Name:
Course: Marketing Principles 2
Date of submission: 24th match 2013
Word count: 3933
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Contents
Introduction......................................................................................................................................3
Elements of the marketing process for ACL...................................................................................4
The costs and benefits of the marketing orientation for ACL.........................................................5
Macro and Micro environmental factors.........................................................................................6
Applying targeting strategies to find appropriate solution..............................................................7
Segmentation Criteria for ACL products in different markets........................................................8
Targeting strategy for ACL’S estate agency cleaning service.........................................................9
Buyer behavior impact on ACL’s marketing activities in different buying situations..................10
Different product strategies used by ACL’s competitors..............................................................11
New positioning strategy...............................................................................................................13
Distribution....................................................................................................................................14
Pricing............................................................................................................................................14
Promotion......................................................................................................................................15
The extended marketing mix.........................................................................................................15
Marketing mix for two different segments of ACL.......................................................................16
Differences in marketing products and services to businesses and consumers.............................17
Findings.........................................................................................................................................17
Differences in international and domestic marketing of ACL.......................................................18
Limitations of the recommended marketing mix...........................................................................18
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Planning managing and organizing the work................................................................................19
Justification of plan........................................................................................................................19
References......................................................................................................................................20
Introduction
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This paper aims at discussing the main elements of marketing principles. Moreover, it presents a
real life scenario of the ABC Cleaning Limited (ACL), a leading cleaning service company in the
UK. In light of this, the company has been used as a reference point for discussing marketing
principles. In a nutshell, the main objectives of this paper are as follows;
Elements of the marketing process for ACL
ACL’s marketing process like any other company consists of the following elements; situational
analysis, planning, implementation and control (Armstrong, Kotler, Saunders& Wong, 2008) as
illustrated in the table below.
Elements of the marketing process What it entails
Situational analysis A marketing audit that involves obtaining
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Objectives
Elements of the marketing processTargeting and positioning strategiesCosts and benefits of the marketing orientationMacro and micro factors that influence marketing decisions
ObjectivesSegmentationImpact of buyer behavior on marketing activitiesNew product developmentDistributionPricing
ObjectivesPromotionThe extended marketing mixProduct strategiesDifferences between business and consumer marketsDifferences between international and domestic marketing
information from the marketing mix.
An analysis of the marketing environment i.e.
the external and internal marketing
environment.
A PESTLE and SWOT analysis.
Planning Formulating the mission of the company, the
corporate and marketing goals and objectives.
Setting marketing strategies to achieve the set
objectives
Planning the marketing mix
Implementation Putting into effect the marketing strategies
which ultimately lead to achieving the set
marketing objectives.
Control Analyzing and evaluating the outcome of the
entire marketing process and providing
measures to gauge performance and
contingency plans.
Rectifying the deficiencies of an unsuccessful
marketing process
The costs and benefits of the marketing orientation for ACL
The marketing concept holds that the key to a successful and profitable organization lies in
identifying and anticipating the needs and wants of customers and producing products that will
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satisfy them. In addition, developing superior products compared to their competitors (Kotler,
1980). The costs and benefits of the marketing orientation for ACL are illustrated below.
Costs Benefits
Extensive costs are likely to be incurred when
researching the market in search of customer
needs and preferences. In addition, production
costs can also take a toll on the company.
ACL will be able to correctly identify feasible
segments which make the company’s
marketing effort more efficient and
economical.
ACL may be required to train its salespeople a
fresh which is costly in terms of time and
money.
Sustainable customer relationships because
ACL will provide as per the market’s needs
and wants as a result, the company will gain
the customer’s loyalty.
The employees may be reluctant in accepting
the marketing concept since it is a paradigm
shift from what they are accustomed to.
Fostering teamwork among the company’s
different departments because the marketing
concept requires a team effort from say the R
and D department, the quality, marketing,
production departments to produce a
wholesome product for the market.
