Marekting Case Study

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GrubHub in Croatia Comment by Andras,Trina: Could use a nice cover page and table of contents

Introduction

GrubHub has revolutionized the food online ordering industry in the United States. What began as a small start-up company in Chicago has expanded throughout the U.S. into major metropolitan areas. It has been the most successful of its type by pushing out or buying up its competition, and partnering with other companies to reach more consumers. If GrubHub is to continue being on top, it must take a risk and expand into the global market. Croatia is a wise choice, based on the evidence presented. The once war-torn country is a European tourism hotspot with the type of emerging market that could allow GrubHub to once again push out any competition and become the favorite among global consumers.

Mission Statement

GrubHub is dedicated to helping the hungry customer find and order the perfect meal or snack to satisfy every craving. Our mission is to help college students eat something close to mom’s cooking; tourists to try something new and exotic; and foodies to write on their blogs about. We aim to become a recognizable name in the global food service market. Comment by Andras,Trina: Excellent

Situation Analysis

Economic environment

Croatian Economy

Strengths: Croatia has a fairly stable economy and its GDP is the world’s 84th largest.1 While not an enormous economy, it is strong compared to similar countries, including the countries that made up Yugoslavia. Additionally, a large amount of the Croatian population is in our target age range; about 12.2% is between 15 and 24 years old. Before the financial crisis of 2008, Croatia’s economy was growing steadily at 4%-6%, while keeping inflation down. All things considered, it is safe to say that this will be an economy that should be stable for the long term. Comment by Andras,Trina: I assume the rest of the stats come from footnote number 1?

Weaknesses: While the Croatian economy is listed as one of the stronger of the former Yugoslav republics, it still has room for improvement. It was significantly damaged by the financial crisis in 2008 and has had a tough time bouncing back.1 Croatia has not yet been able to join the EU in using the Euro as currency, as the country’s financials are not yet at the level necessary to do so. In addition, there is a relatively high unemployment rate in Croatia of about 20%, which is clearly a poor indictor for beginning businesses in the country. On the positive side, GrubHub does not need an enormous amount of its own capital in order to begin operations, it relies on businesses that already exist, and will not need to worry about a great deal of fixed assets. However, the weak economy is still concerning.

Opportunities: The advantage of a business like GrubHub is that it does not require an enormous investment to begin operations. For this reason, entering Croatia, despite its recent problems, should not be a problem. The citizens have the ability to use the technology that is necessary to begin the business. Even with unemployment at 20%, there is not a great concern that they will cease spending money on something like take-out, particularly in our target market of college-aged students. Additionally, tourism is a large part of the Croatian economy, and we can reach a secondary market by being an easy-to-use, trusted business tourists can use should they want to order-in. As there is stability in Croatia, and there is a lack of startup costs and a low risk for large losses for the business, GrubHub has an excellent opportunity. By tailoring the business and advertising to college students through partnerships with restaurants around universities, and to tourists by partnering with restaurants along the coast and in major cities, GrubHub will likely achieve a strong level of success.

Threats: The strength of the economy is of some concern, as it has not been able to bounce back. There is also a competitor, Foodpanda, which does have some of the market share, provides similar services, and could potentially cause GrubHub some headaches. While a strong strategy could prevent this, the fact that there is only so much money to be spent on convenient, consolidated take-out options should not be ignored. Still, there is a relatively small amount of threats compared to the opportunities, particularly when considering that the initial investment will not be significant. Comment by Andras,Trina: good

Financial environment

GrubHub

Strengths: GrubHub is a company that has a great deal of promise. In 2013, they processed over $1 billion of orders.2 The company is the result of the recent merger between GrubHub and Seamless, two former competitors who have now become the dominant force in the delivery marketplace. They are currently filing for an IPO, and will likely become a publicly traded company very soon. They work with over 28,000 restaurants in 600 cities and take between 10%-20% of the sale from each order.

Weaknesses: Entering the market could cause problems for GrubHub. If stockholders do not embrace the company and if it struggles, it could certainly lose money. It may also not be able to control its fate in the same way by becoming publicly traded, and in a time where there are large opportunities for advancement with the correct direction, which could potentially become a problem.

Opportunities: Recent developments from GrubHub include an enormous amount of research. Like most large businesses, data has become extremely important to their operations. They are beginning to provide restaurant owners with accurate estimates of how much product will be ordered, giving them a great advantage in the marketplace.2 They are also participating in ride-alongs on deliveries, working in kitchens with the restaurants, and starting to see first hand how their business affects their clientele in the industry. That will allow GrubHub to ultimately improve the business. They have worked in European markets and have an office in London, and will likely have no problem entering the Croatian marketplace.

Threats: While GrubHub is able to provide strong data to restaurants, and while it does increase revenues in the long run, it also takes a large portion of profits away from the restaurants in the short term.2 They must continually prove their worth to the vendors they are working with, which can be problematic. Also, while they currently dominate the market, it might not take much to knock them off the pedestal they have crafted. Without constant innovation and improvement, GrubHub could begin to suffer quite quickly. In that event, they would likely not be able to expand to locales such as Croatia with such ease. They will also, of course, need to provide Croatian language services and the strong customer service that is present in their more established locations right away to a rather untrusting customer base. Comment by Andras,Trina: good. I like the way you’re structuring this

Cultural environment

Hofstede’s Model

To effectively analyze Croatia’s culture to determine the acceptance of GrubHub, it is beneficial to look at the six dimensions of Hofstede’s model, including power distance, individualism/collectivism, masculinity, uncertainty avoidance, pragmatism, and indulgence.3 These scores will be compared to that of the United States in order to put things into perspective and to highlight the major differences in order to perform a SWOT analysis.

