focuses on differentiating themselves from these close competitors, CeraVe will be able to gain market share and continue to thrive in the growing market of skin care.

With the influence of Korean Beauty in the US market, there is an increase in demand for natural ingredients. 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. “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) CeraVe currently has a travel size squeezable package but it is very difficult to find online or in stores. With the rapid growth and demand for travel size packages and the squeezable plastic tubes, it would be very wise for CeraVe to tap into this growing market. CeraVe can do this by placing travel size squeezable tubes inside of grocery stores and drug stores where CeraVe is currently sold. Doing so, would increase the amount of CeraVe that consumer use and CeraVe would be entering an additional market with an outstanding prospect for the future.

In conclusion, the data shows that the overall market for skin care products is growing in the US, CeraVe's biggest competitors are Cetaphil and Eucerin, and that CeraVe should change their packaging to include squeezable plastic tubes. Knowing this information is vital if CeraVe plans on increasing market share in the skin care category. If CeraVe pushes forward even more into the emerging market of using squeezable plastic tubes and using natural ingredients, they will be able to increase market share and increase growth alongside the rest of the United States.

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Tyman Weiler Product Usage Observation Summary

I gained many valuable insights about CeraVe’s moisturizing lotion from Marge Wheeler. She seems to be a very typical and consistent user of the lotion. She applies the same amount of lotion every morning and typically only once per day. She was initially attracted to the product by a friend, who referred her based on CeraVe’s post-application feeling which is not oily, unlike the other brands she had previously used. She was formerly a Cetaphil user, but the she always hated the greasy feeling of the product. This non-greasy feature of CeraVe is what has kept Marge an active user for over three years. She enjoys that she can continue with her day and tend to her children’s needs immediately after applying the lotion. Marge told me that she considers moisturizing her hands to be a highlight of each morning.

I learned that Marge applies the lotion every single morning after showering. She informed me that she showers, dries off, and then applies one full pump of lotion to her face and neck, and another full pump of lotion to her hands. She then spreads any additional lotion remaining on her hands to her arms and elbows, and then continues with her morning schedule. She mentioned that her sister, who is also a CeraVe user, has a similar morning schedule—and that she applies CeraVe lotion to her face before applying makeup. Unlike some other customers, Marge does not use the lotion in the evenings. She said that the moisturizer is so effective that once per day has proven to be sufficient for her skin. Because of this, she only uses small amounts at a time, and she takes a long time to finish each bottle. Marge informed me that a single bottle of lotion will last her up to 9 months. In the three years that she has been a consistent CeraVe user, she has only used about three bottles.

Marge also informed me that her lotion use remains consistent year-round. She said that her dry skin never changes with the weather, but the severity is consistent. However, she did mention that she knows others whose skin, like mine, requires more lotion at different times of the year—specifically as the seasons change. Marge’s largest and most pertinent suggestion was for travel size bottles. As a frequent camper, she mentioned that she often forgets to pack her large bottle of CeraVe, and severely regrets it each morning when she wakes up with a dry face and hands. She mentioned that when she does remember to bring her bottle, she is nervous that the lotion will spill, even when the nozzle is locked. Marge told me that she has already done her own searching for smaller, more convenient CeraVe bottles of lotion but has been unsuccessful. A small, safe, and lightweight bottle would be very useful for the Wheeler family.

CeraVe could increase sales revenue by implementing all of these insights. First, the company could promote its lotion as a hybrid moisturizer—effective for both hands and face. To do this, they could hire YouTubers who post make-up tutorials (many of whom already promote CeraVe unsolicited) to inform female viewers of the benefits of moisturizing before applying lotion. Next, CeraVe could promote seasonal lotions. As a CeraVe user with eczema, my lotion use increases as summer transitions to winter and as winter transitions back into summer. By promoting a summer, spring, and winter lotion, CeraVe could avoid the problem that they have with Marge—each bottle lasts too long. If CeraVe could convert their customers who buy a new bottle every 9 months into every 3 months, revenues would soar. Lastly, CeraVe needs to promote a more functional bottle. After sharing our personal experiences with the brand, Marge and I concluded that the cream and lotion yield very different benefits. We feel that the cream has a more desirable feel, but the lotion is packaged in a much more convenient bottle. Creating a crossbreed between these two benefits would be ideal. A moisturizer with the consistency of the cream that is packaged in a squeeze tube with a flip-up cap that is small and easy to pack for travel would meet the criteria. By implementing these improvements, I feel that CeraVe could increase market share and become a more prominent leader in their industry.

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Marge Wheeler (Sister Wheeler, to me) has been an active member of my home ward for as long as I can remember. As a youth, she was one of my Sunday School instructors. My rambunctious and slightly rebellious attitude combined with her impatience didn’t always mix well, but she has remained a close family friend through the years. She has been one of my mom’s “go-to” neighbors when she needs a favor, so I was excited when I heard that she is a diligent CeraVe user! Marge has always struggled with dry skin—specifically on her hands and face. Dry skin seems to be in her genes as many of her family members have the same issue. A few of her family members also use CeraVe, and have found it to be the most effective moisturizer/lotion for dry skin.


Questions Asked Before Observation Interviewer: How did you first hear about this product? Respondent: Word of mouth. A neighbor who also has dry skin recommended the product to me. Interviewer: Why did you first purchase it? (TV ad, coupon, friend recommended it, etc.) Respondent: My friend recommended it, and let me sample her CeraVe. I liked it, so I bought my own. Interviewer: When did you begin using this product? Respondent: Three years ago in 2013. Interviewer: Who got you started using it? Respondent: My neighbor. Interviewer: Did they use it in the same way you do now? Respondent: Yes. We both have very dry skin—especially on our hands and face. Interviewer: What was it like using the product for the first time? Respondent: It was surprising. CeraVe exceeded my expectations because it was better than other lotions I used in the past. Interviewer: Were the instructions clear? Respondent: Yes. Interviewer: Did you like it / dislike it? Respondent: I liked it a lot. Interviewer: Did you use a competitor's brand previously? Respondent: Yes. I have used Cetaphil, Eucerin, and Aveeno in the past. CeraVe is the only lotion/moisturizer that I consistently use. Although I do use Aveeno sun screen. I choose CeraVe because the price is good, it has efficacy (recommended by dermatologists), and it provides long-term benefits because it doesn’t dry my skin out, and doesn’t leave my skin oily. Interviewer: Why were you willing to try the product? Respondent: I trust my friend who recommended the product. My friend said it didn’t leave her skin oily, so I was curious and wanted to test it out myself.

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Interviewer: For what occasions do you use the product? Respondent: None specifically. I use it every day. Interviewer: Specific times of the year? Days of the week? Times of day? Respondent: No, I use it every day, year-round. My usage does not change during different times of the year or with changing seasons. I use it most frequently in the morning when I get out of the shower. Interviewer: Who in your family uses it the most? Why? Respondent: I am the only CeraVe user in my family. Interviewer: Is there any prep work you do before you use the product? Respondent: I wash my face and hands, then dry my hands, then apply the moisturizer. Interviewer: Can you show me where you normally store this product? Respondent: I store the product on the bathroom counter, and also in my travel bag. But the lotion in my travel bag isn’t an official CeraVe container—I put it in my own travel size container. Interviewer: Why do you store it in that place? Respondent: The bathroom counter is the most convenient place for post-shower application. Questions Asked During Observation Interviewer: What sort of emotions are you feeling? Respondent: I am very satisfied that it works. It is consistent. I only put it on once per day. It keeps my skin hydrated throughout the whole day. Interviewer: Is this the most common way you use this product? Respondent: Yes, I apply the moisturizer just to my hands and face. I use the same moisturizing lotion for both. Interviewer: How else do you use it? Respondent: On my face and hands only. Interviewer: How often do you use it each way? Respondent: Once per day. Interviewer: Do you know of other people who use it differently? Why do you think they use it differently than you do? Respondent: I have a sister who applies it to her face before putting on her makeup to keep her skin moisturized throughout the day. Interviewer: What do you usually do right after using the product? Respondent: I wipe the access lotion on my arms. I don’t do anything else, just rub it in until dry. Interviewer: When do you dispose of the product? Respondent: When the container is empty. Interviewer: How do you know it’s time to dispose of the product? Respondent: When the pump no longer squirts out lotion. I always buy the pump applicator.

