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MARKETING MANAGEMENT (5565) Executive MBA/MPA (Col)
DOMESTIC AND INTERNATIONAL MARKETING CHALLENGES
Roll.No. AB523655 Semester:Autumn 2008
DOMESTIC AND INTERNATIONAL MARKETING CHALLENGES
Marketing grows even more complex; it is an ever-evolving discipline. It builds on past while taking advantage of new opportunities. Each new challenge demands a firm grasp of what has happened before, a clear picture of the present situation, and an understanding of the n-lost important new options at the moment. In. general, the centre of attention in marketing has to shift away from the instruments and concentrate on information. Creation of personalized customer relationships, calculating the lifetime value of customer and investing in it, and satisfying and retaining existing customers and using predictive modelling to target those customers n-most similar to existing customers will be the ultimate approaches to face the marketing challenges of the 21st century. As an art or science, marketing is undergoing dramatic and exciting changes, and the field promises to be just as dynamic in the years ahead. Marketing has emerged as the most critical function in today's international business climate; even the smallest of the firms are now using innovative marketing techniques due to increasing global competition. As soon as you click on your TV, a commercial for Ariel or Brite washing powder balloons onto the screen, followed by an advertisement of Shaukat Khanum Memorial Hospital or the Edhi Foundation asking for your contributions towards cancer research or zakat. You stroll down the lifestyle store counter and pick out the Citibank/AHZ Grindlays Visa card membership brochure, allowing you to
apply directly for credit cards. A representative from Patient's Aid Foundation gives a talk at your university, soliciting new memberships and volunteers for blood donations. You receive a phone call from Holiday International asking you to participate in a survey about the places you have visited in Pakistan. In your job as a university librarian, you have to keep a track of the supply of books, magazines and journals, so that you keep ordering the latest publications. All these situations involve marketing. According to the American Association, marketing is "the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals." The broad definition takes into account all parties involved in the marketing effort: members of the organization that produces goods and services, resellers of those goods and services and customers or clients. Virtually all businesses realize that marketing plays a crucial role in their success. Marketing texts initially had a strong bias towards packaged consumer goods, which no doubt are important; yet they overlooked consumer services, industrial goods and services, advanced technology products, non-profit enterprises, and government agencies. Today,
marketing has greatly come in play with semi-conductors, commercial banking, industrial chemicals, health care, computer integration services, agricultural equipment, government services, and many other products outside the consumer mainstream.
To appreciate and understand what the future holds for this dynamic field, it is important to first see how marketing has evolved throughout most of the previous years. The 19th century, classified as the 'Childhood Age', the 20th century as 'Adolescence' and the 21st century as 'Adulthood' would take - the readers through a blend of innovations and technology management, rather than marketing. Before the Industrial Revolution, a typical example of marketing was a farmer loading a wagon with his produce to sell in town on market day. Thus, marketing emphasized the physical distribution function of getting goods to customers. Since then, economic and social changes have required organizations to revise their view of marketing in order to stimulate successful exchanges. 19TH CENTURY: CHILDHOOD Throughout the 19th century, Europe produced modern innovations changing the faith of millions around the globe; France invented heliography and made the first photographic image, while England developed stainless steel. Charles Babbage, English inventor and mathematician, designed the difference machine to calculate mathematical function to eight decimal places. Austria in the meantime invented a screw propeller and carried out experimental tries with propeller driven steam ship. The first steam railway line between Liverpool and Manchester (England) was laid. Gasoline engine, the Bessemer process, the first underground railway in London, first electrical telephone, extraction of aluminium through electrolysis, gasoline engine motor car by Benz, and the discovery of radium and polonium took
the whole world by a storm. No one thought about, or cared for, marketing these breakthroughs. 20TH CENTURY: ADOLESCENCE The 20th century saw the advent of scientific management, incorporating universal principles of efficiency and industrial engineering. All the building blocks were already in place: steam engines, railroads, electricity, typewriters, telegraph, telephone, steel, gasoline and diesel engines, radio and flight. Human relations management, covering the psychology of motivation, participation, and job enrichment crept in making the "worker a slave" mentality disappear, Japanese style of management, quality assurance, novel approaches to inventory control, synergies, re-deployment of assets and strategic planning took over overnight. The Evolution of Marketing In the first part of this century, organizations found more and more ways to automate. European and North American companies typically focused on ways to improve the production of goods, because this is how they were able to keep a competitive advantage. Manufacturers concentrated on producing goods, believing the products would sell themselves; this was the production era. During this era, producers operated in a seller's market -- one where demand for products outstrips the supply. Thanks to the many production improvements business had made, they became able to produce more goods than their regular customers wanted to buy. Businesses began operating in a buyer's market-- one in which the
