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Bottled Water Preferences Analysis

Disclaimer: This work has been submitted by a student. This is not an example of the work written by our professional academic writers. You can view samples of our professional work here.

Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UK Essays.

Published: Thu, 22 Feb 2018

Preface

“Leaders aren’t born, they are made. And they are made just like anything else, through hard work. And that’s the price we’ll have to pay to achieve that goal, or any goal”

Vincent Lombardi

All the knowledge learning and procedures are useless without observations and practical experience. The purpose of this research is to acquaint the business graduate with empirical business practices.

As a requirement for Bachelor’s Degree in Business Administration, I opted to conduct my research on “Consumer Preferences of Bottled water”, to fulfill my degree requirement. The reason for choosing bottled water was to get practical knowledge about consumer behaviour, so as to provide myself an opportunity to cope with the real life situation.

This research covers the aspect about consumer’s preferences regarding usage of a certain brand of bottled water. The research focuses on the fact that why a consumer uses a specific brand of bottled water. Is it taste, health consciousness, fashion or any other aesthetic factor that makes a consumers use a specific brand of bottled water. The main idea for this research came from the observation, that why a consumer is using only a specific brand of bottled water, regardless of the fact that all the bottled water brands are providing “pure and clean” water.

I felt that the knowledge that I have gained through this experience is an excellent way to think analytically for finding solutions to problems of day-to-day life. The study of consumer behavior and their preferences itself is a massive study comprising of different factors involved. It is impossible to study each one in detail and include everything in the report. However, I studied the consumer behaviour from preferences point of view.

I am thankful to all my colleagues and higher ups for their valuable guidance in preparing this report in a presentable fashion. I am also thankful to my parents, teachers and all my friends for their cooperation.

“MEASURING CONSUMER PREFERENCES FOR BOTTLED DRINKING WATER”

CHAPTER 01: INTRODUCTION

1.1 Background of the study:

Bottled water consumption has been steadily growing in the world for the past 30 years. It is the most dynamic sector of all the food and beverage industry: bottled water consumption in the world increases by an average 7% each year, in spite of its excessively high price compared to tap water and although industrialized countries consumers have, in principle, access to cheap good quality tap water.

Bottled water is often an alternative to tap water. Consumers often object to the taste of chemicals, particularly chlorine, used to purify tap water. In France, nearly half of them don’t usually drink tap water because of its bad taste (IFEN, 2000), as opposed to only 7% in United States (Olson, 1999).

Consumers also drink bottled water because they care for their health. In Europe, there is a long tradition, dating back to Roman times, of spas and of drinking mineral waters for medical purposes. In the 19th century, this activity developed with the fashion for upper classes to go to spas in order to improve their health. Spas owners weren’t long in understanding that they could increase the wellness of their customers and their own benefits € directly supplying them their water in bottles. Until the 1950s, mineral water was sold in drugstores as a health product. It has now become an everyday product. Natural mineral water, now sold in supermarket, doesn’t carry along anymore this medical image. People now buy bottled water to feel well, responding to advertising campaigns based on well-being, energy, slimming, fitness etc. Bottled water is a healthy alternative to other beverages. It is calorie-free and attractive for people willing to lose weight: “one of the sparks that ignited the bottled water fire was the fitness craze that skyrocketed in the early 1980” (Sullivan, 1996).

Increasing urbanization can also explain this trend for bottled water consumption. In Increasing standards of living and greater use of cars enabled people to buy water in supermarkets and to bring home higher number of bottled water, without difficulty. The use of plastic makes bottles lighter and easier to carry than when they were made of glass. The expansion of shopping centers, outside city-centers, provides consumers with a greater choice in bottled water brands. The explosion of bottled water consumption also reflects deep changes in working habits in industrialized countries, with the decline of the agriculture and industry sectors. In these countries, most people have office works and the bottle of water is now a common element on a desk, next to the computer and the telephone. Drinking expensive bottled water (compared to tap water) is a sign of a rise in the social scale. In addition, bottled water is the result of a huge marketing success.