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Interviewer: What do you do to dispose of the product (recycle? Do you reuse any part of the product?) Respondent: I rinse out the bottle and recycle it. Interviewer: Do you wish the product was capable of something else? Respondent: No, it is satisfactory. Interviewer: Do you wish the product was simpler in any way? Respondent: No, it is simple. Travel size would be great! Interviewer: Is there anything about how the product is used that is uncomfortable or that you wish were different? Respondent: I wish it was in a flip-cap squeeze tube that can stand on its own (like Tyman’s green travel size). That way you could get the better consistency of the tub moisturizer which isn’t as oily, but you wouldn’t have to screw the tub lid back on. Interviewer: Is there anything about the design of the product that could be changed to make it easier for you to use? Respondent: I love the pump on the bottle. A travel size would be very convenient. Interviewer: Is there anything that you wish were different about the product? Respondent: No. Interviewer: How long does a bottle usually last? Respondent: About 9 months. Interviewer: How much do you use each day? Respondent: One pump for my face, one more pump for my hands. Interviewer: Where do you usually buy the product? Respondent: Walmart or Amazon.


Marge almost always uses CeraVe after showering in the morning. I was surprised that she only applies the lotion once per day on average, and a bottle typically lasts about 9 months. She suggested that a travel size tube of CeraVe 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. Marge also suggested that a bottle with a flip-cap top would be helpful, and it would serve as an alternate to either the tub of lotion or the push dispenser bottle. I was also intrigued to learn that Marge uses the same moisturizing lotion for her face and hands—I feel that this is a promotional tactic that CeraVe could use. All in all, Marge is a very average user of CeraVe who enjoys its consistency and the fact that her skin does not feel oily after applying the product.

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Usage Flow Diagram

1. The customer stands up from the couch, walks upstairs, and into the bathroom. 2. The customer grabs the container of CeraVe, and walks back down the stairs to the living room. 3. The customer sits on the couch, removes her rings, and applies one full pump to her hands, and

then spreads the lotions on to her face and neck. 4. The customer then applies one more full pump to her hands, and lathers the moisturizer on her

hands. 5. The customer then rubs any excess lotion on her arms. 6. The customer then smiles because she is so happy to have moisturized skin

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Shop Along Summary

Katie Cummock is the customer that CeraVe dreams about as a company. Katie has been an active and loyal customer of the moisturizing product for four years now. She suffers from severely dry skin, especially on her face and hands. She told me that she takes so much consideration into the health and well-being of her skin that her husband even finds it a little strange and extreme. She explained to me that in addition to suffering from dry skin, she is also hyper-sensitive about wrinkles. Katie has found exactly what she needs in a lotion with CeraVe. For this reason, she feels that there is almost nothing that would cause her to switch to another brand. She is extremely loyal to the brand and is a member of CeraVe’s “love group.” At this point, purchasing CeraVe products does not require any additional time or resources for Katie. It has become a normal purchasing routine for her; the product is completely and fully incorporated into her daily routine. When the product runs out, she replaces it, and this is a cycle she never plans to discontinue.

Katie was first introduced to CeraVe by her former boss named Brittan. Brittan was introduced to the product by her dermatologist (no surprise there), and then began referring the product to her close friends and family who also suffered with dry skin. Through our research, we have found that this is a very typical flow of product consumption. The vast majority of consumers have found the product through referrals, and Katie meets this exact mold. However, Katie didn’t immediately purchase CeraVe following Brittan’s referral, but continued to use Cetaphil as she had done for a few years. Katie remembers seeing CeraVe on the shelf at the grocery store, but wasn’t fully convinced until she received a recommendation from her own dermatologist to begin using CeraVe. The results were phenomenal. Katie explained that as she began using CeraVe, she felt secure. She described that the thick formula used by CeraVe was calming and soothing on her face and skin. The experience was such a contrast from Cetaphil that she immediately switched and hasn’t changed since. She explained in detail that the experience she had with CeraVe is truly what converted her. She says that the non-greasy feel is such a great benefit, and that the product performs so much better than Cetaphil. Because of this, she immediately made the switch.

As I conducted the shop along interview with Katie, she also revealed some interesting insights about CeraVe’s packaging. Katie told me that she doesn’t want anything drastic to change with the packaging. She appreciates the simple, professional look of the product. She contrasted this with Neutrogena, and a few other competitors in the lotion category. Katie said that she felt these competitor’s products look “fake.” She explained that because of CeraVe’s professional and clean appearance, she is able to take more seriously the fact that the product is endorsed by the National Eczema Association. She appreciates this “stamp of approval” from a legitimate association and mentioned that it should be more clearly placed on the front of the packaging. She suggested that this be the main change that they make to the packaging, if any. On the current product, it is located in the back and not clearly noticeable at first glance. She did, however, explain that before first purchasing the product, she felt that the product was only meant for dermatologists. This was due to the lotion having a “medicated” feel—almost as if a prescription was required to purchase the product. It was only after receiving a recommendation from her own dermatologist that she was willing to try the product on her own. Ultimately it was the experience, not the packaging, that converted her.

I learned that for loyal CeraVe customers like Katie, price is not a concern. As a former Cetaphil user, Katie initially compared CeraVe’s price point with Cetaphil and found it acceptable and appropriately comparable. However, now that she has experienced the product and has incorporated it into her daily routine, Katie would not hesitate to buy the product at a higher price point. Katie said that she makes her decisions to purchase products based off of results, not price. CeraVe has proven effective for her skin, which is a part of her body that she is very passionate about caring for. For Katie, CeraVe is the perfect fit.

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I worked with Katie Cummock during a summer internship at Snap Finance from May to August of 2016. We both began working at the company on the same day, and we became friends at the opening orientation. We are both from Bountiful, Utah and attended rival high schools, although she is about ten years older than me. As I was walking by her cubicle at work one day, I noticed a tub of CeraVe on her desk. We began conversing about our mutually dry skin, and I quickly discovered that she is a large CeraVe advocate. She was a perfect candidate for the shop along.

Transcript of Shop Along

Pre-shopping Interviewer: Did you come to the store today already planning to purchase that specific item/brand? Respondent: Yes, CeraVe. Interviewer: What things influenced that decision? Respondent: I am always in need of lotion for my face and dry skin. Interviewer: Did you see ads? What do you remember about the ads? Any emotions associated with the ads? Respondent: No. I have never seen CeraVe ads. Interviewer: Did you receive coupons? Respondent: No. Interviewer: Was it recommended by a friend or family member? Respondent: Yes, it was recommended by my old boss who found out about CeraVe through her dermatologist. Interviewer: Had you searched for it extensively before coming to the store? Respondent: No, my friend just told me it was at any drug store. I went online and found out that it was at almost all drug stores. Brand Loyalty Interviewer: Do you always buy CeraVe? Respondent: Yes. Interviewer: How long have you used CeraVe? Respondent: 4 years now. Interviewer: Why do you buy CeraVe instead of other brands? Respondent: My dermatologist recommended it, and their advertising does not seem misleading in any way. Interviewer: What would make you switch to a different brand? Respondent: At this point, no. Interviewer: Would you consider the generic brand?

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Respondent: No. Interviewer: Do you remember the first time you used CeraVe? What do you remember about that experience? Respondent: I remember after my friend referred me to it, I saw it at the store but didn’t buy it. I was using Cetaphil at the time. I finally tried CeraVe when I went to my dermatologist and he gave me a few samples. When I used it, it was very thick and comfortable. I felt secure and I enjoyed the feeling much more than Cetaphil. Interviewer: What do you like/dislike about the product you purchased? Respondent: It was very thick and secure. It helped my skin to feel comfortable. I also feel that all of the CeraVe products are consistent for my needs. Interviewer: How about the competitors—what do you like/dislike about them? Respondent: Cetaphil was very oily, and watery. It also didn’t help my skin very much at all. Interviewer: What would you change about the product? Respondent: I don’t think I would change anything, actually. Packaging Interviewer: What stands out on the packaging? Why? Do you like or dislike that? Respondent: Nothing really. I never noticed it before I was referred to it. I like that about CeraVe. Interviewer: Is this the right size of package for you? Too small/big? Respondent: It is a good size. I wish the moisturizer cream had a pump though. (It does) Interviewer: Should they change anything about the packaging? Respondent: No. I like that it is plain and not fancy. It doesn’t look fake. It tells me that because their product works, they don’t have to have fancy packaging. Interviewer: Is the information clear enough? What do you think of the claim that CeraVe is endorsed by the National Eczema Association? Respondent: Yes. It gave me comfort that the product was trusted and tried by professionals. Interviewer: If you could change the way CeraVe was packaged, what would you change? Why? Respondent: I wish there was a pump. (There is, and I told her to buy it on Amazon) Interviewer: Are there things that you like about different brands’ packaging? Respondent: No. I like CeraVe’s packaging. Shelving Layout Interviewer: Take a step back and look at the whole category. Is it easy to find what you are looking for? Respondent: Yes. I have been purchasing it for 4 years, so it is easy to find now. Interviewer: Does this brand stand out to you or is it difficult to find on the shelf? Respondent: It is now easy for me to find on the shelf. Interviewer: What makes it more easy/difficult to find the product you are looking for? Respondent: It is easy because it is at basically every drug store in the world.

