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Introduction:
Product life cycle management is the succession of strategies used by management as a
product goes through its product life cycle. The conditions in which a product is sold
changes over time and must be managed as it moves through its succession of stages.
The life cycle concept may apply to a brand or to a category of product. Its duration
may be as short as a few months for a fad item or a century or more for product categories
such as the gasoline-powered automobile.
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Product development is the incubation stage of the product life cycle. There are no sales
and the firm prepares to introduce the product. As the product progresses through its life
cycle, changes in the marketing mix usually are required in order to adjust to the evolving
challenges and opportunities.
Introduction Stage:
When the product is introduced, sales will be low until customers become aware of
the product and its benefits. Some firms may announce their product before it is introduced,
but such announcements also alert competitors and remove the element of surprise.
Advertising costs typically are high during this stage in order to rapidly increase customer
awareness of the product and to target the early adopters. During the introductory stage the
firm is likely to incur additional costs associated with the initial distribution of the product.
These higher costs coupled with a low sales volume usually make the introduction stage a
period of negative profits.
During the introduction stage, the primary goal is to establish a market and build primary
demand for the product class. The following are some of the marketing mix implications of
the introduction stage:
Growth Stage:
The growth stage is a period of rapid revenue growth. Sales increase as more customers
become aware of the product and its benefits and additional market segments are targeted.
Once the product has been proven a success and customers begin asking for it, sales will
increase further as more retailers become interested in carrying it. The marketing team may
expand the distribution at this point. When competitors enter the market, often during the
later part of the growth stage, there may be price competition and/or increased promotional
costs in order to convince consumers that the firm's product is better than that of the
competition. During the growth stage, the goal is to gain consumer preference and increase
sales. The marketing mix may be modified as follows:
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Maturity Stage:
The maturity stage is the most profitable. While sales continue to increase into this
stage, they do so at a slower pace. Because brand awareness is strong, advertising
expenditures will be reduced. Competition may result in decreased market share and/or
prices. The competing products may be very similar at this point, increasing the difficulty of
differentiating the product. The firm places effort into encouraging competitors' customers
to switch, increasing usage per customer, and converting non-users into customers. Sales
promotions may be offered to encourage retailers to give the product more shelf space over
competing products.
During the maturity stage, the primary goal is to maintain market share and extend the
product life cycle. Marketing mix decisions may include:
• Product - Modifications are made and features are added in order to differentiate the
product from competing products that may have been introduced.
• Price - Possible price reductions in response to competition while avoiding a price
war.
• Distribution - New distribution channels and incentives to resellers in order to avoid
losing shelf space.
• Promotion - Emphasis on differentiation and building of brand loyalty. Incentives to
get competitors' customers to switch.
Decline Stage:
Eventually sales begin to decline as the market becomes saturated, the product
becomes technologically obsolete, or customer tastes change. If the product has developed
brand loyalty, the profitability may be maintained longer. Unit costs may increase with the
declining production volumes and eventually no more profit can be made.
During the decline phase, the firm generally has three options:
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• Maintain the product in hopes that competitors will exit. Reduce costs and find new
uses for the product.
• Harvest it, reducing marketing support and coasting along until no more profit can
be made.
• Discontinue the product when no more profit can be made or there is a successor
product
• Product - The number of products in the product line may be reduced. Rejuvenate
surviving products to make them look new again.
• Price - Prices may be lowered to liquidate inventory of discontinued products.
Prices may be maintained for continued products serving a niche market.
• Distribution - Distribution becomes more selective. Channels that no longer are
profitable are phased out.
• Promotion - Expenditures are lower and aimed at reinforcing the brand image for
continued products.
Nonetheless, the product life cycle concept helps marketing managers to plan alternate
marketing strategies to address the challenges that their products are likely to face. It also is
useful for monitoring sales results over time and comparing them to those of products
having a similar life cycle.
