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Introduction
The company that I chose to analyze for my philosophy of marketing paper is the
Arizona Beverage Company. This company makes great tasting tea drinks of all types of flavors,
and I found them interesting because they base their marketing solely off of word of mouth.
They themselves don’t spend money on conventional advertising. They believe that their waste
money on ads that show a product that really isn’t of premium quality. Arizona is a small
company that offers a high quality product and a very low price. Their methods are considered
by many to be rather unconventional but as you will see in this paper; this unconventionality
has led to much success. Arizona is a great company that uses unique methods to be one of the
best in the tea and drink industry.
Company
Arizona is a small company that focuses on what people will like. If they believe that
their customers will like a new flavor, they make it. Simple as that. If any one of their
employees has an idea for a new product they simply suggest it. The flavor is then created and
the employees and friends and families try it out. If they like it, then the new flavor is produced
and sold. They are entirely focused on the customer. If the creators of the product do not love
the product then they believe that the customer won’t either. At Arizona they make products
that they would want to try themselves (Arizona Beverage Company), and that shows in their
success. For when a company does something that they believe in and are passionate about,
then success will surely follow. Formed in 1992 by Don Vultaggio in New York and named after
a place that is hot, Arizona Tea has grown from a small family company to a billion dollar
success story. Though they still want people to think of them as the small company they started
out as, they are now tangling with the corporate giants.
Customers
Arizona appeals to their customers by charging a lower price than their competitors, and
they can afford to do this because they don’t spend a cent on traditional advertising. They rely
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entirely on word of mouth. They know that if someone tries one of their drinks then they will
love it. Once they love it they will tell their friends about it, and then the cycle is in motion.
People have either heard of Arizona Tea or they haven’t, but everyone I have talked to who has
heard of it really loves it and are very satisfied with the products. Several years ago one of my
friends was talking about this great drink that his friend had shown him. Upon asking him what
it was he simply told me that I had to try it to understand. So we drove to the nearest gas
station and I bought an Arizona Tea product. I instantly loved it and I spread the news to several
friends of mine. This is what Arizona is trying to do, and I have lived an example of it. The
customers I talked to drank Arizona tea and have bought Arizona products several times since
then. Although they are not entirely brand loyal, in the sense that they will drink something else
if there, they prefer to drink Arizona.
I asked a few people about Arizona drinks to see if they had similar experiences with
Arizona products and what they thought of them. The first roommate I asked was Sam, and he
said “I love the Arnold Palmer that Arizona makes it’s really good.” He typically has a small
gallon of the stuff in his room. Sam said he heard of Arnold Palmer from a friend he worked
with. He was working as a lifeguard when one of his friends was drinking the Arnold Palmer
product and he decided to have some. He has loved it ever since.
Another one of my roommates whose name is Nathan said that Arizona Tea was sold in
his high school and so he drinks it sometimes. “I used to drink one of their lemon flavored
products and still do every now and then.” He doesn’t drink a lot of products like this, but he
said that it was one of the better ones he has tasted.
I also asked the kid (his name is Michael) who originally got me hooked on Arizona
drinks, to see if he is still satisfied with the product. He said “I still love the product and now
that I am in college I appreciate it much more. It’s so cheap compared to everything else and so
I buy many of their drinks all the time, although my favorite flavor is Mucho Mango.”
The final person that I asked was my dad, who drinks Arizona tea quite often. I called
him on the phone and told him about the paper that I was doing, and then I proceeded to ask
him several questions about the drink. He said that he not only loves the taste of Arizona Tea,
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but says that he thinks it is healthy for him. “I like to drink it after mowing or doing some other
work around the house, and it feels good knowing that it’s not bad for me, plus it’s pretty
cheap.” I didn’t find one person to talk to who didn’t like the product, and while I know that
there are people out there who have negative things to say about Arizona, I think it says a lot
that they were hard to find.