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Interviewer: Is there anything you would change to make it better? Respondent: Nope. I like it. Interviewer: Are you influenced by end-caps? Shelf coupons? On-package coupons? Respondent: Yes. Free samples and on-package coupons influence me to buy certain products. Pricing Interviewer: How do you know what a “good” price is for this product? Respondent: It is on-par with Cetaphil. Interviewer: How does pricing affect how you perceive the quality of the product? Respondent: It doesn’t, I perceive quality more based off of experience.

Interviewer: How much would the price need to be changed for you to notice it? Would you notice a $1 increase in price? Respondent: No. It would take a huge price raise for me to stop purchasing. I am very loyal—Unless it was like $300 per bottle. Interviewer: What kind of discount would need to be offered to get you to change brands? Move to a more premium product within the same brand? Buy a larger package? Respondent: None. I am very loyal to CeraVe and will most likely never change to another brand. Interviewer: Would you use a coupon for this product? Would a temporary price reduction at the shelf persuade you to buy it if you didn’t need it? Respondent: Yes. Definitely. Interviewer: If it’s on sale, do you buy more of it? How much more? Respondent: Not necessarily, but I would be more willing to try different CeraVe products that I’ve never tried before. Interviewer: If it’s NOT on sale, do you decide not to purchase it and wait until it goes on sale? Respondent: Nope, I just go for glory!


I learned that Katie has a “get in and get out” type of outlook when it comes to purchasing CeraVe. At this point, she no longer even things about her purchasing decision. She has been a very devout and loyal CeraVe user for over four years now, and feels very attached to the product. She switched to CeraVe from Cetaphil because she feels that the product is more effective. She is not influenced in the slightest by packaging or pricing. CeraVe has proved so effective to Katie that nearly any price is worth the result that she sees in her dry skin.

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Nielsen Data Summary: Who are the Buyers

From the “who are the buyers” report, we learned that 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. However, 50 percent of these consumers are employed and 23 percent make over $100,000 per year. Modest working towns and plain rural living make up 40 percent of CeraVe’s consumers while a staggering 76 percent of consumers are Caucasian. Surprisingly, the one area of 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. From these statistics, it seems that CeraVe’s target market is shockingly clear.

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The hand and body lotion and moisturizer market is saturated internationally. With over 10 well-known brands including Aveeno, Jergens, Nivea, Neutrogena, and Cetaphil, it is becoming increasingly difficult to establish brand presence and shelf space. Many consumers view lotions and moisturizers as equals—recognizing that the benefits extracted from each brand are nearly indistinguishable. In most cases, generic brands hold the majority of market share and sales (as shown in figure 1). With a further look in to the Statista database, I found that CeraVe holds a very small but growing share of the hand lotion and moisturizer market (as shown in figures 1 and 2). Increasing market share by only a few small percentage points means millions of dollars in increased revenue (Statista, 2016). Below is what it looks like by the numbers. 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). CeraVe holds a mere 3.3% of the market share of hand and body lotion and moisturizer (as shown in figure 1). Although this seems insignificant, the leading brand in the United States is Aveeno, who holds only 5.5% of the market share (as shown in figure 1). With that 5.5%, Aveeno grossed approximately $100.1 million dollars in revenue in 2014 (Statista, 2016). Many consider Cetaphil to be CeraVe’s closest and most similar competitor, who held only 3.4% of the market share in 2014 (as shown in figure 1). Being a fairly new product, CeraVe has a lot of competition against its more tenured competitors. Fortunately, when examining and monitoring growth statistics, the future looks bright for CeraVe. CeraVe’s presence is small, but growing. From 2013 to 2014, CeraVe increased sales by 17% to $60 million U.S. dollars (as shown in figure 1)–more than any other leading brand in the U.S. market (Statista, 2016). During that same time, Cetaphil saw a 9.4% growth, while Aveeno saw an 8% growth in revenue (as shown in figure 2). With nearly twice the growth as Cetaphil, their closest competitor, CeraVe seems to be on the rise. Although brands like Aveeno have dominated the shelves of stores in the past, CeraVe is hoping to continue this growth and establish a more dominant presence. However, in a survey of U.S. households who were asked which brand of moisturizer/cream/lotion they use most often, only 0.92% indicated CeraVe as their brand of choice (Statista, 2016). In answer to this question, 7.61% answered with Aveeno, while 2.3% answered with Cetaphil, and 11.21% answered with non-major or generic brands not included in the survey (Statista, 2016). CeraVe must better establish their brand in the minds of consumers. This poses an issue, as CeraVe has been operating on a “no advertising” regimen. The company does not market on television, the internet, and hardly even in magazines. Because of this, brand awareness is small. CeraVe’s main source of marketing is through dermatologists, which, for their niche has proven effective. To more fully grasp the attention and dollars of consumers, CeraVe’s needs to cast a wider net. According to CeraVe’s website, the product is found only in the United States and Canadian markets. Although they are doing well and growing locally, CeraVe could be missing out on a large international opportunity. Although reaching out to grow the product outside of the United States isn’t within the scope of our project, it could be a huge difference maker for CeraVe as a company. Between 2011 and 2014, the market for body care products hovered between $544 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). The main differentiator in the skincare industry is the effectiveness of the product. With the backing of dermatologists and their current love group, CeraVe could expand and grow around the globe. Dry skin is a year-round and worldwide issue, and there are millions of people who would benefit from the product.

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Kezlie Pollmann Product Usage Observation Summary

Karen Bradford is a middle-aged single women. She grew up in the Washington DC area as the

second youngest of five kids. Currently, Karen is a high school math teacher. Karen's family has a history of skin cancer, so when she noticed that she had very dry skin she was very concerned. When Karen visited her dermatologist, she was introduced to CeraVe. Karen had gone to her dermatologist worried about her extremely dry hand. She explained that she was expecting to have to take some dramatic drug or an extreme treatment. She was surprised and happy to know that all she had to do was put on some CeraVe or Cetaphil lotion every day. When asking Karen about her experience over the past year with CeraVe she had some interesting remarks. One of her remarks was about the packaging. She enjoys that the lotion is dispensed in a pump bottle. She enjoys this because it is convenient and lets her get the lotion while only using one hand. However, she doesn’t use a full pump of the lotion but only uses a half pump. It is possible the if the lotion was packaged differently that she would use more. For example, if the lotion was in a squeeze bottle or an automatic dispensing system. But it would be important to keep the lotion convenient and away from the tub like containers that other heavy duty lotions or creams use. Modifying the form of bottle used, would lead CeraVe consumers to use more lotion than they currently use with the pump bottle. Another feature that Karen pointed out about CeraVe is that it is very thick and takes a long time for it to soak into her skin. She both likes and dislikes this feature. She likes that it allows it to truly heal and repair her skin. She dislikes that it leaves her with an oily feeling afterward. She feels as if she can’t do anything with her hands for a while. It is possible that this could be an area that we can pivot our product slightly. Many, like Karen, use CeraVe after washing their hands. There may be an opportunity to put the CeraVe formula in a soap base. This way you can make the healing effects of CeraVe more readily available for users. It would also cut out a step in the usage flowchart. Finally, it would provide an opportunity that current users would use more and introduce new users as well. Another way to improve Karen’s experience with the thick CeraVe lotion is to have varying types of lotions; one for extremely dry skin and one for normal skin. The lotion for normal skin could be thinner and not take as much effort to rub all the way in but still maintain the smooth skin the CeraVe helps achieve. Something else Karen mentioned was that when she first started using CeraVe she would use it right before going to bed and put gloves on to keep the moisture locked in during the night. This could be an opportunity to combine two products and create a brand extension. There could be CeraVe gloves and CeraVe socks that are specific for nightly uses to deeply hydrate during the night. These would be gloves and socks lines with strips that have CeraVe lotion. If successful these would have to be replaced pretty frequently since the lotion strips would run out quickly, providing CeraVe with a constant customer base. One main question with this is if consumers would buy socks and gloves that were only good for a limited time and if the lotion strips would actually work. However, if there is a willingness to buy and the lotions strips work, this could be market that only has a few brand currently in it. Karen’s year of insight on CeraVe has highlighted many different aspects of the lotion. One is how much consumers value the packaging of a product and how the packaging of a product may influence the use of the product. Another aspect that Karen highlighted was the multiple and ritualistic steps of using the lotion. This could be taken advantage of by creating a brand extension into the soap market since consumers use CeraVe after washing their hands. Finally, Karen mention how she would use CeraVe with gloves when her hands were extremely dry. This could provide the opportunity to create a line of lotion gloves and socks. Overall, Karen provided many helpful insights about CeraVe and the use of intense moisturizing lotions.

