~New Venture Development ~.

Proactiv: How three Critical Marketing Decisions shaped a new

venture’s Future

Introduction
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. It’s a three-part acne treatment kit that includes a cleanser, toner,
and treatment.It’s not sold in stores. Instead, it is sold via infomercials,the company’s website,
a subscription service called the “Proactiv Solution Clear Skin Club,” and in select upscale
boutiques and kiosks. The way Proactiv reached the point it currently occupies is an interesting
story. Early in its life, Proactiv was shaped by three critical marketing decisions, from which the
company has not wavered, even to this day. This case recounts these decisions and discusses
how the decisions shaped this entrepreneurial venture’s future.
How it Started
Katie Rodan and Kathy Fields met while they were working summer jobs at a cardiovascular
research lab in Los Angeles. The lab was developing a drug to treat post–heart attack patients.
Both Rodan and Fields enjoyed the exciting pace of the work as well as the camaraderie they
shared with the lab’s researchers and doctors. After earning their college degrees, they both
went to medical school and became dermatologists. They stayed in touch and often shared with
one another how surprised they were at the number of acne patients they were seeing. At the
time, the medical research said that only 3 percent of the adult population had acne, but Rodan
and Fields became convinced that the number was higher. They were each seeing acne patients
on a daily basis, and they weren’t just seeing teenagers. They were seeing women in their 20s,
30s, 40s, and even in their 50s who were suffering from acne and acne-related problems. Rodan
and Fields decided to form a partnership to 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 vast majority of their patients hated the acne products on the market. The most

-Miku, H.@ClassDicussion ~#MSU_08502~January, 2021_Branding Strategies.

~New Venture Development ~.

common complaints were that the products were very drying and they were very irritating.
Worst of all, patients told Rodan and Fields, the available products did not work. At this point,
the two physicians started thinking there might be an opportunity for them to create a better
product. Rodan and Fields spent the next couple of years thoroughly investigating the acne
products on the market. After testing many of the products on their patients, they made what
they believed was a shocking discovery. All of the products on the market were designed to
spot-treat a pimple—none were designed to stop the pimple from forming in the first place.
This just didn’t make sense to the two dermatologists—from both a practical and a medical
standpoint. By the time you see a pimple, whatever treatment you administer, it’s too little too
late. In their judgment, not taking steps to prevent acne from developing was akin to not
brushing your teeth and instead just going to the dentist to fill cavities. Why not brush your
teeth and floss and try to prevent the cavities from developing in the first place? This revelation
motivated Rodan and Fields to start working on a product of their own—one that would be
more proactive in preventing acne and acne-related problems. They hired a chemist, and the
three worked together for another couple of years. Finally, they had a product they were happy
with and that seemed to work and to satisfy their patients.
Important Revelations
To get ideas about how to market and develop their product, which didn’t have a name yet,
Rodan hosted dinner parties at her house and conducted brainstorming sessions with the
guests. The guests included business executives, market researchers, marketing consultants, an
FDA regulatory attorney, the chief financial officer of a major company, and others. One of the
things the participants in these sessions stressed to Rodan and Fields was the importance of
marketing research. In particular, the group urged Rodan and Fields to hire an unbiased third
party to validate their findings. Rodan and Fields took this advice to heart and hired an outside
consultant. In focus groups that the consultant led, Rodan and Fields learned two important
things about older women. First, evidence suggests that many women who do have acne as a
medical condition refuse to believe that such is the case. Second, people don’t like to talk about
their acne with others. Rodan and Fields also learned that their product still needed work.

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~New Venture Development ~.

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 a skin care
product rather than an acne product. At the time, the acne market in the united States was
about $250 million a year, a low number by consumer products standards. In contrast, the skin
care market was several billion dollars a year, making it much more attractive. The consultant
told Rodan and Fields to think of their product as a skin care system that just happens to treat
acne, rather than an acne medication alone. This recommendation obviously caused Rodan and
Fields to have a much broader vision for the scope of the market for their product.

Critical Marketing Decision 2: Our name Is Proactiv

After Rodan and Fields started thinking of their product as part of the skin care market, they got
advice from a marketing specialist about what to name their product. The name the specialist
recommended was Proactiv (proactive without the e). Looking back, Rodan and Fields admit
that initially they didn’t get the reason for this recommendation. They were hoping for a more
cosmetic-sounding name, like Dermo-Beautiful. The name Proactiv turned out to be perfect. It
captured the essence of what Rodan and Fields were trying to accomplish—to create a product
that would be proactive (rather than reactive) in dealing with acne and acne-related issues. In
other words, the name Proactiv captured the entrepreneurs’ interest in signaling to customers
that their product was intended to prevent the occurrence of additional acne-related problems
for them.
Critical Marketing Decision 3: Infomercials
To get their product on the market, Rodan and Fields initially tried to raise investment capital.
They were repeatedly turned down. The biggest objection they encountered was the sentiment
that if their product was so good and so obvious, why hadn’t Procter & gamble or Johnson &

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~New Venture Development ~.

Johnson already thought of it? “Surely those companies must have dermatologists on their
advisory boards telling them what to do,” was the comment repeatedly expressed to Rodan
and Fields as they talked to those with investment capital. After giving up on raising capital,
Rodan and Fields approached neutrogena to try to get a licensing deal. Neutrogena passed on
the deal but did make a suggestion that resonated with Rodan and Fields. neutrogena said that
the most effective way to sell the product would be via infomercials. Initially, Rodan and Fields
were shocked, because they had a fairly low opinion of infomercials. But there was one
company, according to people at neutrogena, named guthy-Renker that made 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 Proactive (Infomercials Are 30–60 Minute Programs That
Are Paid For By an Advertiser)
■ People need to be reeducated 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,

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~New Venture Development ~.

guthy-Renker offered to license Proactiv and to create an infomercial to sell the product. It also
put up the money to buy the media time needed for the infomercial to be televised. The initial
infomercial was targeted toward women in the age group most ignored by the present
providers of acne products. The 30-minute spot carefully explained what acne is, how it can
affect older women, and how Proactiv was the only product available that potentially
prevented acne from occurring. It also offered a complete money-back guarantee. The first
infomercial sold twice as much Proactiv as expected, and guthy-Renker and Proactiv remain
close partners today.
It was also guthy-Renker’s idea to get celebrity endorsements for Proactiv. The first celebrity
endorser was Judith Light. Light was followed by Vanessa Williams, and now a number of other
celebrities endorse the product.
Proactiv Today
Today, Proactiv is strong. The first guthy-Renker infomercial ran in 1994, and the product has
steadily gained market share since. The company now sells acne treatment in several varieties,
including gentle Formula, Extra Strength, and Proactiv+. Face masks, body washes, and other
skin-care products are also sold under the Proactiv name. Proactive products are now being
sold worldwide. Proactiv’s marketing strategy has not substantially changed since the company
started. The three marketing decisions described in this case set the direction for the company,
and the company remains fully committed to taking only the actions suggested by these
decisions.

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? Why were infomercials a better choice than print or media
advertising for Proactiv when the company was first being introduced?

-Miku, H.@ClassDicussion ~#MSU_08502~January, 2021_Branding Strategies.

~New Venture Development ~.

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. Describe proactive segmentation strategy?
6. Describe proactive value proposition to the target segment?

-Miku, H.@ClassDicussion ~#MSU_08502~January, 2021_Branding Strategies.