The bottled water market in Pakistan is witnessing annual growth rates nearing 40 percent. Bottled water in Pakistan is not considered a ‘beverage’. Beverage processing includes carbonated soft drinks – where Pakistan has the lowest per capita consumption in the world, fruit juices, syrups and juice flavoured drinks. Drinking water – and also bottled water – is not considered an important commodity either. The Government of Pakistan described the market for bottled water, with 33 million liters of consumption per annum in 1999, as small but growing. It furthermore estimated the consumption for 2003, as 70 million liters or 0.5 liters per capita. The bottled water market in Pakistan has witnessed annual growth rates of 40 percent, and after the introduction of Nestlé’s ‘Pure Life’, it had the fastest worldwide growth in bottled water in 2000, at 140%. Recent s estimate a yearly consumption of about 2 liters per person bottled water.

Bottled water is not a solution to inadequate water supplies as it is simply not affordable for poor people who lack access to water. A bottled water culture which turns drinking water into a status symbol is not justifiable from the human rights perspective. The Pakistan government is obliged to adopt measures to provide access to safe and sufficient water supplies even if that means restraining corporations from turning water into a status symbol to make profits, or from polluting or extracting already depleting groundwater resources.

1.2 Purpose of the Study:

This report/study is meant to:

Understand what factors are influencing the consumer preferences to make them purchase different brands of bottled water.
Identifying that what are the factors which affect the purchase of a specific bottled water brand.

1.3 Research Questions:

1. What do people expect from their water utility in the context of drinking water services?

2. What are consumers’ priorities?

3. What do customers consider acceptable in terms of the product and the service they receive?

4. What are they willing to accept for the current price they pay?

5. Why do people prefer to use a specific bottled water brand in terms of their priorities?

1.4 Scope of the Work:

Scope of this report is limited to businessmen, professionals and students of Peshawar and Islamabad who are well users of bottled water.

1.5 Limitations of the Study:

Expected limitations of this research can be:

* Unavailability or Lack of data

* Response from people

* Limited time

* Resource constraint

1.6 Research Methodology:

The methodologies used for the research are as follows:

1.6.1.: Sample Unit:

The respondents selected were belonging to different social backgrounds and different professions.

1.6.2: Sample Population:

The study was conducted in Peshawar and Islamabad only.

1.6.3: Sample Size:

A total sample size of 100 respondents was fixed for the research.

1.6.4: Sampling Procedure:

Because of the limitations, convenient sampling has been selected, as the name implies, the sample is selected because they are convenient. This non probability method is often used during preliminary research efforts to get a gross estimate of the results, without incurring the cost or time required to select a random sample.

The sampling was on the basis of Judgemental Sampling i.e. Non-Probability Sampling Method was used.

1.6.2: DATA COLLECTION:

Both primary and secondary methods of data collection are used in the study.

1.6.2.1: Primary Data:

The data-collecting tool for primary data was the questionnaire. The questionnaires were compromised of questions about personal preferences of the respondents along with questions on the subject of study. The questions used likert scale and category scale. This enabled the respondents to answer questions by marking most suitable answers.

1.6.2.2: Secondary Data:

The most important source of secondary data for the study was articles from different websites and previous researches done on internet. Also different books and some related articles in different magazines and journal of marketing served as a source of secondary data.

1.7 Scheme of the Report:

The report will comprise of following sections:

Chapter 01: Introduction

Chapter 02: Literature Review

Chapter 03: Consumer Trust, Confidence and Customer Preferences for Drinking Water

Chapter 04: Analysis and Findings

Chapter 05: Conclusion and Recommendations

CHAPTER 02: LITERATURE REVIEW

2.1 Introduction

The global water shortage of affordable and safe drinking water is manifested in Pakistan with an estimated 44 percent of the population without access to safe drinking water. In rural areas, up to 90 percent of the population may lack such access. As one indication of the magnitude of the problem, it is estimated that 200,000 children in Pakistan die every year due to diarrhoeal diseases alone (UN Systems in Pakistan, 2003). Drinking bottled water reflects not just a certain way of life in the rich North but a necessity and the only option for safe water in the South. Beside official s, there should be no doubt that the majority of the Pakistan’s population is exposed to the hazard of drinking unsafe and polluted water. In an effort to improve this situation, many consumers in Pakistan have to turn to bottled water as a first alternative to drinking unfiltered tap water or contaminated water of other sources where no public drinking water service exists (GOP, Pakistan Environment Protection Agency, 2003).