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Karen Bradford, a 39-year-old single women. She grew up in Washington DC as the second youngest of 5 children. While growing up both of her parents had full time jobs so she spent a lot of time with her siblings and playing outside with her friends, including my mom. After graduating high school, she attended Brigham Young University (BYU) and received a degree in math education. During her time at BYU, Karen took a break for her education to do an 18-month church volunteer mission in Argentina. She is currently a high school honors math teacher. She complains about the hand soap at her school being too harsh on her hands so she tried a variety of different lotions. Her dermatologist recommended CeraVe after Karen’s hands started to get even drier.


Interviewer: How did you first hear about CeraVe? Respondent: My dermatologist recommended it to me. I went in to the doctor because my hands were really dry and patchy. I thought that I was really sick or hand skin cancer or something. My dermatologist recommended CeraVe because it doesn’t have a certain ingredient that, supposedly, dries out my hands. Interviewer: How long ago was this? Respondent: About a year ago. Interviewer: So, would you say that you use CeraVe differently now than you how you did a year ago? Respondent: My uses for CeraVe have really evolved over the last year. When I first started using it, I would occasionally put it on my hands before bed. I would then put gloves on my hands before falling asleep to help my hands retain the moisture. After a while I stopped using it because it was summer and I thought that the humidity would keep my hands soft enough. Then I had surgery on my hand in June and I started to use CeraVe again because my extreme dry skin came back. Now that I am teaching again, I just leave my bottle in my classroom and use it about once a day. I love the pump feature and I don’t use a lot. I’m still working on my first bottle of it. It was a big bottle but I haven’t finished it yet after a year. Interviewer: Where the instructions clear on how to use it? Respondent: Yeah, most lotions are pretty self-explanatory. Honestly, I didn’t think that CeraVe would help with my hands, but it was super helpful. I thought that the dermatologist was wrong but she was right. I guess that I should trust her more. Interviewer: What do you like about CeraVe? Respondent: I like that it works. It isn’t a joke. It is an intense lotion that actually moisturizes my hands. It doesn’t dry my hands out after multiple uses like other lotions do. Interviewer: What do you dislike about CeraVe? Respondent: I don’t like how the cream is so thick. I feel like I have to rub it in a lot more than other lotions. I also feel like my hands need a break from doing normal activities after putting on CeraVe because of how thick it is. I feel like it really has to set in. Interviewer: Did you use a different lotion brand before?

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Respondent: Right now I use a variety of different lotions. I have an Origins lotion that I use a lot. I use it for my hands, legs, and arms every day. I like it better than CeraVe because it goes on easier and it's a lighter cream. I also wanted to use a different Origins cream instead of CeraVe but it was crazy expensive and in a tub which I didn’t like. After my surgery I needed a lotion that I could use one handed and a tub you need two hands to open. My doctor also recommended using Cetaphil but the store that I went to didn’t have one with a pump so I got CeraVe. Interviewer: Is there a specific time during that year that you use it more than others? Respondent: I use it more during the winter. Interviewer: Is there any prep work you do before using CeraVe? Respondent: I usually wash my hands before I use it. But that is probably just because I wash my hands a lot while I’m at school. As a teacher I’m kind of crazy about washing my hands and the soap they have at my school is really hard on my skin. Interviewer: Where do you store it and why? Respondent: During the school year I store it behind my desk. During the summer we have to clean out our classrooms so I bring it home and leave it in my bathroom. But I don’t use it very much when I have it at home. Interviewer: What are you thinking about as you are using the product? Respondent: I don’t think while I use this product. It has become more of a habit and routine then something I give a lot of thought to. Interviewer: What feelings to do you have while using CeraVe? Respondent: Kind of what I said before, I don’t really have any certain feeling while using it. Interviewer: What is the most common way you use CeraVe? Respondent: I really only use it to rub on my hands at school. Mostly after washing them. Interviewer: What do you do when dispose of the bottle? Respondent: I haven’t been through a whole bottle, so I haven’t had to dispose of one yet. But I assume I’ll just throw it away. Interviewer: Is there anything you would change about this lotion? Like adding fragrances or different ingredients such as aloe. Respondent: No. I like that the lotion is unscented because it doesn’t distract my students. I also don’t think they should add ingredients. They have done a good job with the formula they have now. It does what it needs to do.

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Karen’s description and usage of CeraVe gave great insight into the product. The biggest discovery was that she didn’t know about CeraVe until she was in dire need of a good lotion and went to her doctor. Perhaps if she found the lotion on her own, she would use it more as an all day, everyday type of lotion. Another key insight was that for what Karen believed CeraVe to accomplish the job it was intended to do, which is to help extremely dry hands. Because of that, she thought that the formula should not be changed. Finally, the pump dispenser was a huge asset for her. This design of the packaging was what sold her on CeraVe over competitors such as Cetaphil. However, Karen is reluctant to use CeraVe as her normal lotion because it is too thick. Karen hasn’t used a whole bottle of CeraVe yet so she hasn’t had to dispose of the bottle.

Usage Flow Diagrams

1. Washes hands (most commonly after using the bathroom) 2. Dries her hands with a paper towel 3. Walks back to classroom 4. Squirts lotion from pump about half way down (not a full squirt) 5. Rubs lotion into hands not going past her wrists. This takes a long time 6. Doesn’t use hands for a while as lotion “sets in” 7. Continues with day to day activities

It seemed important that her hands were clean and dry. Both of these allowed the lotion to seep into her skin better. It was also interesting that she only used half a squirt of the pump dispenser. Perhaps the full squirt is too much for consumers to use. There could be a possibility to change the pump dispense to dispense less for each squirt.

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Shop Along Summary

Bill is a 39-year-old single man who lives by himself in Provo, Utah. Bill is my supervisor at the Brigham Young University Cannon Center Commons. He has worked at Brigham Young University for over 10 years. Bill grew up as one of the oldest of 12 children. As a kid, Bill enjoyed hunting and playing outside. In fact, Bill still enjoys the outdoors and frequently goes hiking, running and hunting. He likes the time he gets to spend outside but doesn't appreciate how it dries out his skin. He focuses on having smooth skin because he thinks that it will help him get more and better dates.

Bill is a consumer who is concerned about the way he looks to others. Because of his slight insecurity, Bill is willing to spend money and time finding a good product for his skin. Two of his friends suggested that he looked at Sephora, a high end lotion and make up store, to find a good product for his face. Though a shop along, I discovered a few key things about the way Bill and other consumers experience shopping for a higher end lotion, a category that CeraVe is attempting to penetrate. We can see this through CeraVe's recent line extension. They recently introduced CeraVe Ointment which is a thicker lotion. It is slightly more high end and therefore a little bit more expensive. The three biggest insights were; one, labeling around the store and of the product is key for consumers, two, promotions are to be used sparingly, and three, the presentation of the product is important for consumers to recognize the quality of the product.

The biggest thing was about the labeling of the store and products. Even though CeraVe won’t be in Sephora stores, it did shed insight onto how the labeling of skincare products is so important. Bill was confused from the moment he entered the store on where to go for just a normal soap for his face. There wasn’t any labeling around the store or on the shelves. It makes sense that consumers what clear labeling. From secondary research it is apparent that consumers are very critical about what they put on their skin, so guiding them in the right direction for the store is important. Eventually he just had to ask a store clerk were to find them. It would be important that the skincare section of stores that CeraVe is located in be labeled clearly.

Another insight that gained is the fact that while Bill wanted a coupon or sale, he was willing to buy without either of those. He explained it that they main reason was because this was a product that he needed and not just wanted. While this may have been an exaggeration for a facial lotion or scrub it could work for CeraVe. CeraVe is a product that a lot of times is necessary for those who have extremely dry skin. Another big motivator is that doctors tell their patients that CeraVe is one of the only lotions that will help their dry skin. Since it has become such a necessity, CeraVe does not have to go on sale much or provide many coupons.

Finally, the presentation of the product is important. Bill noticed the packaging that was more elaborate. The more elaborate and pleasing to look at the packaging was, Bill assumed that the quality was higher. CeraVe has already started implementing strategies to have consumers assume higher quality. One thing they did was redesign the packaging to be a darker color. Another thing that CeraVe did was to rename their product from lotion to ointment. This reinforces the idea in consumers’ minds that this is more than just their average lotion, but it is something that is necessary and that their doctor did or would recommend. Overall, higher end lotions need to be cautious of the labeling in the stores and the products, the promotional based marketing used and the presentation of the product itself. CeraVe has shown an increased awareness for many of these points. They changed the packaging to look different and smoother than before. They pivoted from lotions to ointments to increase the clarity of their labels and they continue not to employ many promotional based strategies. Perhaps one thing they can improve on is to conduct research to convince retailers to increase the effectiveness of the in-store labels. This will help consumers quickly find the category and products they are looking for.