The marketing orientation is not ideal for ACL
if it is seeking immediate sales and profits.
The company will be profitable in the long
term as a result of customer satisfaction which
leads to goodwill from the customers who may
spread the good word about ACL hence
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increasing its customer base.
The markets are subject to new entrants hence
ACL will have to invest heavily in promotion
and distribution costs to sustain its competitive
advantage.
ACL will stand out as a competitor to reckon
with.
Macro and Micro environmental factors
Macro environmental factors are those external forces that an organization has little or no control
over and they directly or indirectly affect the organization’s marketing decisions. On the other
hand, micro environmental factors are those that are within the organization’s task environment;
those that it has control over and directly affect its marketing decisions (Palmer & Worthington,
1992). ACL like any company has macro and micro environmental factors that influence its
marketing decisions. These factors are illustrated below.
Macro
Environmental
Factors
Micro
Environmental
Factors
Demographic
factors
The size and growth rate of
the population is important to
ACL when selecting and
targeting and marketing to
segments.
Company ACL’s departments; R
and D, manufacturing,
purchasing and
accounting work together
to arrive at
comprehensive marketing
decisions.
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Economic
factors
This relates to the state of the
economy; economic patterns
such as a recession would
affect ACL’s marketing
decisions. Other factors such
as the market’s income levels
and spending patterns are
factors that ACL needs to be
aware of before formulating
marketing strategies.
Competitors The company’s
competitors pose as
threats and opportunities
that influence its
marketing decisions.
ACL’s competitors
include; YBC
Commercial cleaning
services and Peartree
Cleaning services.
Political factors These consist of laws, the
government and advocacy
groups; human rights
activists. The current
legislative frameworks are
bound to influence ACL’s
marketing decisions, for
instance laws set on
standardizing prices will
influence how the company
sets its prices.
Customers Their wants and needs
influence ACL’s
marketing mix decisions
and marketing strategies.
Technological
factors
Technological changes pose
opportunities and threats for
Suppliers ACL should invest in
suppliers who are
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ACL which means that it
needs to be aware of them as
they influence marketing
decisions especially the
marketing mix.
efficient and available
because they ultimately
influence when
production starts.
Environmental
factors
These relate to the natural
resources that are needed by
ACL as inputs. If for instance
there is a shortage in raw
materials the company will be
prompted to make an
adjustment in its marketing
decisions to ensure that the
markets needs are met.
Distributors The type, length and
complexity of the
distribution channel
determine when, where
and how the consumers
access ACL’s products
and services.
Socio-cultural
factors
The market’s norms, sets of
beliefs, basic values,
perceptions and social forces
influence the type of products
produced by ACL.
Publics These are groups that
have potential interests in
ACL and impact its
ability to achieve its
objectives.
Applying targeting strategies to find appropriate solution
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This section requires identifying a problem that can be solved by applying targeting strategies.
Targeting involves deciding on the segment to aim at (Moehlman, 2010). ACL may face a
predicament of targeting a segment that matches its objectives and resources. This problem can
be solved by selecting suitable targeting strategies in this case, concentrated marketing and
selective specialization.
Segmentation Criteria for ACL products in different markets
Market segmentation involves identifying sub-sets of buyers within a market who share similar
wants and needs and display similar buying patterns (Frank, Massey & Wind, 1972). There four
bases for segmenting markets namely; geographic, demographic, psychographic and behavioral
segmentation. In light of this ACL can use these bases to segment its various products that
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Concentrated marketingACL will select only a single segment to concentrate on.
How it solves the problem;It is appropriate for companies that are seeking an equilibrium between their resources and objectives and a segment's requirementsIt is suitable if the company has limited resourcesThe segment might be a niche market that has no competitionIt is a stepping stone to further segmentation
Selective specializationACL will objectively select a
number of segments that have growth potential and match its
objectives and resources.