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Introduction:
American Marketing Association defines the brand as “A name, term, design, symbol or
any other feature that identifies one seller’s good or service as distinct from those of other
sellers. The legal term for brand is trademark. A brand may identify one item, a family of
terms, or all items of that seller. If used for the firm as a whole, the preferred term is trade
name.
Brand Sponsorship:
Brand managers have four options of sponsoring the brand.
A. Manufacturer Brand-
The brand owned by manufacturer and promoted either directly or indirectly. This type of
strategy has been followed for many years. Pillsbury Atta is a manufacturer brand.
B. Private Brand-
These brands are also called store brands. These brands bear the store name or store
selected vendor name. Basic ingredients of private labels are:
II. Relabeling: The unit pack must bear only the brand name of the particular
store or any other party the store may choose for its private label programme.
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Private labels will enhance the category profitability; increase the negotiation power of the
retailer and better value creates better consumer loyalty. All retailers cannot go for the
private labeling. Private labels can be introduced if and only if:
b) The retailer is not making enough returns from the sale of the branded goods.
b. The retailer must understand the price, quality and willingness to pay.
c. The retailers must have a sufficiently large base of loyal customers in the store
before introducing the private label.
d. The focus must be on the consumer needs and not any private agenda of the
retailers.
e. There must be a stringent system for the private label production. Quality control is
a must since there is no one else to blame.
f. Private labels must work to fill the gaps in the category and not target the brand
leader.
g. Since manufacturers may take a private label initiative o the retailer seriously and
avoid value gaps in the categories as an impediment to growing private labels.
C. Brand Licensing-
It is the legal authorization by the trade mark brand owner to allow another company to use
its brand for a free. For example- Hugo Boss, Tommy Hilfiger, Lovable, Lacoste and Nike
are some of the textile brands those licensed their brands in the Indian market. The major
benefits of brand licensing are low-cost, free publicity and revenue from royalty fees. Brand
licensing also suffers from serious limitations like lack of manufacturing control, and
failure of licensing arrangements.
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D. Co-Branding-
According to Kotler, co-branding is the practice of using the established brand names of
two different companies on the same product. For example- ICICI and HPCL came together
to sell ICICI-HPCL petro cards to the customer. Here card is the co-branding between the
two companies. Co-branding helps ICICI to utilize their financial resources well. It adds
another banking facility to the bank while HPCL can lock the customer from buying the
petroleum products from competitors. HPCL also gets benefit of financial power which it
doesn’t have. Both companies promote these products. Hence, they can leverage brand
image and can reduce the cost. All companies will not get benefit from co-branding.
Sometimes company may lose the brand image f the product fails.
Pricing Strategy:
One of the four major elements of the marketing mix is price. Pricing is an important
strategic issue because it is related to product positioning. Furthermore, pricing affects other
marketing mix elements such as product features, channel decisions, and promotion.
While there is no single recipe to determine pricing, the following is a general sequence of
steps that might be followed for developing the pricing of a new product:
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7. Determine pricing - using information collected in the above steps, select a pricing
method, develop the pricing structure, and define discounts.
These steps are interrelated and are not necessarily performed in the above order.
Nonetheless, the above list serves to present a starting framework.
Because of inherent tradeoffs between marketing mixes elements, pricing will depend on
other product, distribution, and promotion decisions.
For existing products, experiments can be performed at prices above and below the current
price in order to determine the price elasticity of demand. Inelastic demand indicates that
price increases might be feasible.
Calculate Costs:
If the firm has decided to launch the product, there likely is at least a basic understanding of
the costs involved; otherwise, there might be no profit to be made. The unit cost of the
product sets the lower limit of what the firm might charge, and determines the profit margin
at higher prices.
The total unit cost of a producing a product is composed of the variable cost of producing
each additional unit and fixed costs that are incurred regardless of the quantity produced.
The pricing policy should consider both types of costs.