Other customers wrote online blogs that I found. These different blogs ranged from
different topics about Arizona. Some people asked questions about the company, others
wondered whether or not it had real benefits in each drink, and still others just wanted to say
that it was really good. Some people argued that the health claims were a bunch of baloney,
and some people didn’t like the Arizona drinks at all. But the general consensus from what I
read was that many customers are happy with Arizona’s products, not just the people that I
personally interviewed. Also, Arizona would not be having such success if a lot of people were
dissatisfied with their products.
Competitors
Arizona’s major competitor in the tea industry is the corporate giant Lipton, which is
owned by Pepsi. Arizona is a small company and the fact that they can even compete with a
giant organization is amazing, but they are not only competing with them they are winning.
According to adage.com “Arizona now has a 39% share of the category, while Lipton has a
34.8% share.” As a result of this, Lipton is prepared to repackage many of its products and also
spend a lot of money on advertising as they typically do. Lipton ends up spending an average of
200 million dollars on advertising a year (Zmuda, Tea Titans Arizona, Lipton Tangle for First
Place, 2011) and Arizona spends almost nothing. It would seem that Arizona has Lipton very
rattled, according to the Adage.com article I read. Lipton gives many reasons why they are no
longer in first and they sound an awful lot like excuses.
Lipton is only one of Arizona’s competitors; another main competitor of the brand is
Snapple. Snapple is produced by Dr. Pepper and has a smaller market share than the other
companies that I just mentioned. Since Lipton is Pepsi’s tea brand the competition wouldn’t be
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complete without the Coca-Cola Tea brand Nestea. The four of these products battle it out for
market share but the two that are doing the best at this time are Arizona and Lipton.
Context
During the Immigration law controversy of 2010, many people decided to boycott
products that were created in Arizona (the state). According to a NYdailynews.com article by
Helen Kennedy, “online misguided tea fans vowed to switch to Lipton or Snapple. But these
people were simply unaware that the Arizona Tea is actually brewed in New York.” Arizona
found itself in the midst of a controversy that it had absolutely nothing to do with; it was all a
result of the name of the brand.
Another controversy surrounding Arizona Tea is the claim that tea is beneficial to
disease, and although DrinkArizona.com claims that their product has numerous health benefits
the FDA is currently trying to determine just how much of a benefit that is. Several customers of
Arizona believe that there are many benefits; whereas others say that frozen tea can’t have as
many benefits as warm tea. It all depends on who you ask at this point and the FDA hopes to
have more results soon.
Collaborators
Arizona’s main collaborator is any convenience store, as that is the major location for
their sales. They also have their products in several grocery stores across the country. According
to Adage.com author Natalie Zmuda, “Though Arizona Tea continues to shy away from
traditional media and does not have agency relationships, new ventures, along with new
partnerships in the fashion and art worlds and an active social-media presence, will keep the
company growing for its next 20 years.” They are expanding their ties beyond the drink world
and looking to grow in other markets, with help from their collaborators of course.
Strategy
The customers that Arizona is targeting are those who drink tea or other herbal drinks.
They hope to target those who also like to drink other beverages but are tired of the taste of
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other drinks. The healthiest thing for someone is water, but that has a boring taste. So the next
best thing is Arizona Tea (Arizona Beverage Company). They claim to have all natural products
that have certain health and fitness benefits and this leads to a product that sells itself. So they
are targeting anyone who has a health and fitness conscious. People who are health conscious
don’t want to drink soda, but they may be sick of just drinking plain water or water related
products. Arizona has also started positioning themselves as a convenient product, as it is found
in many convenience stores across the country. In this way they are targeting people who are
on the go and don’t have time to shop a lot for their products, and so they gain their attention
with a colorful and cheap product that stands out. Arizona does not sell their products
anywhere but America, they prefer to stay local because that is how they view themselves and
that is the position they want their customers to see them taking. They are the small, local
family business and do not want customers thinking of them as a large corporation. Their
position as a company is to focus on things at home (America) and not worry about sales
abroad (Arizona Beverage Company). Although, the company has thoughts of changing that
statement and selling products abroad, but when and where they will do this remains to be
seen.