How it solves the problem;The firm only selects those segments that match its resourcesPromotion costs are lowered due to similar marketing programs across the segments.The company is bound to increase its customer base which leads to increased profits.It may result in synergetic effects because two segments can be inter-related in terms of cost and performance for them to be more effective and profitable.
include; domestic cleaning, one-off and spring cleaning, end of tenancy cleaning, after builders
cleaning, after party cleaning, carpet cleaning, upholstery cleaning, office cleaning, estate agency
and industrial cleaning as illustrated below.
Segmentation Criteria Product
Geographic segmentation comprises
dividing the market into distinct
geographical units (nations, states, regions or
cities). It is ideal for ACL marketers seeking
to position their products on the basis on
their consumers’ geographical location.
End of tenancy cleaning for consumers moving
out of their homes to other regions, office
cleaning for offices located in different regions in
the UK and industrial cleaning.
Demographic segmentation consists of sub
dividing the market based on demographic
variables such as age, gender, family life
cycle and income.
Domestic cleaning because it targets residential
homes and apartments for consumers of different
ages, gender, different stages in the family life
cycle and income levels. Upholstery and carpet
cleaning can be offered simultaneously with
domestic cleaning as a full package.
Psychographic segmentation. Here
consumers are divided into groups divided
After party cleaning for the party lovers (lifestyle
and personality) and estate agency cleaning for
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into groups based on variables such as social
class, personality, lifestyle and attitudes.
property owners who prefer customized services
(social class and attitudes).
Behavioral segmentation. Consumers are
divided on the basis of their, behavior,
knowledge of a product, use and response to
a product. In addition, the occasional
benefits sought from the products, usage
rates and loyalty to products.
One-off and spring cleaning for consumers who
do not require regular cleaning services and those
who seek the benefits of spring cleaning services.
After builders cleaning for occasions after
construction.
Upholstery and carpet cleaning for the occasional
sofa and furniture cleaning.
Targeting strategy for ACL’S estate agency cleaning service
The estate agency cleaning service targets letting agencies which require cleaning services for
new tenants and often request for customized services. According to Wedel & Kamakura (2000),
the main targeting strategies include; selective specialization, differentiated marketing,
concentrated marketing, product specialization and undifferentiated marketing. Therefore, ACL
has a wide range of targeting strategies to choose from however, since it has to choose one the
most appropriate strategy for the estate agency cleaning service would be concentrated
marketing.
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Components of
concentrated marketing
Advantages Disadvantages
Market structure; selects
only one segment to
concentrate on.
Greater knowledge of the segment
needs which gives the company a
strong market position and a special
reputation.
The segment may turn
sour due to the changing
needs of consumers.
Focus; the company’s
objectives and resources
match to the segment’s
needs.
High profits The threat of new entrants
in the market is high.
Design; the product is
designed to appeal only to
the consumers in the
segment.
Operative economics through
product specialization, mass
promotion and distribution within
the segment.
Reliance; it relies on
product specialization, mass
promotion and distribution.
The company gains customer
loyalty.
Buyer behavior impact on ACL’s marketing activities in different buying situations
Buyer behavior is the action that a person takes in purchasing and using products and services.
Moreover, it consists of the mental and social processes that precede these actions (Shaughnessy,
1992). In light of this, there are two types of buyer behavior; consumer and organizational
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buying behavior (Horton, 1984). Similarly, the two different buying situations are consumer and
organizational purchasing. Buyer behavior has a profound impact on a company’s marketing
activities because it gives the company the direction it should follow in terms of its marketing
decisions. This also applies to ACL. The table below demonstrates this.
Buyer
Behavior
Buying situation Effect on ACL marketing activities
Organizational Purchasing officer
evaluating
alternative vendors
for office cleaning
ACL needs to ensure that it has a competitive advantage
over the other companies. This means formulating
strategies that will put it ahead in the market for instance,
affordable prices quality office cleaning services, a skilled
sales task force because organizational buyers prefer a
more personal and direct relationship with the seller and
effective promotional campaigns.