Environmental Factors:
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Pricing must take into account the competitive and legal environment in which the company
operates. From a competitive standpoint, the firm must consider the implications of its
pricing on the pricing decisions of competitors. For example, setting the price too low may
risk a price war that may not be in the best interest of either side. Setting the price too high
may attract a large number of competitors who want to share in the profits.
From a legal standpoint, a firm is not free to price its products at any level it chooses. For
example, there may be price controls that prohibit pricing a product too high. Pricing it too
low may be considered predatory pricing or "dumping" in the case of international trade.
Offering a different price for different consumers may violate laws against price
discrimination. Finally, collusion with competitors to fix prices at an agreed level is illegal
in many countries.
Pricing Objectives:
The firm's pricing objectives must be identified in order to determine the optimal pricing.
Common objectives include the following:
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• Survival - in situations such as market decline and overcapacity, the goal may be to
select a price that will cover costs and permit the firm to remain in the market. In
this case, survival may take a priority over profits, so this objective is considered
temporary.
• Status quo - the firm may seek price stabilization in order to avoid price wars and
maintain a moderate but stable level of profit.
For new products, the pricing objective often is either to maximize profit margin or to
maximize quantity (market share). To meet these objectives, skim pricing and penetration
pricing strategies often are employed. Joel Dean discussed these pricing policies in his
classic HBR article entitled, Pricing Policies for New Products.
Skim pricing:
Attempts to "skim the cream" off the top of the market by setting a high price and selling to
those customers who are less price sensitive. Skimming is most appropriate when:
• Demand is expected to be relatively inelastic; that is, the customers are not highly
price sensitive.
• Large cost savings are not expected at high volumes, or it is difficult to predict the
cost savings that would be achieved at high volume.
• The company does not have the resources to finance the large capital expenditures
necessary for high volume production with initially low profit margins.
Penetration pricing:
It pursues the objective of quantity maximization by means of a low price. It is most
appropriate when:
• Demand is expected to be highly elastic; that is, customers are price sensitive and
the quantity demanded will increase significantly as price declines.
• Large decreases in cost are expected as cumulative volume increases.
• The product is of the nature of something that can gain mass appeal fairly quickly.
• There is a threat of impending competition.
As the product lifecycle progresses, there likely will be changes in the demand curve and
costs. As such, the pricing policy should be reevaluated over time.
The pricing objective depends on many factors including production cost, existence of
economies of scale, barriers to entry, product differentiation, rate of product diffusion, the
firm's resources, and the product's anticipated price elasticity of demand.
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Pricing Methods:
To set the specific price level that achieves their pricing objectives, managers may make use
of several pricing methods. These methods include:
• Cost-plus pricing - set the price at the production cost plus a certain profit margin.
• Target return pricing - set the price to achieve a target return-on-investment.
• Value-based pricing - base the price on the effective value to the customer relative
to alternative products.
• Psychological pricing - base the price on factors such as signals of product quality,
popular price points, and what the consumer perceives to be fair.
In addition to setting the price level, managers have the opportunity to design innovative
pricing models that better meet the needs of both the firm and its customers. For example,
software traditionally was purchased as a product in which customers made a one-time
payment and then owned a perpetual license to the software. Many software suppliers have
changed their pricing to a subscription model in which the customer subscribes for a set
period of time, such as one year. Afterwards, the subscription must be renewed or the
software no longer will function. This model offers stability to both the supplier and the
customer since it reduces the large swings in software investment cycles.
Price Discounts:
The normally quoted price to end users is known as the list price. This price usually is
discounted for distribution channel members and some end users. There are several types of
discounts, as outlined below.
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Companies interested in profitable sale set initially high price for a product to skim
maximum revenue from the segments which is willing to pay high price and then slowly
move to low price.
Companies interested in large market share set low price for a product in order to attract large
number of customer.
Same product with different features the price is kept on the bases of the cost difference
between the products in product line and customer evaluation of features and competitor
prices. For example Sony offering different television with different features at different
prices.
