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Often referred to as the “lipstick” effect by industry leaders and economists, the beauty industry has had a reputation for being recession-proof. Sometimes, also called the “lipstick index”, this phenomenon was first coined by Estee Lauder chairman Leonard Lauder to describe the increase in cosmetic sales even in times of economic recession. As consumers hold off on making lavish purchases, stressful times encourage consumers to treat themselves with small, affordable indulgences, such as lipstick.
But in 2020 and at the start of 2021, the cosmetics industry along with the rest of the world was upended by the COVID-19 crisis.
For the most part, the industry has responded well; many companies pivoted their manufacturing to the production of goods that help address the pandemic such as hand sanitizers. However, the closing of retail and services and changing consumer habits challenged the so-called “lipstick effect”, causing cosmetic sales to plummet by about 30% from the previous year.
While the pandemic was not kind to the industry as a whole, one particular brand has been experiencing a renaissance. CeraVe, the 15-year-old skincare brand owned by cosmetics giant L’Oreal is known for its affordable lotions, moisturizers, and cleansers. It can easily be found in drugstores nationwide. Despite the pandemic, CeraVe’s parent company reported over 40% growth in its Active Cosmetics Division. Some of this may be because drugstores and pharmacies remain open throughout the lockdowns. But not all of it.
CeraVe’s Performance Is Different
CeraVe’s rise in popularity is apparent by taking a look at Walmart user reviews. We took one of CeraVe’s most popular products, its foaming facial cleanser, and compared it to its more popular competitor Cetaphil, sold typically right beside one another on drugstore and grocery shelves. The two charts below show the number of reviews left for each product, by year and then by quarter for 2020. The two brands were fairly equal until 2019 when Cetaphil’s review number doubled that of CeraVe.
But look what happened in 2020: CeraVe’s reviews exploded, nearly tripling that of their competitor. The same is true in the quarter-by-quarter look. The 2nd and 3rd quarters of 2020 highlight when community lockdowns were imposed. They show huge growth in the number of user reviews for CeraVe compared to the relatively flatter number for its Cetaphil.
Reviews numbers alone don’t provide much insight. Looking at the longitudinal star rating over 2020 shows that this popularity was supported by higher average ratings. Star rating acts as a proxy for satisfaction, and consumer satisfaction steadily increased for CeraVe’s cleanser, while Cetaphil’s dipped. CeraVe began to outpace its competitor in the 3rd and 4th quarters of 2020.
Review number and star ratings can give a glimpse into the WHAT behind a brand. But alone they don’t provide much insight – they can’t tell us WHY the brand suddenly burst into the minds of consumers. For that, it’s important to go directly to the consumer reviews themselves both quantitative and qualitative measures. Both quant and qual measures show some interesting insights that tell us a lot, namely, why consumers are actively seeking out the brand: TikTok. That shows up in some of the qualitatives below:
How CeraVe Became Big in TikTok
In the months following the outbreak of the COVID-19 pandemic, social media platform Tik Tok surged in popularity as their primarily Gen Z audience began to spend most of their time at home due to coronavirus restrictions.
And thanks to huge Gen Z skincare influencers recommending CeraVe products to their audiences, the skincare veteran brand took TikTok by storm.
Because of TikTok skincare influencers like Hyram Yarbro, CeraVe is enjoying a social media moment. Yarbro has promoted the brand in his TikTok account @skincarebyhyram which has 6.8 million followers coming into 2021.
Before this, Gen Z, like generations before, discovered skincare brands from dermatologists. But with the rise of skincare influencers creating content on social media platforms like Tiktok, dermatologists are no longer their first go-to when it comes to skincare. They now get their recommendations from skincare influencers, more relatable because they are closer in age and know what it feels like to be in their shoes. This shift has led to otherwise unassuming brands like CeraVe becoming popular enough to sell out their entire supplies.
How CeraVe Responded
CeraVe responded positively to their newfound spotlight and approached Yarbro in April after seeing his passion for the brand. The brand’s parent company L’Oreal entered a paid partnership with Yarbro, who now creates content for the company on his TikTok and YouTube channels.
While the brand’s messaging itself still centers on being the number one skincare brand recommended by dermatologists, they adapted their strategy to include YouTube creators and TikTok influencers, and sometimes even dermatologists who are also content creators in these platforms.
What Businesses Can Learn From CeraVe
Marketers and business owners can gain a lot of insight from the unlikely rise of CeraVe. From being an affordable and accessible drugstore brand to an immediate fan favorite with an entirely new, often more cynical audience, CeraVe has positioned itself as both dependable and trailblazing. Here’s what we learned:
1. Be proactive in looking at how the market perceives your product. New product demographics may emerge beyond your initial target market. One of the best ways to do so is to look at your user reviews. Your user reviews are a treasure trove of useful data—from the demographics of the people posting reviews to the actual content of their feedback. CeraVe took this data and transformed it into an actionable insight that led them to respond well to their rising popularity in a somewhat far from traditional marketing channel.
Brands can easily work on this data through emerging market research technology powered by natural language processing and sentiment analysis that parses this data automatically and provides recommendations on the right course of action.
2. Respond in a timely and appropriate manner. Ride the wave and don’t be caught off-guard. CeraVe was able to adapt its strategy based on what the data told them. Their product reviews clearly show that new users are finding recommendations from skincare influencers that they follow. Their pivot from primarily sponsoring dermatologists to including social media influencers shows not just their agility but also their trust in the data and in their customers.
3. The power of social media, especially video content, is here to stay. As Gen Z’s purchasing power increases, it is high time that marketers focus on what type of content resonates well with this generation and adapt accordingly. Video content in TikTok and YouTube will continue to shape impressions of a product so it is crucial that brands look into user-generated content, not just as a trending buzzword but as a means to reach out to a wider audience.
About The Author: Mark Jeffreys founded 4Sight in July 2019 after founding, growing and later selling Mobile Agent Now – a review response company. Mark spent the previous 17 years at Procter & Gamble driving profitable growth on brands ranging from Pampers and Always to Clairol and Gillette as well as leading Brand Management Capability across P&G.
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