Value Proposition Testing for Mad For Makeup

Cosmetic items are now an essential part of everyone’s everyday life. Moreover, the global cosmetics business is predicted to experience significant growth in the upcoming years due to the broad integration of cosmetic products into the everyday routines of modern individuals. Indonesia’s market is in a similar state with regard to the cosmetics business. Given the enormous potential for growth in the Indonesian cosmetics sector and the increasing level of competition in the domestic cosmetics market, the local cosmetic brand Mad For Makeup aims to enhance its business in order to meet its goals, stay competitive, and establish a connection with its target market. Because of this, the business must enhance and validate its value proposition to guarantee that the values it offers are in line with what its customers actually want. This study validated the value proposition hypotheses for Mad For Makeup using the 4-point Likert scale survey method. The validation stages are interest validation, preference validation, and willingness to pay validation. The results of the validation steps show that the value proposition hypothesis related to skincare products that maintain healthy skin is the most attractive and the most relevant value proposition to customers.

Introduction

Background

Today, cosmetic products have become integral to the daily lives of modern individuals, regardless of gender (although women tend to use them more extensively) (Nayaket al., 2021). Cosmetics or beauty products are primarily used to enhance glamor and beauty and are crucial to creating an impeccable beauty image (Nayaket al., 2023). People seek to present themselves as attractive and well-groomed, which boosts their confidence and self-esteem (Babu & Arthy, 2020). Given the widespread integration of cosmetic products into the daily routines of modern individuals, the cosmetics industry is expected to grow substantially in the coming years. According to McKinsey and Company (2023), the global beauty industry is expected to grow by a projected 6% a year, reaching approximately 580 billion USD by 2027.

When it comes to the cosmetics industry, Indonesia’s market condition is in a similar condition. Indonesia’s cosmetics industry is one of the promising mainstay industries prioritized by the Ministry of Industry of the Republic of Indonesia (Ministry of Industry of the Republic of Indonesia, 2015). It is reflected in the industry’s significant growth, amounting to a CAGR of 7.5% 2021–2027, which also makes Indonesia the fastest growing cosmetic market in Asia and is predicted to be one of the top five cosmetic markets in the world in 5–10 years (Indonesian French Chamber of Commerce & Industry, 2019). The drivers of this expansion are the growth of the population, awareness of health and wellbeing, and rising disposable income (Amberg & Fogarassy, 2019).

There are several key players in Indonesia’s cosmetics industry. In the top spot, there is PT Paragon Technology and Innovation, which targets middle-class consumers. L’Oreal, which targets middle-class and upper-class consumers fills the second position. In the third position, there is Mandom Corp, a joint venture between a Japanese and an Indonesian cosmetics firm that targets lower-class consumers. Oriflame Cosmetics, an imported cosmetics distributor company, ranks fourth (Ferdinand & Ciptono, 2022). Despite foreign and local brands dominating the market, recently, Indonesian local cosmetic brands have gained popularity in the local market. Based on a survey by Katadata in 2022, Indonesian women prefer local brands (54%) to foreign brands (11%) while the rest (35%) have no preference (Pahlevi, 2022). These local brands contribute to the growing competitiveness of the local cosmetics market. Hence, in this context, effective marketing plays a crucial role. It ensures that companies meet their business objectives, compete effectively in the market, and connect with their target markets.

One of the important marketing strategies that marketing managers need to thoughtfully construct is the customer value proposition. Customer value proposition, when properly constructed, forces companies to focus on what their offerings are really worth to their customers and helps companies create superior customer value, hence significantly resulting in superior business performance (Andersonet al., 2006). Moreover, effectively designing a customer value proposition allows firms to directly target their customers’ most pressing and important tasks, pain points, and benefits sought (gains), avoiding the spending of unnecessary resources on executing projects that fail due to misaligned value propositions (Osterwalderet al., 2014).

To ensure that the values offered by the designed value proposition align with what the customer really want, or is relevant to customers, it becomes necessary to test the value proposition. Additionally, value proposition testing is also carried out with the aim of reducing uncertainty about the value proposition before it is being adopted into the business model (Osterwalderet al., 2014).

Business Overview and its Challenges

Mad For Makeup is a cosmetic brand based in Indonesia and founded in 2017 by married couple Tony Tan and Shirley Oslan. Their motto, “Beauty Which Gets You MAD,” highlights their goal of becoming the leading cosmetics company for young Indonesians, especially Generation Zs. The term “Mad For Makeup” comes from the English word “Mad,” which denotes rage. The enormous profits made by other cosmetic companies are the source of this outrage, which drives Mad For Makeup to provide high-quality goods at affordable prices (Haryanto, 2019). Another source of their anger is the impossible beauty standards that exist in society, such as that a woman must have white skin, sharp nose, big eyes, slim body, and thick lips in order to be seen as beautiful (Nasution, 2021).