It’s the pricing of the main product with the accessories or optional product for example car
with power window CD changer and car without power window and CD changer.
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Pricing of the product which must be used with the main product for example films must be
use with VCR, CD must be use with CD player etc.
Making the bundle of different product and price the bundle at a reduce price. It is basically
for selling the slow moving items.
Introduction:
A logistic function or logistic curve is the most common sigmoid curve. It models the
"S-shaped" curve (abbreviated S-curve) of growth of some set P, where P might be thought
of as population. The initial stage of growth is approximately exponential; then, as
saturation begins, the growth slows, and at maturity, growth stops.
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Where the variable P might be considered to denote a population and the variable t
might be thought of as time. If we now let t range over the real numbers from −∞ to +∞
then we obtain the S-curve shown. In practice, due to the nature of the exponential function
e−t, it is sufficient to compute t over a small range of real numbers such as [−6, +6].
Where P is a variable with respect to time t and with boundary condition P (0) = 1/2. This
equation is the continuous version of the logistic map. One may readily find the (symbolic)
solution to be
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Choosing the constant of integration eke = 1 gives the other well-known form of the
definition of the logistic curve
The logistic curve shows early exponential growth for negative t, which slows to linear
growth of slope 1/4 near t = 0, then approaches y = 1 with an exponentially decaying gap.
The logistic function is the inverse of the natural logic function and so can be used
to convert the logarithm of odds into a probability; the conversion from the log-likelihood
ratio of two alternatives also takes the form of a logistic curve.
All else being equal. Thus the second term models the competition for available
resources, which tends to limit the population growth. Letting P represent population size
(N is often used in ecology instead) and t represent time, this model is formalized by the
differential equation:
Where the constant r defines the growth rate and K is the carrying capacity.
Interpreting the equation shown above: the early, unimpeded growth rate is modeled
by the first term +rP. The value of the rate r represents the proportional increase of the
population P in one unit of time. Later, as the population grows, the second term, which
multiplied out is −rP2/K, becomes larger than the first as some members of the population P
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interfere with each other by competing for some critical resource, such as food or living
space. This antagonistic effect is called the bottleneck, and is modeled by the value of the
parameter K. The competition diminishes the combined growth rate, until the value of P
ceases to grow (this is called maturity of the population).
Where
Which is to say that K is the limiting value of P: the highest value that the
population can reach given infinite time (or come close to reaching in finite
time)? It is important to stress that the carrying capacity is asymptotically
reached independently of the initial value P (0) > 0, also in case that P (0) > K.
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A particularly important case is that of carrying capacity that varies periodically with period
T:
It can be shown that in such a case, independently from the initial value P (0) > 0, P (t) will
tend to a unique periodic solution P*(t), whose period is T. A typical value of T is one year:
in such case K (t) reflects periodical variations of weather conditions.
In statistics:
Logistic functions are used in several roles in statistics. Firstly, they are the cumulative
distribution function of the logistic family of distributions. Secondly they are used in
logistic regression to model how the probability p of an event may be affected by one or
more explanatory variables: an example would be to have the model
Where x is the explanatory variable and a and b are model parameters to be fitted.
An important application of the logistic function is in the Rasch model, used in item
response theory. In particular, the Rasch model forms a basis for maximum likelihood
estimation of the locations of objects or persons on a continuum, based on collections of
categorical data, for example the abilities of persons on a continuum based on responses
that have been categorized as correct and incorrect.
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Where c (t) is the therapy-induced death rate. In the idealized case of very long therapy, c
(t) can be modeled as a periodic function (of period T) or (in case of continuous infusion
therapy) as a constant function, and one has that
I.e. if the average therapy-induced death rate is greater than the baseline proliferation rate
then there is the eradication of the disease. Of course, this is an over-simplified model of
both the growth and the therapy (e.g. it does not take into account the phenomenon of
clonally resistance).