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Bill Wright, a 39-year-old, single man. Born and raised in Utah as the second oldest of twelve children, Bill enjoys hunting and playing in the outdoors. He also enjoys a variety of physically activities and likes finding a variety of marathons to run throughout Utah every year. He attended Brigham Young University (BYU) and got his Bachelor's in History. While attending BYU, Bill started to dance. He began to compete in various ballroom dance competitions. He currently works at BYU dining services as a manager of the Cannon Center. As a single guy, Bill is concerned about how he looks, especially his face since that is the first thing people see. Because of this, he is willing to spend a considerable amount of money for facial products.


Screening Interviewer: Why did you choose this specific store to shop at? Respondent: I decided to shop at Sephora in JCPenny because two of my friends told me that it was a good place to get facial lotion and wash. Interviewer: Did you come with a list of item? Respondent: Not necessarily. I am going so that I can find something to make my face cleaner and a little less dry. Interviewer: Do you know which brands you will buy ahead of time? Respondent: Nope! Not at all. Pre-shopping Interviewer: Did you come to the store today already planning to purchase that specific item/brand? Respondent: I came with a specific product in mind, but not a brand. Interviewer: What things influenced that decision? Respondent: I want it to have good quality. That is why I am going to Sephora, I heard that it has high quality products. Interviewer: Did you see any ads about this category? Respondent: Nope. Interviewer: Did you have any specific products recommended by a friend or family member? Respondent: Not any specific products, but the store was recommended by two different friends. Interviewer: Have you searched this category at all? Respondent: Nope. Brand Loyalty Interviewer: What do you like/dislike about this product? (Looking at Fresh Facial Cleanser) Respondent: I like that it seems high quality and yet is still a little bit less expensive than some of the other facial items. I don’t like that it is still pretty expensive.

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Packaging Interviewer: What stands out on the packaging and why? Respondent: Looking at this packaging (for Fresh Facial Cleanser), it is pretty normal. It is a skinny white tube and that’s about it. There doesn’t seem to be anything too special about it. Interviewer: Is this the right size of packaging for you? Respondent: It is a little too big. I don’t know how long it would take me to get through the whole thing. Interviewer: Should they (Fresh Facial Cleanser) change anything about their packaging? Respondent: Not that I can think of. Interviewer: Is the information clear enough? Respondent: No. I didn’t see anywhere on the packaging that it clearly said that it was a facial scrub. Interviewer: Are there things that you like about different brands’ packaging? Respondent: Other ones where more pleasing to look at. For example, there was one that was round with a flat base. It was cool to see that completely different design. Shelving Layout Interviewer: Take a step back and look at the whole category. Is it easy to find what you are looking for? Respondent: No! There are so many options and none of them are clearly labeled for their purpose. Interviewer: What makes it more easy/difficult to find the product you are looking for? Respondent: One thing that is difficult is that there aren’t any labels anywhere in the store or really on the shelve. This makes it difficult to find anything. Interviewer: Are you influenced by end-caps, shelf coupons and/or on-packaging coupons? Respondent: Yes. I look for all of those! I like that you can easily save money with each of them. Price Interviewer: How do you know what a “good” price is for this product? Respondent: Compare it with other brands or other stores. Interviewer: How does pricing affect how you perceive the quality of the product? Respondent: The pricing influences the quality that I believe it has. The more expensive it is, the higher quality it should be. Interviewer: How much would the price need to be changed by for you to notice it? Respondent: Since the Fresh Facial stuff is $38, I probably wouldn’t notice for about $10. Interviewer: Would you use a coupon for this product? Respondent: Yes! It is slightly expensive for my liking, but I would love to have it if I could save money. Interviewer: If it’s on sale, do you buy more of it? If so, how much more? Respondent: I would probably buy one more. Interviewer: If it’s not on sale, do you decide to not purchases it and wait until it goes on sale? Respondent: Yes. Well I guess not, because I need it now so I have to get it.

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The shop along with Bill uncovered many different insights about the higher end lotions and soaps. The three main things are; labeling is important – both in the store and on the product – coupons or sales will not affect consumption that much, and the presentation, or packaging, of the product is important. Although Bill didn’t go to the store looking for CeraVe, it did shed light onto some of the biggest problems that consumers face while looking for lotions that are of higher quality. Overall, there are a few things that CeraVe could do to improve the customer's shopping experience. One is to make their own labeling for the stores or encourage stores to have a better labeling system. This would make CeraVe easier to find. Another thing is to be aware of how and when to use promotions. And finally, make sure the presentation of the product reflects the quality.

Nielsen Data Summary: Which Channels Are Strongest

Hand and body lotion can be found in a variety of channels including warehouse clubs, drug

stores, supers, mass mechanizing without supers, total grocery, convenience and gas stations, and dollar stores. CeraVe has the biggest presence, by far, in drug stores. Within the total U.S, 52.4% of CeraVe’s dollars were spent in the drug store channel in 2012. This is 30% higher than Cetaphil, CeraVe’s main competitor. The biggest weakness for CeraVe is in warehouse clubs. 40.5% of Cetaphil’s dollars were spent in the warehouse club for the year of 2012. A potential channel that CeraVe could spend more resources on is the super markets. Currently CeraVe is spending the same amount of money in supermarkets as Cetaphil and the category of hand and body lotions. If CeraVe shifted some of their dominance in the drug store channel to have a bigger control over the supermarkets.

CeraVe’s brand performance has changed for the better in most regards. In the U.S. there are 852K households buying CeraVe who spend an average of $13.47 per trip. 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 1.3%. In order to remedy this, CeraVe can offer smaller packages, coupons, or in-pack-on-pack promotions.

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Summary of Secondary Data Insights Lotion is a product that many of us use without considering why we are using a specific brand or

type. However, there are some who need lotion that is more specialized than others. Through research from the Mintel database, I discovered that purchase intentions within the category of lotion seem to rely on three main criteria; the type of brand, the packaging, and the ingredients.

In Mintel’s Personal Care Consumer study, common personal care products such as deodorant, hand and body lotion, hair styling products, and specialty skincare were carefully looked at to gain insights about the demographics of the market. The most important finding was that consumers relied on mass brands such as Pantene and Dove for all of their personal care products. However, this is less evident in facial skincare products.

CeraVe is included in multiple categories; specifically hand and body lotion, facial cleansers, facial moisturizers and specialty skincare. Within these categories, consumers are more likely to buy mass brands in the hand and body lotion category. In the hand and body lotion 56% of consumers are willing to buy a mass brand most often while 19% would use a prestige brand (as shown in Figure 8). Also within this category, males and females between the ages of 35 and 54 buy the most mass brands than any other age category. However, the younger group (ages 18-34) are more likely to buy prestige bands. Overall, consumers are more likely to buy mass brands. Because CeraVe is a mass brand, this puts the company in a great position for growth.

In a different Mintel study, Skincare Ingredient and Format Trends, Mintel tested skincare products and how the consumers react based on the ingredients and packaging. One of the important findings in this study was that hand and body care owns a big share in the skincare market, 25% (as shown in Figure 9). Most of these consumers, almost 50%, buy these products because “it is important to be attractive to the opposite sex” and within the past 3 years the reason of “it is important to keep young looking” has overtaken “when buying toiletries, the brand I choose is very important to me” as the second most important reason. Interestingly, the reason of “I will spend whatever I have to, to make myself look younger” has barely reached over 10% within the last 5 years (as shown in Figure 10). Many CeraVe customers use it because they have severe eczema and they want their hands to appear smoother and clean with the intention of attracting the opposite sex.

Another finding was that most consumers are looking for packaging with a variety of benefits such as “simple usage instructions”. Mintel mentions that consumers are looking for specific features such as instructions, easy to store, easy to open, resalable, and controlled dosage. Overall, men are more likely the women to be enticed by the non-functional packaging features and younger adults, ages 25 to 34, are the main group looking for packaging innovations. Features that such built-in tools are enticing to these consumers. This includes features similar to facial scrubbers or a feature that shows when the product is running low.

Finally, moisturizing products are associated with ingredients such as shea, coconut oil and aloe. Most males and females (33% and 20% respectively) associate aloe with moisturizers while only 12% and 11% respectively associate shea with moisturizers. This may be because aloe tends to be seen as having multiple benefit such as cleansing, moisturizing and treating a specific condition while shea is just known for moisturizing and may not be as well-known overall. Another opportunity that Mintel showed is using argan oil and soybean oil. Both of these oils have benefits such as reducing acne and wrinkles. However, many consumers want to be able to understand the ingredients on the label.

Most importantly, the research found that most consumers want to stick to their familiar brands. Adults are most likely to switch based on friend or family recommendations and low prices. However, this is only 35% of the consumers. This relates back to the other Mintel study, that consumers will choose mass brands for personal care products.