Consumer A consumer
interested in the
domestic cleaning
service
ACL is faced with the task of ensuring that its domestic
cleaning service is the best in the market. This calls for
proper positioning and differentiating strategies for the
service as well as an effective sales promotion and
advertising campaign to encourage the consumer to
purchase the package. Consumers are easily convinced by
an attractive package hence ACL should ensure that the
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service package is appealing.
Different product strategies used by ACL’s competitors
Earlier, two of ACL’s competitors were identified namely; YBC Commercial cleaning services
and Peartree cleaning services. In general, companies use the following product strategies when
developing their products to gain and sustain a competitive advantage within the market; product
design, product quality, product features and product branding (Hake, 1971). YBC Commercial
cleaning services was founded in 1996 and has largely grown through recommendation and
referral. YBC is famously known for providing quality cleaning services and facilities
throughout the South-East and has a customer retention rate of over 85%. Similarly, Peartree
cleaning services is a huge competitor of ACL in the office cleaning segment. The company was
founded in 1986 and delivers office cleaning and support services to high profile corporate
organizations in the City of London, the South-East and the UK. The company has an annual
sales turnover in excess of £9m.
YBC Commercial cleaning services Peartree cleaning services
Product design: a high quality product
that is geared towards customer
satisfaction.
Product design: a high quality product that is tailored
according to their clients specifications. In addition, the
product is compliant with the safety and health
regulations.
Product quality: efficient, high quality
and technological advanced products.
Product quality: the company offers a high quality
product to high profile corporate organizations and
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invests in highly trained and qualified operatives in
both cleaning and other specialist areas.
Product features: Daily office and
kitchen cleaning
daily hygiene and washroom cleaning,
daily classroom cleaning,
Periodic kitchen cleaning security,
caretaking, janitorial supplies, waste
management and laundry.
Product features: office, retail cleaning, waste
management, manufacturing, front of house,
stone ,marble and terrazzo, IT cleaning, recycling,
preventive pest control, plant and landscaping
washroom and hygiene supplies.
Product branding: the company brands
its services by stating their attributes,
benefits and values(sustainability)
Product branding: the company brands itself as
independent, innovative and one that has reputation for
excellence and competiveness in terms of the product
and services it provides.
The strategies used by these two companies have proven to be effective for instance as earlier
stated YBC has customer retention rate of over 85%, while Peartree cleaning services has an
annual sales turnover in excess of £9m showing that both companies are doing exceptionally
well in the cleaning service market. .
New positioning strategy
Positioning is a strategy used by a company to design its products with distinct characteristics or
features that distinguish them from its competitors in order to give it a competitive advantage in
the market (Trout & Ries, 2001). This section proposes a new positioning strategy for the office
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cleaning service. Since the market for this service is almost saturated, ACL may consider
adopting the competitor positioning strategy which comprises claiming that their service is better
than their competitors. In addition, to claiming that, ACL should add more features to the service
(for instance carpet cleaning at half price as part of the office cleaning package) if it wants to
gain a competitive advantage.
Developing a new product and sustaining its competitive advantage
ACL is developing a new vacuum cleaner and plans on sustaining the product’s competitive
advantage within the market. For this to happen ACL needs to consider the following factors as
it develops the new product; relative advantages of the product, compatibility, ease of use, price
and existing standards and values (Porter, 2008).
Factors for sustaining
competitive advantage
Relative advantage ACL’s new vacuum cleaner should be of high quality and
posses additional features that stand out from competitors.
Compatibility The vacuum cleaner should be compatible with modern
technology hence acceptable to the market.
Ease of use Consumers should have an easy time using it. If so, the product
will be competitive and marketable.
Price The price of the vacuum cleaner should be reasonable and
affordable.
Existing standards and values The product should be environmental friendly.
