Critical Marketing Decisions

How Three Critical Marketing Decisions Shaped a New Venture’s Future? IntroductionHow It Started

In 1995, two dermatologists, Dr. Katie Rodan and Dr. Kathy Fields developed what they
believed was a medical breakthrough in fighting acne. Their mission: to help millions of people rid themselves of acne and acne-related problems. They named their product Proactiv Solutions.
This name was chosen because the product could heal existing blemishes and proactively help prevent new ones from forming.
Today, Proactiv is the number one selling acne product in the United States, even though it’s not available in most stores. It’s sold primarily through infomercials, the company’s Web site, a
subscription service called the “Proactiv Solution Clear Skin Club,” and in select upscale boutiques and kiosks. The way Proactiv reached the point it currently occupies is an interesting
story. Early in its life, Proactiv was shaped by three critical marketing decisions, from which the company has not wavered, even to this day. This case recounts these decisions and discusses
how the decisions shaped this entrepreneurial venture’s future.
Katie Rodan and Kathy Fields met while they were working summer jobs at a cardiovascular
research lab in Los Angeles. The lab was developing a drug to treat post-heart attack patients. Both Rodan and Fields enjoyed the exciting pace of the work as well as the camaraderie they shared with the lab’s researchers and doctors. After earning their college degrees, they both went
to medical school and became dermatologists. They stayed in touch and often shared with one another how surprised they were at the number of acne patients they were seeing. At the time,
the medical research said that only 3 percent of the adult population had acne, but Rodan and Fields became convinced that the number was higher. They were each seeing acne patients on a
daily basis, and they weren’t just seeing teenagers. They were seeing women in their 20s, 30s, 40s, and even in their 50s who were suffering from acne and acne-related problems.
Rodan and Fields decided to form a partnership to investigate the acne issue further. They started by talking to their patients, asking them a wide range of acne-related questions. What they found
was that the vast majority of their patients hated the acne products on the market. The most common complaints were that the products were very drying and they were very irritating. Worst
of all, patients told Rodan and Fields, the available products did not work. At this point, the two physicians started thinking there might be an opportunity for them to create a better product.
Rodan and Fields spent the next couple of years thoroughly investigating the acne products on the market. After testing many of the products on their patients, they made what they believed
was a shocking discovery. All of the products on the market were designed to spot-treat a pimple—none were designed to stop the pimple from forming in the first place. This just didn’t
make sense to the two dermatologists—from both a practical and a medical standpoint. By the time you see a pimple, whatever treatment you administer, it’s too little too late. In their
judgment, not taking steps to prevent acne from developing was akin to not brushing your teeth and going to the dentist to fill cavities. Why not brush your teeth and floss and try to prevent the
cavities from developing in the first place? This revelation motivated Rodan and Fields to start working on a product of their own—one that would be more proactive in preventing acne and acne-related problems. They hired a chemist,  and the three worked together for another couple of years. Finally, they had a product they were happy with and that seemed to work and to satisfy their patients.
Important Revelations 

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

Three Critical Marketing Decisions That Shaped the Future of the Firm 

Critical Marketing Decision 1: We’re a Skin Care Company 
After Rodan and Fields reformulated the product again, they hired another marketing consultant
to advise them as to how they should proceed to successfully market their product. The first
piece of advice they got from the consultant was to think of their product as skincare rather than
as an acne product. At the time, the acne market in the United States was about $250 million a
year, a low number by consumer product standards. In contrast, the skincare market was several
billion dollars a year, making it much more attractive. The consultant told Rodan and Fields to
think of their product as a skincare system that just happens to treat acne, rather than an acne
medication alone. This recommendation obviously caused Rodan and Fields to have a much
broader vision for the scope of the market for their product.

Critical Marketing Decision 2: Our Name Is Proactiv 
After Rodan and Fields started thinking of their product as part of the skincare market, they got
advice from a marketing specialist about what to name their product. The name the specialist
recommended was Proactiv (proactive without the e). Looking back, Rodan and Fields admit that
initially, they didn’t get the reason for this recommendation. They were hoping for a more
cosmetic-sounding name, like Dermo-Beautiful. The name Proactiv turned out to be perfect. It
captured the essence of what Rodan and Fields were trying to accomplish—to create a product
that would be proactive (rather than reactive) in dealing with acne and acne-related issues. In
other words, the name Proactiv captured the entrepreneurs’ interest in signaling to customers that their product was intended to prevent the occurrence of additional acne-related problems
for them.

Critical Marketing Decision 3: Infomercials 

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

Why Infomercials Have Worked for Proactiv (Infomercials Are 30-60 Minute Programs 
That Are Paid For by an Advertiser) 

• People need to be re-educated about how to treat acne.
• The reeducation can’t be done in a 30-second or 60-second television commercial, or in a print
ad.
• Acne is an embarrassing problem, so people will be most open to learning about it in the
privacy of their homes.
• The demographic group that spends the most time watching infomercials, women in their 20s,
30s, and 40s, are Proactiv’s market.
• Infomercials provide Proactiv the opportunity to show heartfelt testimonials of people who
have used the product. Showing “before” and “after” pictures of people who have used the
product and have experienced dramatic results has been a particularly persuasive tactic.

Guthy-Renker 

After being turned down by Neutrogena, Rodan and Fields were about ready to throw in the
towel when they met, simply by chance, a person who introduced them to Guthy-Renker, the
infomercial company that people at Neutrogena recommended highly. After several meetings,
Guthy-Renker offered to license Proactiv and to create an infomercial to sell the product. It also
put up the money to buy the media time needed for the infomercial to be televised. The initial
infomercial was targeted toward women in the age group most ignored by the present providers
of acne products. The 30- minute spot carefully explained what acne is, how it can affect older
women, and how Proactiv was the only product available that potentially prevented acne from occurring. It also offered a complete money-back guarantee. The first infomercial sold twice as
much Proactiv as expected, and Guthy-Renker and Proactiv remain, close partners, today.
It was also Guthy-Renker’s idea to get celebrity endorsements for Proactiv. The first celebrity
endorser was Judith Light. Light was followed by Vanessa Williams, and now a number of other
celebrities endorse the product.

Proactiv Today 

Today, Proactiv is strong. The first Guthy-Renker infomercial ran in 1994, and the product has
steadily gained market share since. Proactiv is now being sold in Canada, Europe, Latin
America, Australia, and Asia as well as in the United States. Neither the product nor the sales
strategy has changed since Proactiv was first introduced. The three marketing decisions
described here set the direction for the company, and the company remains fully committed to
taking only the actions suggested by these decisions.

Discussion Questions 

1. How has Proactiv gone about establishing its brand? To what degree do you believe Proactiv
is important in its customers’ lives?
2. Discuss the things that Rodan and Fields learned, prior to meeting Guthy-Renker, that
persuaded them that infomercials were the best way to sell Proactiv. If Proactiv hadn’t developed
infomercials in partnership with Guthy-Renker, do you think Proactiv would be in existence
today? Describe why infomercials were a better choice than print or media advertising for
Proactiv when the company was first being introduced.
3. Describe Proactiv’s positioning strategy. To what extent did the three critical marketing
decisions discussed in the case shape the evolution of Proactiv’s positioning strategy?
4. What is the difference between Proactiv’s core product and its actual product? Describe its
actual product and your assessment of whether the actual product provides an attractive mix of
characteristics.
5. In your judgment, why doesn’t Proactiv sell through mainline retail stores, like Target and
Nordstrom, along with its Web site, subscription service, kiosks, and upscale boutiques? Make
your answer as thoughtful and substantive as possible.