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Daniel Goodrich Product Usage Observation Summary

Becca has a very active lifestyle. Between being a stay at home mom and her active church

service she is usually on her feet. She has consistently been a part of the youth organizations in her church for almost a decade, which keeps her outside a lot. She loves to take the boat out on the lake with her family and really values her family time. Her love for flip flops and summer activities leave her feet dry and cracked. This presents the need Becca has for CeraVe. She uses CeraVe lotion as a night time solution cream for her very dry feet. This usage situation presents a different perspective on the product then other possible customers and provides some unique insights into CeraVe consumers’ behavior.

The first and possibly most important insight comes from the path Becca took to become a CeraVe user. She was given CeraVe as part of a dermatologist visit for her daughter. When her daughter no longer needed the product, Becca was left with excess lotion. One summer day when she was suffering from a very dry feet day, Becca decided to try the lotion since she already had it. She instantly became loyal to the product. She liked that the lotion was thicker then Eucerin, almost like Body Butter, but with a less greasy feeling. The lotion solved her need very effectively. This insight is crucial to the success of CeraVe. When consumers try CeraVe, the quality of the product can sell itself. The problem is getting them to try it. CeraVe has a strong presence in dermatologists’ offices, but it’s general consumer awareness is low. When dermatologists recommend the lotion consumers are often converted. This recommendation is very powerful for consumers like Becca. This power must be brought into the retail market. CeraVe could consider giving out samples or placing their products in locations such as doctor’s offices, hospitals, or retail stores. If these samples were well linked to the brand, potential consumers would get an experience with the product and then the quality would sell itself. Branding should also highlight the relationship that CeraVe has with dermatologists and with societies like the National Eczema Association. A common thread that emerged in the interview was the fact that Becca is unaware of where she can purchase CeraVe. She also has never met anyone else who uses the product. CeraVe is not well known among shoppers. Becca only began using the product on a whim when it was placed in her home by a dermatologist, she did not choose to purchase the product. CeraVe clearly has a lower marketing budget then industry leaders, but an increase in awareness driving campaigns is needed. A concern may be expressed that advertising the product may make the product seem less credible and pull it away from the prescription strength feel created, but this can be circumvented. Advertising ideas should be explored, as well as a merchandising plan to capture more valuable shelf space in large format grocery stores. Becca doesn’t know where to purchase CeraVe which is obviously a large hurdle to her consumer path. If CeraVe chooses to explore new advertising and merchandising ideas, consumers would have an easier process to find where to buy CeraVe.

An alternative to potentially expensive merchandising could be found in the online marketplace. Becca made the suggestion that if she knew the product was Amazon that would make her purchasing experience easier. An increased push online could increase awareness and provide easy purchasing pathways for consumers. Doing this would help CeraVe in lowering merchandising costs and make the process of purchasing much easier. One final insight from this consumer is the importance of texture. Becca loves the thickness of CeraVe. That was the feature of the product she enjoyed the most. The primary concern she expressed was the greasy feeling that accompanied application. The thick texture overpowered the slightly greasy feeling in this usage situation but has eliminated her desire to use CeraVe as an out and about lotion. If steps to tap into an on the go market as many competitors are currently doing, CeraVe must resolve this concern to earn the loyalty of consumers like Becca in this new usage situation.

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Becca is a 44-year-old woman living in Springville, Utah. She is a stay-at-home mother of 5 children. She is originally from California and studied Dietetics and Nutrition at BYU. She has been very active in serving in her church, including many different positions working with the youth of her church. She is an avid boater and loves to taker her family and friends out on the lake. She is also a very talented chef and baker and loves to serve others using that gift. She is the first person on the scene when someone is in need. Needless to say, she is a very busy individual.


Questions Asked Before Observation Interviewer: How did you first hear about this product? Respondent: My Dermatologist recommended it to me, well actually he recommend it for my daughter. Interviewer: Why did you first purchase it? (TV ad, coupon, friend recommended it, etc.) Respondent: My daughter had itchy red splotches on her legs and the Dermatologist handed me some CeraVe. I actually walked out of the office without paying for it and so the doctor just billed me for it. Interviewer: When did you begin using this product? Respondent: My daughter didn’t really use it, her rash went away and then I just decided to try it on my feet. I started consistently using at the start of summer. Interviewer: Did they use it in the same way you do now? Respondent: No, I use the lotion primarily on my feet. I just decided to try it one day because my feet get really dry. I use it for my cracked calluses on my feet. I then sort of stole it from my daughter. My dermatologist also gave me samples of the facial lotion, but I don’t really know where to buy it. Interviewer: What was it like using the product for the first time? Respondent: I liked it, I liked that it was thick. Interviewer: Were the instructions clear? Respondent: The instructions were clear, it’s lotion, the dermatologist didn’t really explain anything. Interviewer: Did you like it / dislike it? Respondent: I liked it! Interviewer: Did you use a competitor's brand previously? Respondent: I’ve used Eucerin, and Bath and body works for during the day lotion. (Later in the conversation) Oh I’ve also used Cetaphil, I knew there was one more but I couldn’t remember what it was! Interviewer: Why were you willing to try the product? Respondent: Well I didn’t so much choose to buy the product. The doctor just told me what I needed. I tried it because my feet were really dry one day and I figured since I had it I might as well use it. Interviewer: How did this new product compare to the other, similar, products that you used previously?

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Respondent: This is thicker than Eucerin. It’s not as greasy as body butter, I hate the greasy feel. It’s much less greasy then body butter. I would buy this again over Cetaphil, if I can find it. Interviewer: For what occasions do you use the product? Respondent: I use this product specifically at night before I go to bed. Interviewer: Specific times of the year? Days of the week? Times of day? Respondent: I really only use it at night. Usually 4 nights a week. I actually used it more during the summer months. I wear a lot of flip flops and so my feet dry out really fast. Interviewer: Who in your family uses it the most? Why? Respondent: My daughter is starting to use it more now. The splotches came back but I definitely use it the most. She (her daughter) hasn’t been using it long enough to see if it works for her yet. Interviewer: Is there any prep work you do before you use the product? Respondent: I just get ready for bed, hop in my pajamas and then it’s the last thing I do before I go to sleep. Interviewer: Can you show me where you normally store this product? Respondent: I keep it right on my nightstand, right where I can reach it as I get in bed. Interviewer: Why do you store it in that place? Respondent: It’s just easy to reach and it keeps it where I need it. Questions Asked During the Observation Interviewer: What are you thinking about as you are using the product? Respondent: Well the first thing I thought was I should use this more often. Then I think that it is kind of expensive. Sort of funny, that I think I should use more but also how it is kind of expensive. It is a little greasy, I wouldn’t use it during the day, I think it would get in the way. I couldn’t like walk around bare foot on the carpet or floor because I would feel like I’m tracking it around. This wouldn’t be my go to lotion throughout the day. This really just a special night time product for me. Interviewer: What sort of emotions are you feeling? Respondent: I feel a little guilty that I’m using it on my daughter. I feel like I need to go wash my hands off since I’m not going to bed. Interviewer: Is this the most common way you use this product? Respondent: Not really because I usually am getting in bed when I use it. Interviewer: How else do you use it? Respondent: The only other way I use it is for my daughter. Interviewer: How often do you use it each way? Respondent: I put it on 4 times a week with my feet and whenever my daughter needs it. Interviewer: How did you learn to do it this way? Respondent: I just tried it out and it worked!

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Interviewer: Do you know of other people who use it differently? Why do you think they use it differently than you do? Respondent: I don’t know anyone else who uses it. Interviewer: What do you usually do right after using the product? Respondent: I just got to sleep! It’s really the last thing I do at night. Interviewer: How do you feel after using the product? Respondent: I feel slightly greasy but I’m usually going to sleep so it’s fine. Interviewer: When do you dispose of the product? Respondent: I haven’t made it through my first tub yet. I like that it is in the tub because I just use it before I go to bed. I like that I can just scoop out how much I need. Interviewer: How do you know it’s time to dispose of the product? Respondent: When I get there I will scrape it clean, partially because I won’t think about buying a new one until this one is close to being gone. I also have a really sensitive nose when it comes to lotion going bad so if the lotion goes at all rancid I will not use it any more. Interviewer: Do you wish the product was capable of something else? Respondent: If I didn’t know there was a facial cream, I would suggest that… but knowing that there is a facial cream I guess just knowing where to find it. Interviewer: Do you wish the product was simpler in any way? Respondent: If I knew I could buy it Amazon that would make it awesome, I’m an Amazon girl. Interviewer: Is there anything about how the product is used that is uncomfortable or that you wish were different? Respondent: Nope. Interviewer: Is there anything about the design of the product that could be changed to make it easier for you to use? Respondent: If there was a better lotion for everyday use I would want it in a pump container or a small squeeze tube for my purse. I don’t like the big squeeze tubes; I feel like I can’t get everything out of it. I also don’t like that I am committed to the amount of lotion that comes out. With the tub or a pump, you can try to put some of the lotion back but you can’t do that with a squeeze tube. But for what I use if for now I like the tub. Interviewer: Is there anything that you wish were different about the product? Respondent: Maybe a better lotion for during the day, maybe there is but I just don’t know about it. I never see CeraVe in stores, and I don’t know where to find the facial cream. I guess that is my main thing, I don’t know where to find it. Interviewer: Do you have any last thoughts? Respondent: The name is a little weird, I’m not sure how to pronounce the name. Is it CeraVee, CeraVeh, Cera-Ve?