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Distribution
Distribution is arranged to provide customer convenience by considering certain distribution
elements. These include; selection of the distribution channel, level of customer service and the
terms and conditions of distribution (Rolnicki, 1998)
Pricing
Companies often price their products and services according to their marketing objectives and
the market conditions (Alpert, 1971).
ACL’s Marketing
Objectives
Price Market Conditions Price
Survival: to survive in
the market when plagued
Low Price elasticity: the
degree to which
Low and high
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Selection of the distribution channel i.e. determining the type
of distribution channel to use; extensive or intensive distribution.
Level of customer service; delivery periods and methods of
transportation.
Terms and conditions of distribution with the distributors.
with over capacity and
intense competition.
consumers are price
sensitive or price
insensitive.
respectively.
Maximum current profit
and revenue: to
maximize sales profits.
High Competitors’ prices:
they affect how ACL
prices its products and
services.
High or low depending
on how the competitors
have set their prices.
Maximum sales growth:
to penetrate the market
Initial price is
usually low but
is increased
later on.
The economy A boom in the economy
means setting high
prices while a recession
means the opposite.
Market Skimming: to
skim the market.
High Government Laws set to
regulate pricing by
companies.
The prices should not
exceed what is
stipulated in the law.
Promotion
For a company’s promotional efforts to be successful, it is important to integrate them with the
company’s marketing objectives (Sandhusen, 2000).
ACL Marketing objectives Promotional activity
Build long lasting customer
relations.
Customer Loyalty
Public relations because it involves building and maintaining
mutually beneficial relationships between a company and its
publics.
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Product awareness and
securing a large market share
Advertising; it reaches the masses at low costs.
Customer satisfaction
Quality services to customers
Follow up sales
Personal selling and direct marketing; It is interpersonal enabling
a comprehensive presentation of a product to a client.
Increasing sales and profits Sales promotions; they serve as short-term incentives to
encourage increase in purchases.
The extended marketing mix
The extended marketing mix consists of; people, process and physical evidence (Kotler, 1980).
Below is an analysis of the extended marketing mix for the vacuum cleaner.
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The extended marketing mix
PeopleProcess
Physical evidence
PeopleThese are ACL's
salespeople.They should be
presentable, courteous and resourceful to
customers purchasing or
inquiring about the vacuum cleaner Process
The process of handling customer complaints on the vacuum cleaner, identifying their needs and the processes of
handling orders placed for the
vacuum cleaner
Physical evidenceThis is the physical
location of ACL. Consumers have high expectations when visiting the
company that produces their
vacuum cleaners
Marketing mix for two different segments of ACL
This section requires designing marketing mixes for two different segments in consumers
markets. The two different segments include; psychographic and geographic segments.
The psychographic segment marketing mix
Product After party cleaning service. This product is suitable for customers who are out
going and portray this kind of a lifestyle. The product features; dish and glass
washing, dusting and polishing furniture and all surfaces, sanitizing bathroom and
toilet facilities, vacuuming carpets, washing floors and rubbish removal
.
Place The company will directly supply the service by sending its cleaners to the clients’
residence.
Price The charge is £ 15 per hour per person
Promotio
n
Television advertising, sales promotion and direct marketing.
The geographical segment marketing mix
Product Office cleaning service (for offices all over the UK) This product is also suitable to
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consumers who prefer regular office cleaning.
Place The company will directly supply the service by sending its cleaners to the clients’
residence
Price Regular weekly office cleaning at £ 12.50 per hour.
Promotio
n
Television advertising, sales promotion and direct marketing.
Differences in marketing products and services to businesses and consumers
Businesses markets Consumer markets
Small in size: company invests in personal
selling and relative advertising.
Large: company invests in intensive mass
promotion.
Direct and shorter lines of distribution. Distribution channels may be direct or indirect
and often long consisting of two or more
intermediaries.
The buyers are sophisticated and highly trained
in purchasing.
Buyers are easily convinced about a product if
the advertising campaign is catchy and
educative enough.