The double logistic is a function similar to the logistic function with numerous
applications. Its general formula is:
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Where d is its centre and s is the steepness factor. Here "sign" represents the sign function.
• Healthcare Logistics:
• Distribution Logistics:
The aim of distribution logistics services is to drive down customer wait time and cost
while improving quality and reliability of service. Distribution logistics focuses on forward
stocking.
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• Logistics Software:
Integrated logistics management software will help gain a competitive edge. SAP, a leading
logistics software provider, delivers tools and capabilities that can help your logistics
Services Company operate with efficiency, flexibility and speed. Logistics software benefits
warehouse logistics management by implementing cross docking. Logistics software offers
tracking and tracing tools that allow measurement of key performance indicators (KPIs).
Introduction:
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Answer
Introduction:
International marketing (IM) or global marketing refers to marketing carried out by
companies overseas or across national borderlines. This strategy uses an extension of the
techniques used in the home country of a firm.[1] According to the American Marketing
Association (AMA) "international marketing is the multinational process of planning and
executing the conception, pricing, promotion and distribution of ideas, goods, and services
to create exchanges that satisfy individual and organizational objectives."[2] In contrast to
the definition of marketing only the word multinational has been added.[2] In simple words
international marketing is the application of marketing principles to across national
boundaries. However, there is a crossover between what is commonly expressed as
international marketing and global marketing, which is a similar term.
The intersection is the result of the process of internationalization. Many American and
European authors see international marketing as a simple extension of exporting, whereby
the marketing mix 4P's is simply adapted in some way to take into account differences in
consumers and segments. It then follows that global marketing takes a more standardized
approach to world markets and focuses upon sameness, in other words the similarities in
consumers and segments.
Four Ps:
Elements of the marketing mix are often referred to as 'the four Ps':
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Four Cs:
The Four Ps is also being replaced by the Four Cs model, consisting of consumer, cost,
convenience, and communication. The Four Cs model is more consumer-oriented and fits
better in the movement from mass marketing to niche marketing. The product part of the
Four Ps model is replaced by consumer or consumer models, shifting the focus to satisfying
the consumer. Another C replacement for Product is Capability. By defining offerings as
individual capabilities that when combined and focused to a specific industry, creates a
custom solution rather than pigeon-holing a customer into a product. Pricing is replaced by
cost, reflecting the reality of the total cost of ownership. Many factors affect cost, including
but not limited to the customers cost to change or implement the new product or service and
the customers cost for not selecting a competitors capability. Placement is replaced by the
convenience function. With the rise of internet and hybrid models of purchasing, place is no
longer relevant. Convenience takes into account the ease to buy a product, find a product,
find information about a product, and several other considerations. Finally, the promotions
feature is replaced by communication.
An editor has expressed a concern that this section lends undue weight to certain
ideas relative to the section as a whole. Please help to discuss and resolve the
dispute before removing this message. (October 2009). A formal approach to this
customer-focused marketing mix is known as 4C(Commodity, Cost, Channel,
Communication) in 7Cs compass model. This system is basically the four Ps
renamed and reworded to provide a customer focus. The four Cs Model provides a
demand/customer centric version alternative to the well-known four Ps supply side
model (product, price, place, promotion) of marketing management.
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o Product→ Commodity
o Price → Cost
o Place → Channel
o Promotion→ Communication
When the "You're in the Pepsi Generation" advertising campaign launched in 1963, it
may have been the first time a brand was marketed primarily with an association to its
consumers' inspirational attitudes. A decidedly youth-oriented strategy, the campaign hoped
to hook young Baby Boomers while they were still young. In 1984 Pepsi launched another
long-running campaign, "The Choice of a New Generation," and in 1997 they debuted the
"GeneratioNext" concept.