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The biggest takeaways from my interview with Becca is that once Becca tried CeraVe she became a loyal consumer. That experimentation is a key to repeated purchases and breaking old purchasing habits. Another important insight come from her lack of awareness. She still doesn’t really know where to purchase CeraVe. She also doesn’t know anyone who uses CeraVe. This is a big problem for CeraVe. A final insight to be gleaned from this interview is the importance of post application texture. Becca needs her lotion to feel non-greasy in order for it to be used during the day, but she loves the thick texture and so she uses it on her feet at night

Usage Flow Diagrams

1. Gets ready for bed 2. Gets into bed 3. Reaches over and grabs CeraVe off of nightstand 4. Dips two fingers into tub 5. Spreads lotion onto palms 6. Rubs lotion onto feet, concentrating on the heels. 7. Any excess lotion is put back into tub rather than rubbed into other areas. 8. Goes to sleep

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Shop-Along Summary

I conducted my shop-along with an old family friend, Amber. Amber is 35 years old and is a

mother of 4 children. Her oldest daughter is in the fourth grade and has down syndrome. She is very active and likes to stay in shape. She is a stay at home mom although she did graduate from college. Her family does not have to worry too much about finances due to the success of her husband’s tech company, which he founded in his twenties. I have known Amber since I was about 12 years old when I mowed their families lawn as a young man. They are a very service oriented family and founded an organization to help others who have children diagnosed with down syndrome.

Amber found CeraVe in the same way that many of the people we have spoken with during our research. Amber was having a struggle with a condition called Mother’ Thumb and went to her dermatologist to get some help. Her dermatologist recommended CeraVe and she was committed. In shopping with Amber I was shown how powerful this expert recommendation is. She said she was willing to pay almost twice as much for CeraVe before she would consider switching brands. She did however mention that she would switch brands if her dermatologist recommended it. This price insensitivity demonstrates that authoritative recommendations are clearly an important reason to believe for CeraVe customers.

This power of this recommendation is a great source for increasing the consumer base. There is however a barrier to purchase that CeraVe needs to address. Amber is the perfect consumer for CeraVe because of her brand loyalty. She is willing to add an extra shopping stop to her schedule to obtain it. Amber only stops at Walgreens when she needs CeraVe. She specifically mentioned how she wished there was a better selection of CeraVe products at Walmart and how the products they do have are in really hard to find locations. This represents an opportunity for CeraVe in the merchandising field. By expanding their product offering in larger retailers, CeraVe puts their product in front of more potential consumers. This removes a barrier to purchase for brand loyal customers and increases the chance for consumers not looking specifically for CeraVe to stumble upon the product.

Amber also offered an interesting thought process on the packaging of CeraVe. When asked about the packaging, her initial thought was that CeraVe reminded her of a prescription. In looking at the packaging, this conclusion is not difficult to come too. The clean white bottle with blue lettering does have a medical feel. This packaging design, though not necessarily an eye grabber, does reflect the level of quality that CeraVe tries to portray. Their endorsement by the National Eczema Association and referral pathway through dermatologists portrays “prescription strength” feeling. However, Amber noted that she had never noticed the National Eczema Association endorsement before it was pointed out to her. With the power of recommendation from reputable sources found in this shop-along and in previous interviews, this lack of awareness is a problem. Amber felt like the lettering could be enlarged to draw more attention to the product features CeraVe highlights, but the fact that she had never even seen the endorsement seal represents a bigger problem.

This shop-along reinforced the feeling that CeraVe’s quality really does sell itself. When consumers try the products, they are sold. Amber noted the fact that a little lotion goes a long way and that she loves the moisture protection feature. Consumers will pay for quality if they know about it. This shop-along highlights the need for CeraVe to increase the access consumers have to their products. Consumers who try CeraVe stick with CeraVe. The issue arises from the fact that the only real experiment path for CeraVe is through dermatologists. Highlighting the authoritative recommendations CeraVe has received in the retail setting, along with Improved product offerings and shelving practices can help generate experimentation and purchasing among the general consumer population. This generates an alternative pathway for consumers to experiment with CeraVe and be converted by its superior quality.

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Amber is 35 years old and is a mother of 4 children. Her oldest daughter is in the fourth grade and has down syndrome. She is very active and likes to stay in shape. She is a stay at home mom although she did graduate from college. Her family does not have to worry too much about finances due to the success of her husband’s tech company, which he founded in his twenties. I have known Amber since I was about 12 years old when I mowed their family’s lawn as a young man. They are a very service oriented family and founded an organization to help others who have children diagnosed with down syndrome.


Screening Interviewer: Why did you choose this specific store to shop at (or why this type of channel—mass, grocery, drug, club)? Respondent: This is the only store that I know where to find CeraVe. Interviewer: Did you come with a list of items? Respondent: No, I only come shopping here when I need CeraVe Interviewer: Do others in your family have a say in what products or brands you buy? Respondent: Not really for lotion, I really just go based off my dermatologist’s recommendation. Pre-shopping Interviewer: What things influenced that decision? Respondent: My dermatologist just told me what to buy. I have something called “mother's thumb”. Basically, my hands are always in water and it makes my thumbs get really cracked and dry. My dermatologist said it would work so I bought it. Brand Loyalty Interviewer: Do you always buy CeraVe? Respondent: I usually buy CeraVe. But I also have Curel around the house. I try to use them both. I usually put on CeraVe a couple times a day and then use Curel every other time my hands get wet. Interviewer: How long have you used CeraVe? Respondent: Oh, it hasn’t been all that long. Let me see (lists months) so it’s been about 7 months. Interviewer: Why do you buy CeraVe instead of other brands? Respondent: Because my dermatologist told me to (Laughs). I like CeraVe because of, oh let me look at the bottle, I can’t remember what it’s called. The Skin Protectant, it like keeps moisture from affecting my hands. It definitely feels a little weird to put on the lotion and then get your hands wet, the water like, doesn’t really touch. I don’t really know how it works but I like that. Interviewer: What would make you switch to a different brand? Respondent: My dermatologist would have to say it’s a better lotion. I don’t really buy a lot of different brands. I just stick with what I buy. Interviewer: Would you consider the generic brand?

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Respondent: Not really, I have a specific need and this works. Interviewer: Do you remember the first time you used CeraVe? What do you remember about that experience? Respondent: I remember it felt a little greasy and then I washed my hands and noticed it felt different. I guess that’s the skin protectant working. Interviewer: What do you like/dislike about the product you purchased? Respondent: I like that it works (laughs) Interviewer: How about the competitors—what do you like/dislike about them? Respondent: I haven’t ever really tried any “specialty” creams or lotions or anything. This was sort of the first upper level brand I tried. But I like that other lotions have easier absorption. Interviewer: What would you change about the product? Respondent: The price (laughs), but I would change that on everything I buy! It’s sort of a little tube, but I guess you don’t really have to use much. A little bit goes a long way. Packaging Interviewer: What stands out on the packaging? Why? Do you like or dislike that? Respondent: It looks like a prescription; I mean which might be good but I wouldn’t have just pulled it off the shelf. I don’t mind that it looks prescription, it just means I wouldn’t notice it. Interviewer: Is this the right size of package for you? Too small/big? Respondent: I think a size like this (points to a 6 oz. package of Curel) is the right size for me. Interviewer: Should they change anything about the packaging? Respondent: It just doesn’t pop off the shelf at me. Like I have to look for it. Interviewer: What do you think of the claim that CeraVe is endorsed by the National Eczema Association? Respondent: It makes sense to me! I’ve never really noticed that before you pointed it out though. I have lots of family with Eczema so that is really cool. Interviewer: If you could change the way CeraVe was packaged, what would you change? Why? Respondent: I think the writing is too small, I mean look at this one (points at Curel bottle) well I guess the lettering is about the same size. Maybe it just doesn’t stick out from the bottle enough. Yeah you like have to pick up the bottle to what it says. (Referring to the features) Interviewer: Are there things that you like about different brands’ packaging? Respondent: Hmmm… I know when I just was looking for lotions I often went for things that look more natural. Woah. I never noticed how similar these two are (picking up a Cetaphil bottle). But yeah I guess it just look for things that pop off the shelf and maybe look natural. Shelving Layout Interviewer: Take a step back and look at the whole category. Is it easy to find what you are looking for? Respondent: Well I know Walmart is terrible, they don’t have many options for CeraVe and I can’t ever find it anyways. Here it’s alright, but it doesn’t really pop off the shelf.