Tactics
Price: The suggested retail price for Arizona products is 99 cents, although in some areas it may
be different depending on the business’s owner (ArizonaTea.com). They target people who are
looking for the most bang for their buck. They keep their drink at a very large size but also at a
very low price.
Product: Arizona has many different flavors of tea, water, energy drinks, juices, and smoothies.
They have a diverse product line that even expands into newly created Arizona chips and dip.
They are becoming more diverse as they look to expand beyond the Tea and herbal drinks
market. They sell their product in many different sizes. “Arizona Iced Tea also comes in the
largest array of sizes, from 11.5 oz./ 340 ml cans, to gallon bottles of 128 oz./ 3.8 l” ( (ArizonaInternational). Arizona gives their customers a large quantity of product for a low price.
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Promotion: Arizona does not spend a single cent on conventional advertising campaigns. They
instead use the packaging of their product to help sell it. Their product is tall and stands out
using very colorful designs. This helps sales because it is more likely to be the first product that
a customer notices; it really gains their attention. The ingredients listed on the back only help
make the purchase, as it keeps the customer interested in the product once they have it in their
hand. Not only that, but the one hundred percent natural label makes the customer want
(desire) the health benefits that are inside every drink. And finally, the price (typically 99 cents)
causes the customer to take action and buy the product because it is so cheap.
Place: Arizona is sold mainly in convenience stores and grocery stores. The product was
innovative in its distribution because of Michael Schott. According to Andrew Wallenstein of
Adage.com, “The innovation was that Mr. Schott went national with the brand using a beerbased distribution and manufacturing system.” The convenience store location makes sense
because Arizona drinks are very cheap, and most things at a convenience store are low priced.
People would not go to a fancy upscale store looking to buy an Arizona product; they would go
to a cheap place to gain a cheap product that is also of good quality.
Overall I would say that Arizona uses all two parts of the FAB Concept. The majority of
what they do is focused on the benefits of their products. They claim that they are healthy and
good for you. For example: on their website drinkarizona.com, they have a section that is all
about health benefits. They claim that it is their all natural ingredients that help people stay
healthy and fight disease. They also like to emphasize their all natural ingredients that they use
in every drink they make; this would be a feature. For example: their extra sweet Green Tea
with ginseng and honey claims to have 100 percent all natural ingredients. The advantages I can
think of are the price of the actual product, but as fair as the product itself having an advantage
there isn’t really one. Tea is tea to the average drinker, and for this reason Arizona does not
focus on their advantages, but rather their features and benefits.
Link
The tactics of Arizona are based on their strategy in many different ways. The price is
based completely on the strategy that Arizona has. Arizona wants to focus on the actual
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product rather than a conventional advertising campaign, and as a result of this they can charge
lower prices for their drinks. The typical price being 99 cents. Arizona also wants to be known as
a cheap product that is also very convenient, and as a result of this many of their products can
be found in convenience and grocery stores across the country. They also have chosen to focus
their efforts on the United States, although this may change in the near future. The product
itself is 100 percent all natural, which leads to health benefits. This is exactly what the company
wants to do, create a product that is good tasting and good for you.
Since they focus on making a great product, they also need a great promotional tactic to
get people to try it. They want to have colorful cans that also stand tall above the competition.
So that is what they do, they have colorful can designs, every one of them being approved by
the company founder Don Vultaggio (Americas Hottest Brands).