However, bottled water is a very expensive alternative and not always healthy because of infrequent testing for contaminants and sporadic inspection of processing plants. Bottled water should not be considered as a substitute to a sufficient service with drinkable tap water, but it is due to lack of access to water services or to bad quality of available resources (WHO, 2000). Bottled water consumption has been steadily growing in the world for the past 30 years. It is considered as one of the most dynamic sectors of all the food and beverage industry, where consumption in the world increases by an average 12% each year, in spite of its excessively high price compared to tap water (UNESCO, 2003).

Bottled water consumption has been steadily growing in the world for the past 30 years. It is the most dynamic sector of all the food and beverage industry: bottled water consumption in the world increases by an average 7% each year, in spite of its excessively high price compared to tap water and although industrialized countries consumers have, in principle, access to cheap good quality tap water. This research report aims to provide background information on bottled water, the use of bottled water in order to understand the reasons of a trend that goes beyond a simple fashion and turns to be a real social phenomenon. It will first identify existing types of bottled water: although they seem very much alike, bottles of water don’t contain the same product. The increase in bottled water consumption has boosted the bottled water industry and market trends show very promising perspectives for the future. This report will then identify the major reasons why consumers choose to buy specific expensive bottled water rather than drink tap water. It will finally analyze the impact this industry has on the environment.

2.2 Water – Global Trends and Pakistan’s Struggle

Water is essential for human beings to survive and develop. At the same time, water is a scarce good, and shortage sometimes results in crises. Both facts lead to the simple conclusion that lack of water hinders development and a dignified life. This can be assessed from global trends, as well as from Pakistan’s national and local struggles for better access for people to safe and sufficient drinking water.

2.3 Water – A Global but Scarce Good

According to s published by the United Nations, subsidiary organizations and other international organizations, 1.1bn people are without a sufficient access to water, and 2.4bn people have to live without adequate sanitation. Under current trends, the prognosis is that about 3bn people of a population of 8.5bn will suffer from water shortage by 2025. 83% of them will live in developing countries, mostly in rural areas where even today sometimes only 20% of the population have access to a sufficient water supply (Guissé, El Hadji, 2004). This actual lack of water is opposed to the theoretical conclusion that there is enough ground water existing in all regions of the world to guarantee an adequate water supply for all people. According to international law, in the case of concurring water users, the socio-economic priorities have to rest on human development and social interests of the people (UN, 1997). However, only 6% of global freshwater is used by households, while 20% is utilized industry and another 70% by agriculture. The conclusion drawn from these framework conditions is that water shortage and the unequal distribution of water are global problems rather than regional problems that require international solutions. Insufficient supply of drinking water is the main cause of diseases in developing countries. Already in 1997, the United Nations Commission on Sustainable Development concluded that 2.3bn people suffer from diseases rooted in insufficient water provision and quality (UN, 1997). More than five years later, it was estimated that 2.4bn people were suffering from water related diseases, and the World Health Organization reckons that 80% of all infections are traceable to poor water conditions. 5,483 people die daily of water caused diarrhoea – 90 percent are children under five. Taking into account all water related diseases and deaths, international organizations estimated in 2001 that 2,213,000 people died because of inadequate water supply – ten times more than the tsunami disaster caused in December 2004 (UNESCO, 2003).

2.4 Poverty and Access to Water in Pakistan

It is acknowledged that lacking safe and sufficient drinking water – as with other basic needs such as food, shelter and education – is not a geographical but social problem. Being poor or rich is mainly decided by birth, and poverty perpetuates itself from generation to generation. Development strategies should be judged by their effort to break through this vicious cycle. Single indicators, such as literacy rates or households with access to water, are a litmus test for such an assessment.