supply of products exceeds the demand for them. This marketing challenge was intensified by the limitations on spending caused by the Great Depression and World War-II. Many businesses responded to the challenge by hiring salespeople and looking for ways to persuade consumers and organizational buyers to purchase more of their products. The period in which this approach was common to marketing is known as the sales era, and it prevailed until the 1950s. As markets continued to grow, many businesses became less satisfied with the principles of selling more and more. They needed a basis for focusing their efforts, and they needed more successful strategies for attracting and keeping customers. This led businesses to enter the marketing era, a period during which more and more companies formed the marketing (rather than simply sales) departments, sought to identify customer needs and desires, and adopted the marketing concept. This concept states that an organization should seek to meet its customers' needs as it strives to achieve its own goals. The process of researching these needs and then planning a way to meet them can be time consuming, but it helps ensure that organizations use their resources wisely; at organizations that have adopted the marketing concept, marketing becomes the company's link to the customers. In the decades that have passed since the beginning of the marketing era, competition has intensified. Technological advances have enabled
organizations to serve much larger geographical areas, so that companies now share the local markets along with many foreign firms. Government deregulation have increased the number of companies working in the
industries, intensifying competition. Information explosion has made today's buyers more sophisticated and more demanding. As a result, more and more organizations are finding it necessary to move beyond the marketing era to an emphasis on quality and customer value. 21ST CENTURY: ADULTHOOD From mass marketing in the heydays of fifties and sixties, segmentation and line extension in seventies and intensified niche marketing in he eighties, total quality management blended with the marketing concept in late eighties, broadening the traditional marketing concept to involve all members of the organization in striving to improve quality in order to satisfy customers. In an organization applying the total quality concept, various functions of the organization (marketing, technical and operations) work together to decide what the buyer needs and how the seller will meet those needs; they act as partners to get the needs met. The goods and services are produced right the first time, the whole process is faster, and the customers and the suppliers are both satisfied with the result. In effect, practicing total quality management enables the organization truly to put the marketing concept into practice. In 1980, Alvin Toffler coined the word demassification in his book, The Third Wave, where he describes how and why the mass society created by the industrial revolution in splintering more and more into a demassified society. Mass markets had split into ever-multiplying, ever-changing sets of mini-markets that demanded a continually expanding range of options, models, types, sizes, colours, and customization. Moving in the 21st century,
the trend towards customization and micro marketing would continue to intensify. Customers would choose from at least 70 types of ice creams within the same brand, 50 models of cars from the same automobile manufacturer, and may be over a 1000 perfumes in a single superstore. The population of Pakistan grew at a compounded rate of 2.7 per cent to 139 million in 1998, compared to 155 million in 1997. Estimations show growth in population of urban areas, and a decline in the rural areas, suggesting an urban movement. The per capita income went up to $ 386 in 1998 from $352 in 1997. Growth in population and income, and urban migration also shows an increasing trend of working women. It cannot be said to what extentthese demographic changes will continue to be reflected by the next census. But periodically we are hit by startling new members that dramatize the accelerating change in the society both for consumers and marketers. The seventies revealed extensive consumer inclination towards brand loyalty; the eighties brought about product proliferation, increased imports, inflation, recession and extensive sales promotion, eroding the advertisedbrand dominance. Generic products, private labels and retailers brands seems to flood the customers with competitive prices and quality. Sales promotion in both goods and services, Pepsi's free World tickets, Maal-aMaal by Muslim Commercial Bank and Crore Pati by Habib Bank have proliferated, tempting the customer constantly to jump from one brand to another hence decreasing brand loyalty.