Evaluation
Currently Arizona is doing slightly better than corporate giant Lipton Iced Tea. Arizona
currently has a 39 percent share of the market, compared to 34.8 percent (Zmuda, Tea Titans
Arizona, Lipton Tangle for First Place, 2011). This shows that their current strategy of avoiding
advertising and simply making a good product that their customers love is working. I personally
like Arizona products, especially their Green Tea with Ginseng, and I believe that this company
will succeed. The reason that I believe they will do well is simple. They base all of their
advertising on whether or not the customer is satisfied with the product, and not just satisfied
in their experience but satisfied enough that they get others to try the products. So far Arizona
has a high sales rate, and this means that the word of mouth advertising is growing throughout
the country. Now that more and more people know about these products, more people will try
them. And Arizona is becoming well known as a result of their success and ability to go toe to
toe with the corporate giants of Lipton and Snapple. This has increased awareness and has
been free publicity to Arizona. Although a bad product could steer consumers away, Arizona is
focused on making their product the best that it could possibly be for their consumers. As a
result of all this I feel that they will continue to grow and will pull away from Lipton in the Tea
industry.
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Philosophy of Marketing
As far as the expectations of the customer are concerned, people see a cheap drink and
may assume that it is not of the best quality. But Arizona eliminates this problem through word
of mouth. They create a great product, then once someone tries it they tell people they know
about how great the product is. So people then see a great product that is very cheap in
comparison to competing products. Once a customer drinks an Arizona product, they are
typically satisfied especially since they also saved money in the process. Not to mention they
just received some health benefits from an all-natural product Low price can cause lower
expectations that can be easier to meet. Arizona makes a product that would exceed
expectations in any case, and thus satisfies their customers.
Without the customer Arizona would fail as an organization, especially since they don’t
do any conventional advertising. Because of this, they have to focus on the customer, and they
do. Every drink they make is geared toward satisfying their consumers. They make a product
that their customers will love, and they maintain their low price. Even with their publicized
success, they have stuck true to what they started out as, and that is a company that has an
amazing quality product at a very cheap price. They are focused on, and will remain focused on
the customer for as long as they are a company.
Conclusion
As you can see, Arizona is very unique in their marketing strategy and has used this to
become one of the best in the Tea industry. Many would consider them to be unconventional.
But they have used their strategy to go toe to toe with corporate giants, satisfying many
customers along the way. Their low price and high quality leads to products that are very
successful and will continue to be. As long as Arizona sticks to the strategy that got them to the
top, they will stay a contender in the tea and herbal drink market for many years to come.
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Works Cited
Arizona Beverage Company. (n.d.). Retrieved 16th 2012, January, from drinkarizona.com:
http://www.drinkarizona.com/index_national.html#about_history
Arizona-International. (n.d.). Arizona Beverages. Retrieved from arizona-international.com:
http://arizona-international.com/
Kennedy, H. (2010, April 28th). Opponents of immigration law call for boycott of Arizona Iced Tea - but it
is brewed in New York! Retrieved January 16th, 2012, from nydailynews.com:
http://articles.nydailynews.com/2010-04-28/news/27062886_1_immigration-policy-boycottcold-stone-creamery
Wallenstein, A. (1995, June 26). The Marketing 100; Michael Schott; Arizona Iced Tea. Retrieved January
16th, 2012, from Adage.com: http://adage.com/article/news/marketing-100-michael-schottarizona-iced-tea/80726/
Zmuda, N. (2011, November 28). Arizona Tea Aims to Ride Growth with Category, International
Expansions. Retrieved January 16th, 2012, from Adage.com: http://adage.com/article/specialreport-americas-hottest-brands/america-s-hottest-brands-arizona-tea/231172/
Zmuda, N. (2011, September 26th). Tea Titans Arizona, Lipton Tangle for First Place. Retrieved January
16th, 2012, from Adage.com: http://adage.com/article/news/tea-titans-arizona-lipton-tangleplace/230034/
People Interviewed:
Sam Lozada, my roommate and a sophomore at Loras College
Nathan Reckhamp, my roommate and a sophomore at Loras College
Michael Lyon, my friend from home and a sophomore at the University of Iowa
My dad Matt Chute, a regular Arizona product drinker