3) How does the Starbucks of 2002 differ from Starbucks of 1992?

ANS: Starbucks was at a nascent stage and was trying to establish itself as a prestigious
company during the period of 1992. It was focused more on the sales of whole bean coffees
which was the major item back in those days. In 1992; Schultz decided to take the company
public and also ventured into the lounge style coffee bar stores. In that year Starbucks had 140
stores in Northwest and Chicago where it was successfully competing against other small scale
coffee chains. They had fewer beverages at that time due to which the processing time was
very low and a greater number of customers could be served with a higher level of customer
satisfaction. The lesser number of beverages was attributed to the reason that consumers were
not so much into customizing their beverages and rather preferred the offered item.

During 2002 the company had already created an appeal among the consumers of being trendy.
Furthermore, the operations had expanded and taking this into consideration, Schultz handed
over the day to day operations to CEO Orin Smith. It was operating around 5000 stores and
catering to over 20 million consumers. It was found that 77% of sales were from coffee
beverages and various other options derived from them. The lounge concept was economized
by reducing the shop sizes and trying to cater to the lower income groups of younger age, who
were now in the target consumers. The added beverages increased processing times and
interaction with the consumer reduced thereby affecting consumer satisfaction.

The whole concept reversed from the point where customers would go to Starbucks into the
concept wherein Starbucks was reaching out to the customers. In growing leaps and bounds the
company had lost a track of the customer satiation which it used to rely on earlier.