Involves a complex buying process. Involves a simplistic buying process.
Consists of parties that influence the purchase
decision.
Individual purchase decision.
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Consists of complex products for instance;
computer programs.
Products are not complex; clothes.
Findings
The findings of this presentation are as follows; the psychographic and the geographical segment
marketing mix have been designed and are ready for implementation; the price, product, place
and appropriate promotion techniques have been presented. Second, the differences between
marketing to businesses and consumers have been discussed and pointed out that, business
markets are smaller compared to consumer markets which requires different marketing
strategies; that business markets require more direct and shorter distribution channels; that the
buying process by business markets is complex which is not the case for consumer markets; that
there are multiple buying influences in business markets, while in consumer markets, consumers
make individual purchase decisions; that products in business markets products are more
complex when compared to those in consumer markets.
Differences in international and domestic marketing of ACL
International Marketing Domestic Marketing
Involves producing, selling promoting and
distributing of ACL’s products and services
Involves producing, selling promoting and
distributing of ACL’s products and services in a
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in a global market. local market.
ACL will have a wider scope of endless
opportunities if it ventures into international
marketing.
The domestic market may become too saturated
because of high competition from similar companies,
causing ACL to incur losses.
It is more profitable. It is not as profitable as international marketing
especially due if the domestic market becomes
saturated.
Cultural, currency and language barriers that
may be present.
In domestic marketing ACL will not face any
cultural or language barriers.
Is risky for the company because its products
and services may not be well received
Is less risky because ACL has an existing customer
base
Huge financial costs Requires less financial resources
Different consumers who possess different
kinds of tastes and preferences.
The company deals with only one set of consumers.
Limitations of the recommended marketing mix
Psychographic segmentation is limited sue to the fact that is doe not account for motivation among consumers and the value structures which guides people behavior. Thus, for factor such as attitudes it will be difficult to segment due to their relatively diverse nature.
In this segmentation, it is difficult to differentiate the segment. This is because of the attribute such as attitudes. The marketing mix element price is different and this makes it difficult to segment the market. When it comes to promotion, it is also very difficult to segment since capturing the consumers is difficult. For example, advertising may not reach the intended audience since they have different attributes.
Geographical segment is also limited in place of distribution. Consumers are scattered which increases the costs of transporting goods to them. This also increases prices which may discourage consumers.
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Possibility of consumer s moving from one region to another is high. It may impact negatively on segments profitability. Segments in different regions may need customized promotion. This means travelling to their locations. This increases costs and make it unprofitable.
Planning managing and organizing the work
Justification of plan
The marketing mix plan was formulated after carefully investigating the products offered by
ACL and placing them in suitable segments. The psychographic segment marketing consists of
the after-party cleaning service because it seeks to attract consumers who have an outgoing
personality and lifestyle. On the other hand, the geographical segment marketing mix seeks to
attract customers from all over the UK who require office cleaning in their companies and
corporate organizations. In light of this, the distribution channel that was selected for both mixes
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Studying the assignment's requirments
Commencing on the work by refering to the course work and through research in the library
After completion, joining a group for the required presentation in class
Organizing and practicing individual presentation parts.
is the direct channel one because it is a service and cannot be separated from its provider
(inseparability). The prices set are trial prices to test how the products will perform in the
segments, while the promotion techniques i.e. television advertising, sales promotions and direct
marketing are the most effective if the company wants to reach the entire market. On the other
hand, the limitations of the recommended marketing mix can be solved by adding more products
in both segments for instance in the geographic marketing mix, industrial cleaning can be added
to make the segment synergetic. Moreover, the marketing mix should include the effect of the
product’s life cycle and rate of adoption on the product’s performance in the market. In addition,
the heavy promotional costs are an investment for long-term sales and profitability. Finally the
marketing mix should account for the factors influencing the prices set for instance; the
company’s marketing objectives or the prevailing market conditions.
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