Projections show that by the end of the century the world will have almost 700 million telephone lines operating, all of them interconnected and almost all accessible by direct dial. The toll free phone; the fax machine; the credit card; and now on-line shopping services readily available through the computer modern -- all these have revolutionized the ways people shop and pay around the world. ANZ/Citibank Visa cards, Mastercard, Diner's Club cards and ATMs have all found their inroads to our markets. With so much happening to provide so many different ways to shop, marketers willing to look over and beyond the orthodox marketing approaches have an overabundance of new challenges and, opportunities. The 21st century will be the times of massive consumer database. A great many consumer marketing companies and almost all business-to-business marketers now maintain some form of detailed prospect and customer profile using geographic, demographic and psychographic characteristics, and purchase history. Keeping track of the customers personal
characteristics, preference, and purchase in a relational marketing database, and pushing a customer-focused marketing strategy, together represent the single most significant development of modem-day and future marketing. Most companies distributed their products to the consumers through two Sources: retailing and sales agents. New products and services in the demassified society refuse to be confined to a single channel, which was one of the first principles of marketing. Appreciation and reward of multiple channels of marketing are setting in place clearly. The question is not "How
do we distribute" but "How else can we distribute?" Marketers will have to find new combinations of hybrid marketing channels to reach all customers. The abundance of information through the electronic and print media has given rise to advertising clutter, a problem and an opportunity for the marketers and customers. The increase in local television channels, the dishsyndrome and now the cable-syndrome have left the marketers perplexed. Local and foreign magazines and newspapers have already flooded the market. Advertising on the World Wide Web has seen a tremendous boom. The real issue is -- as it has always been -- how do you connect most effectively and affordably with your target market. And if you have been dependent on one form of advertising medium, where do you now turn to gain market share? Marketing grows even more complex; it is an ever-evolving discipline. It builds on past while taking advantage of new opportunities. Each new challenge demands a firm grasp of what has happened before, a clear picture of the present situation, and an understanding of the most important new options at the moment. In general, the centre of attention in marketing has to shift away from the instruments and concentrate on information. Creation of personalized customer relationships, calculating the lifetime value of customer and investing in it, and satisfying and retaining existing customers and using predictive modelling to target those customers most similar to existing customers will be the ultimate approaches to face the marketing challenges of the 21st century.
10 MARKETING CHALLENGES
Any company is faced with marketing challenges, even the market leaders. Many of these challenges rely upon perception of the market. Thus Marketing is required. In most of these cases advertising helps, but that is the most expensive method. 1. The unknown alternative solution Your solution addresses a common problem differently but nobody knows. What to do: - Create awareness by press releases, industry analysts and bloggers - Start blogging in order to get attention - Improve the SEO of your website in order to be found on the Internet - Create content related to your solution in order to be found on the Internet - Be present on trade shows and on conferences on a tight budget 2. A solution without a known brand name Your solution suits a specific category of problems or servers a specific industry, but you are never considered or invited for a first meeting: they just don’t think of or remember your solution. What to do: - Branding is required in order to make sure people connect your brand with a specific problem. - Start blogging in order to build authority in these matters - Be present on trade shows and on conferences on a tight budget 3. The ‘me-too’ solution Even if you are recognized as a vendor, buyers and decision makers don’t see the benefit or the differentiating features or functions. Thus they don’t put you on the short-list. What to do:
- Publish comparison charts - Create awareness with industry analysts and bloggers 3. The wrong pricing perception solution The solutions of the market leader are selling at a high price tag. Decision makers and buyers have the perception of expensive solutions. Due to a number of reasons (less marketing, less overhead, better design, improved production methods) your sales price is much lower. Still people don’t take your solution into consideration as they think it will be also too expensive. What to do: - Put your price list on your website if possible - Put a starting price tag on your website and on leaflets 5. The cheap perception Somehow the solutions of your company are considered as “cheap”. Still you are offering good quality for a decent price. Not “cheap low quality”. What to do: - Show your references on the website - Publish case studies with the best well known brand names you have amongst your clients. - Get a certification: then send out press release concerning this certification and put the logo on website. 6. The high cost competitor perception The market leader offers a complex solution that is difficult and costly to deploy and install, whereas your solution is simple and straightforward. Still it can be used by 80% of the market.