The newest campaign slogan, introduced this year, is "More Happy," which definitely
coincides with one concrete example of "more" in the packaging of Pepsi products today—
more designs. Many more. At least 35 distinct design ideas will grace the packaging of
Pepsi's cans and bottles this year alone, and this design strategy may continue indefinitely.
Though not "generational" in word, the campaign certainly has a youth-oriented feel
with package designs, advertising, and websites that are fun and playful. PepsiCo worked
closely with Peter Arnell and Arnell Group, based in New York City, to devise a
comprehensive new strategy that would connect with Pepsi's core consumers. Arnell
reinvented the Pepsi package as a meaningful and appealing communications tool for the
latest generation of youth that are not overwhelmed by media, music, or digital distractions.
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Experiential packaging:
Arnell Group (a wholly-owned subsidiary of Omnicom Group) is a design and brand
creation firm specializing in experiential design and product innovation, preferring to take
complete branding and packaging projects from first concept to complete market solutions.
Peter Arnell, currently chairman and chief creative officer of Arnell Group, formed the
Arnell Group Innovation Lab in 1999 to place invention and innovation at the forefront in a
collaborative laboratory for corporations interested in designing for next generation
products and experiences. Arnell applied many of his philosophies in the Pepsi project.
"Peter has taken a classic and turned it into a modern, innovative, and relevant
marketing and communications tool," said Ron Coughlin, chief marketing officer,
beverages, PepsiCo International. The new global look launched in February with eight new
package designs across cans and bottles, and the campaign is unfolding in a similar manner
overseas. The can designs roll out one at a time approximately three weeks apart to enhance
the anticipation of discovery and to pique the interest of collectors.
Thinking globally
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The Pepsi can designs roll out one at a time, but the two-liter Pepsi bottles will have
three or four designs out at any given time.
Mike Doyle, creative director at Arnell Group, explains that there was a great depth
of exploration and research that was conducted before even beginning to formulate a new
Pepsi packaging strategy. PepsiCo and Arnell Group traveled extensively to emerging
markets to find key consumer product drivers for youth cultures and to learn how the Pepsi
brand was perceived in different countries. They found, somewhat surprisingly, that there
were very few differences around the world in how consumers felt about Pepsi's fun,
effervescent brand image.
"The brand equity is really consistent," says James Miller, marketing director,
Pepsi-Cola North America. They also found many consistencies in youth cultures around
the world in how today's youth is preoccupied with newness, discovery, and personalization
of their possessions. Miller describes the design campaign's goal as "sustainable discovery,"
where the consumer audience is constantly intrigued and engaged.
Designers at Arnell Group created the dozens of new and vibrant designs with only
a handful of blue and gray shades. Each design tells a story of sorts and each can design has
a unique website address on the side of the can. The first one on the "Your Pepsi" can
allows web users to design a digital billboard that will appear in Times Square, and one
coming shortly will allow users to mix their own music online.
"We redefined packaging as media in the marketplace for Pepsi," says Doyle. "It speaks
to youth in their language." Doyle believes that the designs succeed because they are able to
capture the audience's mind space. "The designs are reflecting back to the culture instead of
talking to the culture or imposing on it."
Reassuringly Pepsi:
Pepsi actually asked their loyal consumers what brand elements would have to remain
so that they would be intuitively reassured that their favorite drinks were not changing and
the brand they trusted was still essentially the same. Their answer was direct and consistent.
Pepsi-lovers needed to see three elements for sure—the Pepsi "globe," the iconic Pepsi blue,
and the familiar tilted Pepsi capital letters.
Arnell Group updated the primary logo substantially and cleverly without really
redesigning its key elements. The most recent logo design had the Pepsi wordmark on top
of and slightly overlapping the iconic Pepsi red-white-and-blue "globe." On the previous
can design, the word mark wrapped halfway around the can, and the globe was off-center.
The new cans and bottles have un-bundled the word and globe, making the newly centered
globe more of the hero, and the smaller Pepsi word mark less prominent.
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