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Interviewer: Are you influenced by end-caps? Shelf coupons? On-package coupons? Respondent: I actually hate end-caps. They make it really hard to find what I’m looking for! If it gets moved away from my normal spot I end up not being able to find it. I always like coupons! Pricing Interviewer: How do you know what a “good” price is for this product? Respondent: Honestly, if it works, I will pay more. Interviewer: How does pricing affect how you perceive the quality of the product? Respondent: Yeah I think it does. If I was just running into a store knowing I needed to get something really good, I would definitely look at the price. Interviewer: How much would the price need to be changed for you to notice it? Would you notice a $1 increase in price? Respondent: Hmm.. That’s a hard question, I don’t think I would notice a dollar increase in price. Interviewer: If your preferred brand was $2 more expensive, would you still choose it? How about $4 more expensive? (Extremely variable by category—choose price changes that are appropriate for your category) Respondent: Honestly, I think I would pay for CeraVe up to like $30 before I really considered changing. My dermatologist recommended it and so I don’t want to switch. Interviewer: Would you use a coupon for this product? Would a temporary price reduction at the shelf persuade you to buy it if you didn’t need it? Respondent: Of course, I would always use a coupon. I don’t know if it would persuade me to buy it if I don’t need it because I’m not looking for it. Interviewer: If it’s on sale, do you buy more of it? How much more? Respondent: Usually if it’s on sale I will buy two and save one for later. Walgreens usually does a buy one get one deal anyways. Interviewer: If it’s NOT on sale, do you decide not to purchase it and wait until it goes on sale? Respondent: No, if I’m there I’m looking for it and I need it. I will just buy it anyways. Interviewer: Any last comments? Respondent: I think I would just change the packaging and make sure other stores have the full range of products. Then I wouldn’t have to go out of my way to buy it.

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Paragraph of Insights The primary insight that comes from the shop along with Amber is how much value she places on dermatologist recommendations. Granted, Amber faces fewer restrictions on cost then many other consumers, but she said she would be willing to pay almost twice the current price before seriously considering making a switch. She also stated that she would need to be told by her dermatologist that a different brand was superior to CeraVe before she was willing to switch to a competitor. This recommendation led Amber to look for justifications for her preference and she created arguments for her preference when asked why she preferred CeraVe. Another insight that arises from this shop along is that the current merchandising strategy pulls Amber out of her normal shopping routine. She is forced to go to a store she generally does not shop at. She has only found CeraVe in this one location. Though this doesn’t affect Amber’s consumption habits due to her flexible budget and brand low brand elasticity, it does create an unnecessary hurdle to consumption.

Nielsen Data Summary: Product Multiple Measures

According to the Multiple Measures View: Product Focus report, CeraVe has only been

purchased by .3% of all households in the US in the last 52 weeks. Compared to their nearest competitor, Cetaphil this is a difference of .6%. This difference in penetration translates to a revenue spread of approximately 114 million dollars. Despite this revenue and penetration difference, CeraVe has a slight edge in the repeat buyer category. 16.1% of CeraVe purchasers repurchase later, compared to only 15.9% of Cetaphil purchasers. Closing this penetration gap will have a greater effect on CeraVe’s revenue totals due to their higher rate of repurchasing. One way to do this could be through reevaluating merchandising strategies. Comparing Cetaphil and CeraVe, we find that 51.1% of CeraVe’s purchases come from drug stores compared to 19.9% for Cetaphil. Conversely, Cetaphil has a pronounced lead in warehouse club stores of 36.1% to 5.4%. This 36.1% of purchases yields 40.5% of the dollar revenues for Cetaphil. Improving CeraVe’s presence in these store formats could help close the gap between these two close rivals.

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The following insights are taken from the IBISWorld database, Industry Report 32526, Cosmetic & Beauty Products Manufacturing in the US.

This industry is very competitive with 3,355 businesses participating. The industry leaders are Estee Lauder Inc. (13.8% market share), L’Oréal USA Inc. (7%), Proctor and Gamble (6%), Mary Kay (5.7%), Unilever (4.8%), and Coty (3.6%). That leaves 59.1% of the market to be fought over by the remaining companies. Developing a point of difference will be crucial for companies looking to be successful in this industry. As CeraVe is gaining market share in the current industry, they should continue to focus on what makes them different from their competitors.

Marketing is becoming more necessary in the realm of cosmetic and beauty products. A simple glance at a shelf of lotion shows very clearly why that is the case. On average those in the industry spend 16.7% of their revenue on marketing operations and their marketing spending level has increased by an average of 3.3% over the past 5 years. In a basic Google search, the most recent advertisement dates back to 2013. This paired with the lack of in store marketing efforts leads to the conclusion that CeraVe has a much lower proportion of marketing spend.

IBISWorld notes two categories of product improvement possibilities. First being an increased cultural focus on sun protection and second an increased cultural conscience about carbon footprint and eco-responsibility. The second insight is a potential point of difference for CeraVe as the majority of packaging today is made of plastic. Developing an eco-friendly packaging or emphasizing recycling efforts could allow CeraVe to differentiate themselves from their close competitors.

Another insight identified by IBISWorld is that increasing volume is difficult in this industry, so most marketing efforts are aimed at upselling, promising superior quality, or promising convenience. In our product usage observations, we found that there are specific times and situations when our consumers use their lotion, keeping with IBISWorld’s conclusion that increasing volume is difficult in this market. This difficult shifts the focus to perception of quality and in producing new usage situations to allow for increased purchasing. Again from our product usage observations, we found that dermatologist recommendations generate a huge value perception in consumers. This evidence for quality can be a central feature of our marketing efforts, whether through advertising, packaging, or merchandising pathways. The previous packaging insights would also help emphasize quality through eco-responsibility. These options can capitalize on the data provided by IBISWorld to direct our marketing efforts.

CeraVe has on opportunity to capitalize on the convenience portion of this insight by shelving more convenient travel sizes of their lotion. This would also create a possible new usage situation for current consumers, as they now have a new option for using the product they are already loyal too. On the go packaging was a desire expressed by several of those we interviewed.

IBISWorld identifies 5 key factors for success in the cosmetic and beauty products category. These factors are as follows. Producing premium products, consumers in this industry are willing to pay a premium for products they believe to be higher quality. Having contacts in key markets, high brand visibility is very important for this market. If not a major player, access and positioning to niche markets can generate profits. Marketing expertise is very important to generate brand visibility although in niche markets this becomes less important. Finally, producing goods that are currently favored in the market is a key factor to success. These success factors, analyzed in the context of CeraVe can provide the directed creativity needed to increase CeraVe’s market share and awareness.

In conclusion, CeraVe’s primary concern must be establishing a high perception of quality to generate greater market penetration. In such a competitive, crowded market, points of difference must be clearly communicated to consumers in order to generate purchasing behavior. Using the category insights from this data can help CeraVe establish and communicate its quality point of difference.

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Appendix

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Statista. (2016). Percentage of total hand and body lotion sales in the United States in 2014, by

brand. Retrieved from https://www-statista-com.erl.lib.byu.edu/.

Statista. (2016). U.S. households: Which brands of moisturizer / cream / lotion do you use most

often? Retrieved from https://www-statista-com.erl.lib.byu.edu/.

http://clients1.ibisworld.com.erl.lib.byu.edu/reports/us/industry/default.aspx?entid




http://academic.mintel.com/display/679778/

http://academic.mintel.com/display/717017/

https://www.statista.com/study/25907/skin-care-market-in-the-united-kingdom-uk-statista-dossier/

https://www-statista-com.erl.lib.byu.edu/statistics/195274/share-of-us-hand-and-body-lotion-sales-in-2012-and-2013-by-brand

https://www-statista-com.erl.lib.byu.edu/statistics/276420/us-households-brands-of-moisturizers-creams-and-lotions-used/

70

Figures

Figure 1

Figure 2

71

Figure 3

Figure 4

72

Figure 5

Figure 6

73

Figure 7

Figure 8

74

Figure 9

Figure 10

75

Figure 11

0

2

4

6

8

10

12

14

16

18

20

1955 1960 1964 1967 1970 1973 1976 1980 1983 1987 1989 1991 1993 1995 1997 2000

Count of Years

76

Images

Image 1

77

Image 2

78

Image 3

79

Image 4 Image 5

80

Tables

Table 1

Table 2

81

Table 3

Table 4

82

Table 5

Table 6

Table 7

83

Weight of Bottles in grams

Travel Sized Bottles On-the-Go Bottles Bottle 1 90 38

Bottle 2 87 35

Bottle 3 100 30

Bottle 4 90 40

Bottle 5 94 36

Average 92.2 35.75

Starting Weights 100g 46g

Table 8

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