People don’t even think of looking for a solution for this problem as they are afraid of the difficulties and costs involved of implementation. What to do: - Distinguish from the market leader by explaining the lesser complexity and ease of use - Addressing this message of the difference to industry analysts and bloggers
7. Being the leading solution in different market Your solution is market leader in a certain market segment. The solutions can be used in a different market segment or industry too. Still buyers of the different market just don’t address to you. What to do: - Branding into the different market - References in this different market segment - Publish case studies with companies in this different market - Win an award related to this different market 8. The better solution than the market leader You have a solution that has many more features or functionalities or is just more efficient to solve the problem than the well-known brand name. What to do: - Publish comparison charts - Create awareness by press releases, industry analysts and bloggers - Show references on your website or in publications - Publish case studies 9. Being the market leader with the perception of expensive
Your company is the market leader, but solely large companies will considering buying from you as the market has the perception of high costs involved in your solutions. Thus you miss all possible deals with medium and smaller companies. What to do: - Publish case studies with smaller companies - A ROI calculation on your website - Blog in order to approach your potential customers 10. The great solution from the wrong country You might have the best solution at the best price / quality; however people don’t buy from you as your country of origin has a lesser reputation in quality or support. What to do: - Use all references you have abroad - avoid your country references - Get a certification for your solution or production process - Set up a local office for sales and support - Hire local sales people for each local market - Have all your marketing material available in the local language - Use competitive pricing, but don’t become low cost or cheap
MARKETING ISSUES IN PAKISTAN
Pakistan is a land with a staggering population of a 160 million and a market that has largely remained untapped. It falls under the umbrella of emerging markets and offers its own set of challenges to marketers. It may even prove evasive to conventional marketing wisdom. Major corporations have their eyes set on developing nations and they have a monumental task ahead of them. They need to realize that the G8 nations comprise a fraction of the world’s population. These nations might be rich, but their inhabitants are aging fast and this in my opinion is indicative of a stagnant market. In contrast, developing nations such as India, Pakistan and the “other 86%” of the world present a plethora of opportunities in the form of a prodigious consumer base of more than 4.5 billion plus. These consumers are more aware and are demanding their share of the consumer pie. The following are some of the marketing issues that are pertinent to the market: 1. What are the practical and conceptual problems of branding an FMCG product in Pakistan? 2. What are the problems of branding an agricultural product in Pakistan? 3. Pakistani exports are not branded properly in the international market. 4. How to brand Pakistan and position it on the global business landscape. 5. Dearth of marketing research and paucity of reliable data. 6. Supply chain management issues and lack of coordination among channel members 7. Lack of quality advertisements. Products are sometimes promoted in an unethical manner.
8. Problems and difficulties faced by adverstising agencies in Pakistan. 9. Lack of communication between different mediums. 10. What are the extent of Corporate Social Responsibilities in Pakistan? Are they being fulfilled? 11. The effect of smuggling in Pakistan. 12. Lack of specialization and awareness amongst local manufacturers about the role of marketing. Marketing is taken “lightly” and is not considering an integral part of the business. 13. Law and order situation. This is an external factor but important to the notion of marketing. 14. Abundance of counterfeit products and their effects on mainstream business.
4 WAYS TO OVERCOME MARKETING CHALLENGES FOREVER
For most domestic business owners, marketing is an overwhelming concept. They need marketing solutions that ensure a smooth-running, profitable business yet most don't know where to begin or how to focus their efforts. 90% of small businesses don't even have a marketing plan. It's difficult to reach your destination if you don't know where you're going! If you're a small business owner looking for ease, focus and marketing success, we recommend that you focus on just 4 tactics: 1. Establish a memorable and unmistakeable brand identity: The secret to business success is determined by your ability to powerfully communicate your business with laser precision and your ability to deliver a clearly-defined and consistent experience.