2.4.1 Access to Water in Pakistan

Pakistan is an Islamic Republic, whose aim is to enable its Muslim majority “to order their lives in the individual and collective spheres in accordance with the teachings and requirements of Islam as set out in the Holy Quran and Sunnah” (Constitution of the Islamic Republic of Pakistan, 1973). Water is recognized in Islamic teachings as a vital resource, of which everyone has the right to a fair share. Following the Hadith, it is reported that the Prophet Muhammad (PBUH) said: “Muslims have common share in three (things): grass, water and fire” (Abu-Dawood 3470). Furthermore, the Holy Quran warns human beings against unfair distribution of common goods and the majority of scholars agree that Islam forbids speculation, manipulation and unbalance profit with a common good such as water (Faruqui, Naser I, 2001). In 1995, UNDP counted Pakistan as country having among the highest water potential per person out of 130 countries that should dramatically improve its water situation to overcome the current crisis and prevent future ones (IRIN, 2001). Obviously, Pakistan failed to make any improvement. In 2003, the United Nations dropped Pakistan’s ranking, because its total renewable water resources per capita per year have been estimated as 114th out of 180 countries (UN, 2003). Only three percent of Pakistan’s sweet water resources are used for household purposes and drinking (GOP, Pakistan Ministry of Water and Power, 2002). Therefore the debate about access to water in Pakistan is dominated by irrigation disputes, mega-projects of dams and canals, and climate change. The focus is on water for agriculture rather than for people (UNDP, 2003). This production oriented perspective continues in the debate about groundwater use and extraction. It is estimated that surface water meets only 75-80 percent of crop water requirements. As a result, groundwater is merely seen as a reserve water source for irrigation and food production, as well as the major factor for the growth of agricultural production in the late 20th century (World Bank, 1996).

With regard to the availability of safe and sufficient drinking water, Pakistan lacks reliable statistics. While data about the availability of water and field studies about water quality exist, there is no sufficient data that take both into account. Official data about the access to drinking water vary between 60 and 90 percent of households. In rural areas – where a decline of households with access to water is documented – s about availability differ between 10 and 53 percent. Differences in these statistics mainly emerge from the inclusion or exclusion of households that rely on privately owned wells and supply systems (Pakistan Mouza Report, 1998).

In addition, having access to water in Pakistan is not similar with having access to safe and sufficient water supply. Pakistan’s water quality ranks as 80th out of 122 nations. Pipe water in Pakistan is contaminated either because of leakages with all sorts of bacteria or due to geological conditions and insufficient purification, with abnormally high levels of arsenic and elevated fluoride (IRIN, OCHA, 2004). Water, extracted by hand pumps – the major water source in rural areas – is mainly brackish water and not sufficient for drinking and cooking. The Pakistan Council of Research and Water Resources (PCRWR) estimate that almost 50 percent of urban water supply is insufficient for drinking and personal use (GOP, Pakistan Council of Research and Water Resources, 2004). According to a research which took data about availability and quality into relation and concluded that an average of 25.61 percent of Pakistan’s 159 million inhabitants has access to safe and sufficient drinking water (Nils Rosemann, 2005). This calculation shows that in rural areas only 23.5 percent and in urban areas approximately 30 percent can use their source of water without jeopardizing their health. These findings come close to a conclusion by independent experts who predicted that already in 2001, with prevailing consumption rates and a population growth of 4 million people per year, one out of three people in Pakistan would face critical shortages of water, “threatening their very survival”. The Government of Pakistan estimated with regard to diarrhoea that this mainly water related disease accounts for 14 percent of illnesses for children under five and for seven percent of all disease in people age five and older (GOP, Pakistan Ministry of Economic Affairs and Statistics, 2004). The Pakistan Council of Research and Water Resources (PCRWR) assesses that 40 percent of all reported illnesses are water-related. It is estimated that 200,000 children in Pakistan die every year due to diarrhoeal diseases alone (UN Systems in Pakistan, 2003). Unsafe water affects mainly rural and urban poor, who suffer above the average from sickness and water related diseases. (GOP, Pakistan National Human Development Report, 2003).

2.5 About Bottled Water

The term bottled water seems to tell that any bottle containing water, however there are important differences: all bottles don’t contain the same product. There is very little in common between natural mineral water and purified water, as the chemical compositions or the treatments these waters can undergo respond to very different criteria that can change from one country to another. In some cases bottled water is merely bottled tap water.

2.5.1 Industry Definitions

Several terms are commonly used to describe the products of the bottled water industry, including some of the following:

* Artesian water – bottled water from a well that taps a confined aquifer (a water-bearing underground layer of rock or sand) in which the water level stands at some height above the top of the aquifer.

* Fluoridated Water – often used as a health focused drink for growing children, it contains fluorine within permissible limits.

* Ground water – obtained from underground sources, pumped out using pressure that is equal to or more then atmospheric pressure.

