Candida dermatitis. This is probably candida dermatitis, a common and benign rash caused by a skin yeast infection. You can use an over-the-counter cream called lotrimin (clotrimazole) twice daily for 2 weeks but you should also keep the area as dry as possible since yeast likes dark and damp environments. This is often easier said than done!
Apply baby powder. Babies often get neck rashes from wetness, due to sweat, saliva, and milk getting into the neck's skin folds. If applying baby powder doesn't solve the problem, the baby should been seen by a doctor to decide if a medicated cream or powder is needed. When putting a powder onto a baby's neck, one should be careful to not let the baby inhale the powder.
Oil. Moisture in the neck folds causes maceration of the skin. Do not use powder because although it can absorb some moisture, it can also build up and exacerbate the skin irritation. I like using a fragrance free grease like, vaseline or aquaphor; other greases include glycerin or mineral oil; if you want to use a natural oil, make sure it does not have a fragrance or odor.