In a nutshell... it's called branding, and, when done right, it ensures a thriving business with all the customers and profits you need. The secret is to establish a powerful brand identity that sings distinction. And establish that identity before you launch any marketing activities. 2. Create a deep connection with your core target audience - your potential raving fans! Who wants and needs what you have to offer? The only wrong answer is "everyone." If you're a pediatrician, you may see infants and children. Are they your target audience? No! They are your patients, but it's the parents you need to connect with to get the kids in your door. And it's not just any parents - it's a definite group of parents. In marketing, you get a lot more "bang for your buck" if you focus your spending on a well-defined group of people that you enjoy working with. The better you define this group, the more effective your marketing can be. 3. Design compelling offerings that pull customers in like a magnet. 80% of all purchase decisions are based on emotion. It's your job as a marketer to know how your customers want to feel and to get them to visualize how your services can meet their needs. People want to know, "What's in it for me?" Tap into the emotion and create offerings that touch your customers. 4. Craft A Personal, Workable Marketing Plan Marketing is everything you do to make your product or service more visible, more desirable and more profitable. Your marketing plan will clearly define the big picture and provide focus and direction based on
the 4 'P's of Marketing - product, price, place/distribution and promotion. Since 90% of small business owners do not have a plan, you'll have a leg up on your competition by crafting your personal, workable marketing plan to ensure that you reach your business goals. Following these 4 criteria will transform any small business into a moneymaking machine guaranteed to grow your client list, sales and profits. The upfront work is the secret to a million-dollar business, literally and figuratively.
In Practical study, two major sectors analysed to check the marketing challenges which they are facing at domestic and international level. These sectors are: 1). Pharmaceutical Sector in Pakistan. 2). Telecommunication sector in Pakistan. Challenges faced by these sectors also apply to a larger extent to others sectors too.
MARKETING CHALLENGES TO PHARMA INDUSTRY IN PAKISTAN Most of the doctors in Pakistan instead of giving ticket to health to the poor patients prescribe those medicines that give them ticket to Caribbean Cruise, Video cassettes, Microwave Oven, Television, Family Entertainment Show etc. This is one of the many stories which reveal the dubious side of marketing in the Pharmaceutical industry. In 2006, one company offered a brand New Toyota Carrola car to a doctor and said if you stop prescribing our brands we will get this car from you. Another company offered fridges and dinning room furniture to the doctors who prescribe their medicines. Off course, Pharmaceutical companies must keep their competitive edge, but one should do ethical marketing not this type of financial gain to the doctor. The Pharmaceutical industry is a powerful economic force. Pharmaceutical companies in Pakistan spend 35-50% percent of its total sales back into the Marketing of the drugs as there is almost no research and development in the Pakistan Pharmaceutical Industry. Face to Face promotion of drugs in Pakistan is the industry favorite marketing approach. Each company employs “medrep” to schmooze doctors and pharmacists. As one medical rep explains… “Med Reps are trained not to mere sample distributors and goodwill ambassador. From offering cash deals and flight tickets to the baby sitting and taxi services, the spectrum of task a med rep has to perform in serving doctors is as broad as the medrep and doctors want it to be”. In Pakistan the registration process of drugs is very easy. An estimated 3450 new drugs registered between May 1, 1994 and February 1996 almost eight new drugs per working days.
Direct to Consumer Marketing In Pakistan, patients can pick up leaflets which help them diagnose their own depression. If they are persuaded they can simply buy the Prozac over the counter and start consuming one day. Advertisements with Slogans like “Extra Strength” “Clinically Proven” 24 hour relief or nothing is stronger are common. Challenges Faced by Pakistani Pharmaceutical Companies • Pharmaceutical companies of Pakistan face challenges of increasing competition from existing companies and as well new companies. • Inflation is another factor which Pakistani Pharmaceutical Companies facing (Oil Prices, Electricity, Gas, Raw Material Prices Increases Due to these problems, pharmaceutical companies’ profits are decreasing day by day and even some companies are running on break even or even in loss. So one should keep in mind these problems in mind while speaking about Promotion of Drugs in Pakistan. The Pharmaceutical industry has shown remarkably strong growth over the past several years. But now this industry is moving towards a more mature business model. National Pharmaceutical Companies need to define itself beyond being simply a low cost service provider: Management needs to identify and define the company’s unique value offering for potential client. Determining the new position of a pharmaceutical Company is not easy task and should be done as part of long range strategic plan. Commercial success is still possible and still there is space for new market entrant. Availability of funds is a major weakness of Pakistan Pharma industry with drugs requiring significant investment with no or little success.
With low barrier to entry, Pakistan Pharmaceutical Industry is highly fragmented with about 607 companies of which 405 companies have manufacturing plants including 25 foreign companies. • The Cost of manufacturing conducting clinical trials are lower in Pakistan than US and other developed countries. • R & D expenditure of Pakistani Pharmaceutical Organization is still among the lowest in the world. • Pakistan Pharma Industry employed 0.4 to 0.5 million people directly or indirectly. • Price of drugs in Pakistan are Government controlled. For the last seven years there is no increase of price.