Mad For Makeup’s positioning is daily makeup which looks expensive. To differentiate itself from its competitors, Mad For Makeup formulates acne-safe products, which eliminates 52 ingredients that have been duly approved by BPOM (Indonesia’s Food and Drug Supervisory Agency) to enhance overall product safety. In fact, Mad For Makeup is currently striving to be the number one acne-safe makeup brand in Indonesia.

Their accessible branding, which aims to be more of a friend than a business entity to their target audience, especially in their social media presence and marketing initiatives, is what makes them stand out. Notably, Mad For Makeup avoids a commercial look and avoids using professional models or studio photography. Instead, they use real people who represent their Rebels community of customers and fans as models (Haryanto, 2019).

In the increasingly competitive local cosmetics market, Mad For Makeup wants to improve its business in order to fulfill its goals, stay competitive, and establish a connection with its target market. This research aims to reevaluate Mad For Makeup’s marketing strategy, namely its value proposition. The reevaluation of Mad For Makeup’s customer value proposition is firstly done through value proposition testing, which is the activity of testing the values that Mad For Makeup brings to achieve a fit with what the customers really want. An updated value proposition would help Mad For Makeup realize profitable growth, superior business performance, and superior customer relationships.

Research Objective

The objective of this research is reevaluating Mad For Makeup’s value proposition strategy by validating the value proposition hypotheses to identify the most compelling value proposition for Mad For Makeup.

Literature Review

Value Proposition

Osterwalderet al. (2014) define value proposition as the benefits customers can expect from a firm’s products and services. According to Barneset al. (2009), building a value proposition is a key way of building profits. Building a value proposition is simply a way that firms provide profitable and superior customer value, even more profitable and more superior that if a firm hadn’t built one. Basically, the whole object is to generate wealth. By providing profitable and superior customer value, a firm is increasing its own wealth. Moreover, designing a value proposition allows firms to directly target their customers’ most pressing tasks to be done, pains, and gains (Osterwalderet al., 2014).

Value Proposition Testing

In his book, Osterwalderet al. (2014) describe in detail and comprehensively the concept of value proposition testing. According to Osterwalderet al. (2014), to reduce the risk and uncertainty for new and improved value propositions, firms are better off testing their ideas with cheap experiments to learn and systematically reduce uncertainty. Only when firms have validated their ideas (hypothesis) do they get into execution mode and scale.

This is completed by first testing the “customers,” that is, by proving which jobs, pains, and gains matter to customers the most by conducting experiments that produce evidence beyond the initial customer research. After this step is done, then firms can focus on their value propositions. Next, the value propositions should also be tested if the customers care about how firms intend to help them, by designing experiments that produce evidence that the firms’ products and services kill pains and create gains that matter to customers (Osterwalderet al., 2014).

Methodology

Research Framework

Fig. 1, the research framework shows that after customer assumptions (assumptions regarding pains, gains, and jobs) are validated, in the next step, value proposition hypotheses are prototyped and validated through interest validation, preference validation, and willingness to pay validation. After going through those validation stages, then the value proposition is said to have been validated.

Fig. 1. The research framework.

Value Proposition Hypotheses

From the validated customer assumptions, the author extracted two value proposition hypotheses to be tested in this research, they are shown in Table I.

Table I. Value Proposition Hypotheses

No	Customer hypothesis	Value proposition hypothesis
	Customers use skincare to maintain healthy skin.
1	Customers use skincare to keep the skin hydrated.	“Maintaining-skincare”
	Customers use skincare to protect the skin from sun rays.
	Customers want skincare products that maintain the skin.
2	Customers want makeup and skincare products that are effective for the price.	“Effective-for-the-price cosmetics”

Two of the value proposition hypotheses are briefly explained below:

Value Proposition 1

Value proposition hypothesis 1, “Maintaining-skincare,” provides skincare products which aim to maintain the skin in a healthy condition, are especially hydrating, and included in it are sunscreen products which protect the skin from sun rays. This value proposition may provide skincare products such as cleansers, serums, moisturizers, toners, face masks, and sunscreens.

Value Proposition 2

Value proposition hypothesis 2, “Effective-for-the-price cosmetics,” provides makeup and skincare products which are effective in accordance with the price, ensuring that customers get the best value (products that are effective) for their money. The highlighted value is the assurance of the makeup and skincare products’ effectiveness while maintaining reasonable prices.

Research Method

The author utilizes a 4-point Likert scale survey to validate the value proposition hypotheses in terms of customers’ interests, preferences, and willingness to pay for the value propositions synthesized. The explanations of each validation stage are as follows:

Interest Validation

At this stage, the author aims to know and ensure the extent to which customers are genuinely interested in the products, services, or ideas offered. Survey questions reflecting the values offered from each value proposition hypotheses were designed to confirm the level of interest that customers have towards the values.

