CeraVe’s Strategy & Growth: 4 Keys to its Success
If you are a skincare fanatic or just a casual buyer of skincare products then you have heard of CeraVe. For those of you are who aren’t fans yet, CeraVe is a brand of dermatologist tested skincare products which consumers love.
CeraVe generated $1 billion in sales in 2021 and part of the growth can be linked to viral videos about CeraVe on TikTok that caused the product to sell out in many markets. But the success of the brand can also be traced to a number of strategic moves CeraVe made years ago to position itself as the brand of the moment. If you are curious about how CeraVe has grown over time then consider these four keys to its success.
1. The right pricing strategy. A trend that is creating winners and losers in the retail sector is the consumer’s shrinking wallet. Gen Zs entered the workforce during one of the most uncertain times in history because of the COVID-19 pandemic with many unable to find jobs. Then as the pandemic retreated they had to contend with fears of a recession. Millennials are also struggling. The Washington Post goes as far as to call Millennials “The Unluckiest Generation in U.S. History”. The Post writes that “Millennials will bear…economic scars the rest of their lives, in the form of lower earnings, lower wealth and delayed milestones, such as homeownership.”
These trends are directly correlated to which brands and retailers are winning. It is no coincidence that Walmart, a low priced retailer, is one of the largest retailers in the world or that dollar stores often open the most amount of stores each year. It is also no coincidence that low priced skincare brands like The Ordinary and CeraVe are winning the hearts and minds of consumers.
If you are a Gen Z consumer or a Millennial you don’t have a lot of discretionary income especially after you pay for a necessity like a mobile phone and data. As technology eats up a larger portion of our budget than in the past there is less money available to spend on luxuries like skincare. If a product is cheap and effective consumers are going to flock to it because they can actually afford to buy it. If most of CeraVe’s products cost more than $40.00 instead of coming in largely at under $25.00 the brand would not be as successful. Brands that do not appreciate the financial strain many young consumers face are doomed to have more value based competitors steal their share.
2. Ingredients that work. Whether a consumer is getting their skincare advice from their dermatologist or from a “skinfluencer” they are more informed than ever. It doesn’t take too long while watching videos on YouTube or TikTok to learn that parabens are bad and hyaluronic acid is like a superfood for your skin.
Consumers no longer have to buy products named Clinique or L’Oreal to feel like they are getting the right products for their skin they can do the research themselves and make an informed decision. “There has recently been a greater emphasis on skin education and people wanting to understand the ingredients their skin needs to function at its best. I have seen this in social media and magazines as well as in my clinic – previously a patient's eyes would glaze over as I explained ingredients, waiting for me to just hand over the product, but now they want to know more,” says aesthetic doctor Dr. Amiee Vyas.
While the focus on the best ingredients has gained traction over the last few years, CevaVe is ahead of its time. CeraVe didn’t respond to a TikTok trend, it created it. CeraVe has been on the market for 15 years and the brand’s original intention was to make products with the best ingredients. CeraVe worked directly with dermatologists to come up with formulations that dermatologists would feel comfortable recommending to their patients. CeraVe didn’t skimp on quality instead it worked with the best in the skincare field to come up with the right formulations. "We developed this brand with dermatologists as a therapeutic skincare line for them to recommend to patients with conditions like eczema, rosacea and acne," said Tom Allison, cofounder of CeraVe.
One doctor and aesthetician had this to say about CeraVe: “Cerave is a brand created with and recommended by dermatologists”, says Dr. Kemi Fabusiwa. “The premise behind it is affordable products with ingredients that actually work and have a strong evidence base. It’s a shining example of what a skincare brand should look like in 2021: low cost but high value that strips skincare right down to the ingredients that you actually need.”
Sometimes when a brand goes viral as CeraVe has it seems like an overnight success. But when you look under the hood you see that the success is really years in the making. CeraVe’s marketing approach has long been to not only work with dermatologists but to court them, investing large sums of money to go after this set of influencers. This approach of treating a dermatologist as the “most important customer” now seems like an obvious move as expert opinions have become more popular but CeraVe had this view long before it made sense to do so.
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3. Simple packaging. CervaVe’s packaging is no frills and no nonsense. The bottles containing CeraVe’s products even come in different colours so dermatologists can easily tell their customers to just use the blue container for a certain issue or the green container for another issue.
When something works you don’t have to make it fancy. I often think if you showed someone a mock up of two stores and one looked like Nordstrom and one looked like Walmart and asked the person which one makes more money, they would likely say the one that looks like a Nordstrom store. But the clear winner is Walmart. The reason Walmart can get away with its no frills approach is because Walmart’s low prices are hard to beat.
Since CeraVe’s packaging is so simple the consumer focuses on what matters like the fact that the product is “developed with dermatologists” as it says right under the CeraVe logo on its containers. When you think about the packaging of prescription medications it’s often no nonsense as well. You might just have a bottle with pills with the name of the manufacturer but you have confidence in your doctor’s recommendation.
At the end of the day if you have bad breakouts you want something that works. In the midst of a skincare industry that has historically focused on fancy packaging CeraVe catches your attention not for blending in but for standing out.
4. Social media. It’s hard not to talk about CeraVe without discussing its breakout success on TikTok where the CeraVe hashtag has 4.6 billion views. But the truth is that social media is an amplifier. It amplifies whatever you are doing. When Rihanna launched 40 shades of foundation for Fenty Beauty in 2017 the launch almost broke the internet. But Fenty’s success isn’t just due to Rihanna. Most celebrities launch a clothing line or a skincare line or a makeup line at some point but how many of those brands do you remember or buy?
Fenty has enjoyed widespread success because Rihanna truly found and filled a gap in the market. She created a makeup line for all. If Rihanna only released a product line targeted at dark skinned women her brand wouldn’t have been nearly as successful. Not only did Rihanna launch a wide range of foundation her products work. CeraVe is also a brand that works.
Too many people think road to success follows the opposite path. You find the right social media channel, the right influencer and voila, success. While sometimes this happens more often than not successful products are successful because they are great products. CeraVe is no lightweight. It was bought by L’Oreal in 2017 as part of a three brand deal for $1.3 billion. To attract L’Oreal’s attention it had to be doing something right.
But as the old saying goes, luck is preparation meets opportunity. The vision CervaVe’s founders had nearly two decades ago is now resonating with a generation of young customers. But imagine over 15 years ago deciding to create a relatively boring looking product that you were going to sell not directly to consumers but via dermatologists. I am sure there were a few doubters in the room. But that was CervaVe’s strategy and it worked.