MARKETING CHALLENGES TO TELECOM INDUSTRY IN PAKISTAN
Telecom industry is growing in Pakistan, with new companies getting license the competition is tough as a result the consumer is getting benefit and enjoying cheap call rates. With a population of 15 million country, telecom is one of the best revenue generated industry. As voice over IP, web conferencing and online video sessions are becoming popular these companies have bright future ahead.
Although the telecom industry is growing, but at the same time they are also facing marketing challenges due to perfect competition between different service providers. This healthy competition results in deceptive marketing by different companies. Trend of aggressive marketing and advertisement is observed by the mobile operators in Pakistan. 68 paisa, 65 paisa, 60 paisa. Trying to one-up other competitors, the advertisements emphasized the lowest possible rate to grab attention. In reality the low rates being advertised come with many conditions. To figure it out one has to read the fine print carefully. I think this is unfair to the consumers and we need to criticize this trend which some may characterize as deceptive marketing. Over the years mobile service packages have become difficult to understand. It used to be pre-pay & postpay and in-network & out-of-network. Now there is the option of lower price for pre-defined numbers (usually innetwork) such as family and friends. Then there is the billing duration which used to be 1 minute in good old days. Not anymore. The rates advertised are usually based on lowest billing duration (say 30 seconds) and may only be valid during certain times (e.g. Paktel’s Power Hours are 7 pm – 10 pm). The billing duration for the same package can vary for in-network and out of network calls! Given all of the complexity, it is difficult for a common person to easily understand and compare these plans. I mean who has time to analyze all of this (except your truly)? My guess is that most of the time people get upset but carry on with their busy lives. Wouldn’t it be fair if all the operators advertisements included the rate for 1 minute call clearly? How about being more up-front and making the fine print a bit less fine?
I think this problem is common to all operators, therefore all of them should share the responsibility to create a baseline standard. Better to fix this now before the regulator (PTA) is asked to step in. Challenges of High Growth Mobile Telecom Markets The mobile companies in many regions of the world do not enjoy the subscriber growth witnessed today in Pakistan. Therefore they have to work on new strategies to spur the growth and increase the revenue per subscriber. A recent paper in Alcatel Telecommunications Review summarized the challenges of high growth mobile markets and provided some suggestions to increase revenue. The paper “Innovating to maintain momentum in mobile penetration” is available at Alcatel’s site. In this post I’ll share a few key points and figures from their paper. Figure 1 is a summary of key challenges. The mobile companies in Pakistan will soon face many of these challenges.
Telecom companies can use IP based networks to converge and optimize their solution offerings and at the same time increase their penetration by
offering new services such as micro-payments. The next generation networks will play a key role in this growth. Of course some of the technologies like WiMAX are so new that their success or failure is still an open question. Still the point remains that current products and services can take these companies only so far. Companies such as WATEEN are already moving in this direction by providing triple play and mobile services.
14 TIPS FOR COMPANIES TO EXPAND INTERNATIONALLY
Here are the 14 solid tips for getting started in the global marketplace.
Determine how much you can afford to invest in your international expansion efforts.
Plan at least a two-year lead time for world market penetration.
Pick a product or service to take or source overseas.
Conduct market research to identify your prime target markets.
Research the data to predict how your product will sell in a specific geographic location.
Find cross-border customers.
Establish a direct or indirect method of export.
Hire a good lawyer, a savvy banker, a knowledgeable accountant and a seasoned transport specialist, each of whom specializes in international transactions.
Prepare pricing, and determine landed costs.
Set up terms, conditions and other financing options.
Brush up on documentation and export licensing procedures.
Make personal contact with your new targets.
Explore cross-border alliances and partnerships.
Enjoy the journey
www.ecommercetimes.com www.docstoc.com/docs marketing.about.com/od/marketingplanandstrategy www.pragmaticmarketing.com/publications www.map.org.pk bx.businessweek.com/marketing-challenges www.pharmabiz.com/article findarticles.com/p/articles/ www.paki.biz/dir/pakistan-marketing www.scribd.com www.pta.gov.pk
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