* Mineral water – An extremely specific product that must meet certain criteria. Defined as water with at least 250 parts per million total dissolved solids. The source of water is either ground water or a spring.

* Purified water or drinking water – is water taken from rivers, lakes or underground springs that has undergone some form of treatment. It can be produced by “distillation, deionization, reverse osmosis or other suitable processes. It can be chemically treated in order to have some components disappear. It is basically de-mineralized water from public sources. Purified water is actually a manufactured product.

* Sparkling water – water injected with carbon dioxide

* Spring water – water obtained from an underground formation from which water flows naturally to the earth’s surface.

* Sterile water – water that meets the requirements specified under government or other “sterility tests”.

* Well water – water from a hole bored, drilled or otherwise constructed in the ground which taps the water of an aquifer. (IBWA, 2000)

If these waters contain the minimum required mineral content according to US standards, they can be called “mineral waters”. So many different categories of bottled water, changing from one country to another, are not easy for consumers to differentiate.

2.5.2 What is Distilled Water?

Distillation is a process that leaves water free of minerals. Distilled water has been brought up to a boiling temperature. The steam is captured and is cooled, which condenses it back into a liquid form. When the water turns to steam, anything heavier than water (like minerals, or unwanted organic matter) is left behind.
Thus, distilled water only contains water. Distilled water is good to use in appliances such as coffee makers because since it contains no minerals it does not leave behind lime scale.

2.5.3 Packaging

Packaging used for water can have very different shapes and colours and are made of different materials. For a long time, bottled water was only available in glass, a very good but heavy material. At the end of the 1960s, bottlers started to use packaging made of PVC (vinyl polychlorure). In the 1980s, a new kind of plastic started being used: PET (polyethylene terephtalate). PET is progressively replacing PVC because of its numerous advantages.

Plastic, either PVC or PET, is the most frequently used material to make bottles of water; about 70% of the bottles used for natural mineral water are made of plastic. Bottles usually contain 33cl, 50cl, 1 litre, 1.5 litre, 2 litres or 5 litres. The biggest packaging for bottled water is a 5-gallon carboy (about 20 litres).

Packaging is an essential part of bottled water marketing strategies. “The packaging makes the brand. The brand makes the packaging. A product must have visibility to sell its presentation refers to notions such as service, security, hygiene” (Miquel, 1999). In some cases, such as Kinley, it is even possible to recognize the brand of the bottled water thanks to the shape and colour of its packaging. Some brands have reshaped their bottles in order to make them look like the marketing message they are supposed to carry. Many bottles, for instance, now high mountains not only on the labels but also on the plastic itself.

The packaging is an important part of the bottled water marketing success. All types of bottles coexist and are regularly reshaped in order to better catch consumers’ attention.

Marketing and advertising campaigns are essential to differentiate the product and attract consumers. Brands tend to associate with specific activities: sport, fitness, slimming, fashion, etc. For the last 50 years, Evian has been the water of babies, emphasizing that its low mineral concentration is suitable for them. The brand’s marketing strategy capitalizes on infants, from the pink colour of its labels to advertising campaigns.

2.6 Bottled water market trends and Planet’s Health

The world bottled water market amounts to an annual volume of 89 billion litres, which represents an average 15 litres of bottled water drunk yearly per person (Danone, 2000).

Western Europeans are the major consumers, drinking nearly half of all the world bottled water, with an average of 85 litres/person/year (Sollberger, 1994). In United States, 54% of Americans regularly drink bottled water (Olson, 1999). More than half (59%) of the bottled water drunk in the world is purified water, the remaining 41% being spring or mineral water (Belot, 2000).

Bottled water is an extremely competitive market; hence companies need to develop diverse marketing strategies.

But according to campaigners, the planet’s health may be suffering as a result.

A new report warns that people’s thirst for bottled water is producing unnecessary garbage and consuming vast quantities of energy, even in areas where perfectly good drinking water is available on tap.

The report, released by the Earth Policy Institute (EPI), says global consumption of bottled water doubled between 1999 and 2004, reaching 41 billion gallons (154 billion liters) annually.

2.7 Bottled Water Market in Pakistan

Before focusing on Pakistan in particular, one should note that bottled water consumption has generally grown around the world in the past 30 years, despite its high price compared to tap water. Lured by the potential for huge profits, multinational companies have been trying to create an international market for bottled water.