Preference Validation

The preference validation aims to know the extent to which the features offered by the value propositions align with customers’ preferences. Survey questions, which use specific keywords to validate the preferences of customers towards the value propositions offered, were designed.

Willingness to Pay Validation

The willingness to pay validation aims to know the extent to which customers are willing to spend their money on the products offered by the competing value propositions. One straightforward question was presented representing each value proposition hypothesis to address customers’ willingness to pay for the values offered. The proposed prices were also stated in the question to assess whether they align with customers’ expectations and financial willingness.

Findings and Analysis

Interest Validation

The interest levels of both “feature suitability” and “interest in the features” of value proposition 1 are higher than value proposition 2. Accordingly, the average percentage score of interest for value proposition 1, “Maintaining-skincare,” is higher (93.4%) than value proposition 2, “Effective-for-the-price cosmetics” (89.1%). This indicates that the customers have more interest in the values offered by the “Maintaining-skincare” value proposition than the values offered by the “Effective-for-the-price cosmetics” value proposition. The results for the interest validation are shown on Table II.

Table II. Interest Validation Results

Metrics	Total Likert score		Max score	Percentage score
	VP 1	VP 2		VP 1	VP 2
Feature suitability	372	359	400	93%	89.8%
Interest in the feature	375	354		93.8%	88.5%
Average percentage score of interest				93.4%	89.1%

Preference Validation

“Maintaining-skin” value proposition (value proposition 1) has a superior average percentage score of preference of 91.4% compared to “Effective-for-the-price cosmetics” value proposition (87.5%) for both questions addressing customer preferences, namely “features usability based on status” and “features relevancy in helping the customers solve their problems”. This indicates that customers’ preferences are more inclined towards the features offered by value proposition 1, “Maintaining-skincare,” which focuses on providing skincare products that maintain healthy skin (e.g., cleansers, serums, toners, face masks, and sunscreens). The results for the preference validation are shown in Table III.

Table III. Preference Validation Results

Metrics	Total Likert score		Max score	Percentage score
	VP 1	VP 2		VP 1	VP 2
Feature usability based on status	367	351	400	91.8%	87.8%
Features relevancy in helping the customers solve their problems	364	349		91%	87.3%
Average percentage score of preference				91.4%	87.5%

Willingness to Pay Validation

Customers are more willing to pay for the products offered by value proposition 1, “Maintaining-skincare,” than the products offered by value proposition 2, “Effective-for-the-price cosmetics,” as indicated by a higher percentage score of 90.3% (compared to value proposition 2, with 80.5% percentage score) for willingness to pay validation. This indicates that the “Maintaining-skincare” value proposition has more superior perceived values in the eyes of customers. The results for willingness to pay validation are shown on Table IV.

Table IV. Willingness to Pay Validation Results

Metrics	Total Likert score		Max score	Percentage score
	VP 1	VP 2		VP 1	VP 2
Willingness to pay for the price	361	322	400	90.3%	80.5%
Average percentage score of willingness to pay				90.3%	80.5%

Value Proposition Hypothesis Validation Summary

Based on interest validation, preference validation, and willingness to pay validation, the summary of the test results is shown in Table V.

Table V. Validation Results Summary

Stage	VP 1	VP 2
Interest validation	93.4%	89.1%
Preference validation	91.4%	87.5%
Willingness to pay validation	90.3%	80.5%

Based on Table V, value proposition hypothesis 1, “Maintaining-skincare” has more superior percentage values in the three stages of validation, namely interest validation (93.4%), preference validation (91.4%), and willingness to pay validation (90.3%) compared to Value Proposition Hypothesis 2, “Effective-for-the-price cosmetics.” Therefore, from the value proposition hypothesis validation, it is determined that “Maintaining-skincare” is the most attractive value proposition.

Conclusion

To determine the most compelling value proposition, two value proposition hypotheses are proposed based on the validated customer assumptions (hypotheses). Value proposition 1 is called “Maintaining-skincare,” which focuses on providing skincare products that maintain healthy skin. Value proposition 2 is called “Effective-for-the-price cosmetics,” which focuses on providing makeup and skincare products that are effective for the price. The following are the conclusions of the research:

1. Value proposition 1, “Maintaining-skincare,” achieved superior percentage scores at all validation stages. Therefore, based on this validation test, value proposition 1 is the most compelling value proposition for Mad For Makeup.
2. Value proposition 2, “Effective-for-the-price cosmetics,” received the least percentage scores at all validation stages. Therefore, based on this validation test, value proposition 2 is less compelling compared to value proposition 1.

Based on the validation results, Mad For Makeup must create a value proposition delivery plan which ensures a proper and effective delivery. Included is communicating the values of the new value proposition effectively and clearly to customers, so that the customers understand and believe in the superior values of their offerings.