The bottled water market in Pakistan is witnessing annual growth rates nearing 40 percent. Bottled water in Pakistan is not considered a ‘beverage’. Beverage processing includes carbonated soft drinks – where Pakistan has the lowest per capita consumption in the world, fruit juices, syrups and juice flavoured drinks (Pakistan Investors Guide, 2004). Drinking water – and also bottled water – is not considered an important commodity either. Water supply and prices for drinking water and bottled water are not considered under the items in the Sensitive Price Indicator, Consumer Price Index or Wholesale Price Index. From this perspective; it is obvious that Pakistan has low consumption of bottled water. The Government of Pakistan described the market for bottled water, with 33 million litres of consumption per annum in 1999, as small but growing. It furthermore estimated the consumption for 2003, as 70 million litres or 0.5 litres per capita. The bottled water market in Pakistan has witnessed annual growth rates of 40 percent, and after the introduction of Nestlé’s ‘Pure Life’, it had the fastest worldwide growth in bottled water in 2000, at 140% (The Bottled Water Industry of Pakistan, 2004). Recent s estimate a yearly consumption of about 2 litres per person bottled water (Nils Rosemann, 2005). Compared with Thailand’s 43 litres and Philippine’s 15 litres per capita consumption, this seems relatively low. But taking Pakistan’s population into account, one has to estimate an annual consumption of 318 million litres. While, sufficient s are not available to prove this 964 percent consumption increase in five years, one is able to conclude that Pakistan is a highly dynamic and lucrative market.

Market expectations are as high in the retail market of bottled water as in the household and operations sector for bulk water. Besides these market expectations, the production of bottled water is also considered quite profitable. It is estimated that a bottle of 1.5 litres has production costs of PKR 12.51 while it is sold for PKR 22 (Nils Rosemann, 2005). The profit is shared between producing corporations, with PKR 0.66-0.83, and middleman, with PKR 6.66-7.08. By this standard, the producing corporation makes a profit of 4-5 percent while the middleman makes a profit of 27-30.55 percent. In Pakistan’s water market, there are approximately 20 permanent players. Official s show an estimated number of 26 corporations, while in summer time, this number increases up to 70 (Nils Rosemann, 2005). But from the perspective of quality control, PCRWR is witnessing a fluctuation in the market of 50 percent, e.g. half of the brands disappear and are replaced by new brands yearly (PCRWR, 2003). In 2005, PSQCA admitted that 200 companies are selling bottled water in Pakistan, but only 27 are registered as maintaining standards stipulated for the product (Hoti, Ikram, 2005). Nestlé itself estimates approximately 150 water brands, with only 15 registered under the PSQCA scheme (Hoti, Ikram, 2005). Regardless of this data, it is unquestioned that Nestlé controls the majority of the market (over 50 percent) with its brands ‘Pure Life’, AVA and Fontalia, while Danone’s subsidy 22 “Sparkletts” holds 12 percent and another local brand “BSW” has an estimated five percent market share (Nils Rosemann, 2005).

Bottled water is not a solution to inadequate water supplies as it is simply not affordable for poor people who lack access to water. A bottled water culture which turns drinking water into a status symbol is not justifiable from the human rights perspective. The Pakistan government is obliged to adopt measures to provide access to safe and sufficient water supplies even if that means restraining corporations from turning water into a status symbol to make profits, or from polluting or extracting already depleting groundwater resources.

2.8 Bottled water consumption: a certain way of life

Some consumers choose to only drink bottled water; we can identify several reasons for drinking bottled water.

2.8.1. Consumers care for their health and safety

Bottled water is often an alternative to tap water. Consumers often object to the taste of chemicals, particularly chlorine, used to purify tap water. In France, nearly half of them don’t usually drink tap water because of its bad taste (IFEN, 2000), as opposed to only 7% in United States (Olson, 1999).

Consumers also look for security, in emerging as well as in industrialized countries. They often mistrust their tap water, because of previous bacterial contamination for instance, and perceive bottled water as being safer than tap water. In India, the suspicion of bad tap water quality, in addition to general and seasonal shortages of tap water, lead people to turn to bottled water. In Pakistan, only t


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