SOURCE: Hofstede 6-D Model of Croatia and the United States4

Power Distance

Power distance is the extent to which the less powerful people within a country expect and accept that power is distributed unequally.3 Croatia’s scored 73 for power distance, which is quite high. This means that people generally expect and accept hierarchical order. In comparison, the United States scored only 40, so people generally reject the idea of a highly hierarchical society. This will have little bearing on Croatia’s willingness to accept and use GrubHub.

Individualism/Collectivism

Individualism has to do with whether individual’s in a society look out for themselves and their direct family (Individualist societies), or if people are concerned with the collective welfare of society (Collectivist societies).3 Croatia has a low score of only 33, therefore it is a collectivist society. The United States has a very high score of 91, meaning that it is a highly individualist society. A collectivist society may be more difficult to introduce a new product or service since it may have to gain acceptance and the trust of the entire nation in order for society to adapt and start using a new product or service. Therefore, this is a potential threat for introducing GrubHub into Croatia. However, once people discover GrubHub and understand the advantages, word-of-mouth will lead to a quicker adoption of the new service, especially if the first users have a positive experience with the service. This could be seen as a potential opportunity. However, if the first users have a negative experience with GrubHub, the opposite may occur, thus creating a threat situation.

Masculinity

The masculinity dimension is the extent in which the value system of society is more concerned with being influenced by competition and being the best (masculine), or if the value system of society is concerned with caring for others and quality of life (feminine).3 Croatia scored 40, meaning that the society is moderately feminine. The United States scored 62 for this dimension, defining it as more of a masculine society. Croatia and United States do not have a strong tendency for a feminine or masculine society. This dimension has little bearing on Croatia accepting GrubHub.

Uncertainty Avoidance

The uncertainty avoidance dimension is concerned with how a society copes with the reality that the future is uncertain and whether the attitude of society is to allow the future to happen as it is or to try to control the future.3 This creates an environment of ambiguity, which may bring about a certain level of anxiety in different societies, thus forcing different cultures to deal with this anxiety in different ways. Croatia scored an 80, meaning that there is a very high level of avoiding uncertainty. This compares to the United States’ score of 46, meaning that society has a tendency to have a low level of anxiety when dealing with the uncertainty of the future, along with a desire to try to control the future. Countries, including Croatia, that score high for this dimension tend to maintain more orthodox rules, beliefs, and behaviors. There is an inherent need for rules, and people tend to always feel the need to be busy and to work hard. Additionally, innovation may be resisted in such states. This may be a threat in efforts to introduce GrubHub into Croatia. However, due to advancements in the technological infrastructure and the growing number of individuals using the Internet and the increase in mobile phone usage, Croatia seems to be becoming more and more accepting of newer technologies (see the Technological Environment section). Through strategic market segmentation, the impact of this high level of avoiding uncertainty in Croatia will be minimal.

Pragmatism

The pragmatism dimension is concerned with how society relates to the reality that much of what happens around us cannot be explained.3 Croatia scored a high score of 58, which means that Croatia can be described as having a pragmatic orientation. People with a pragmatic orientation don’t have a need to explain everything around them since they believe that some of the complexities of life can never be fully understood. In contrast, the United States has a low score of only 26, meaning that society has a normative orientation, in which people have a strong need to explain as much as possible. This type of environment makes society more resistant to reacting quickly to major, complex changes, including changes to different infrastructure. Croatia, and other nations that have a pragmatic orientation, show an ability to adapt traditions easily to changed conditions, along with a strong propensity to saving money. Therefore, the pragmatism dimension is a strength for implementing GrubHub into Croatia since the society will be more likely to accept growing trends in technology that are influenced by the younger generation without needing an explanation, especially when it is free.

Indulgence

The last dimension of the Hofstede model is indulgence. This is the extent to which society tries to control desires and impulses.3 Cultures with a weak control can be described as indulgent, while cultures with strong control are restrained. Croatia scored 33, making it a restrained country. On the other hand, the United States scored a 68, meaning that the society is indulgent. Though Croatia is considered to be a restrained country, it is not influencing the growing number of Internet users and smartphone users (see the Technological Environment section). The indulgence dimension has little impact on Croatia’s willingness to accept and use GrubHub.

World Value Survey (WVS)

The World Value Survey (WVS) is a survey that was conducted by social scientists at universities around the world that analyzed approximately eighty countries to evaluate the values and beliefs.5 This survey covers 85 percent of the world’s population and data was collected multiple times, starting in the early 1980s and most recently from 1999 to 2001. The data collected separates countries into two dimensions. The first dimension is traditional versus secular-rational values, which measures the importance of religious values against secular norms. The second dimension is survival versus self expression values, which measures the extent to which society is comfortable expressing creativity freely and the ability to be comfortable with change. As less developed countries begin to modernize and grow in terms of wealth, the trend is that they tend to move to secular-rational and self expression values. The United States does not follow this rule, with a higher score for traditional values (-0.5) along with a very high score for self expression values (1.5). Croatia is somewhat neutral for both dimensions, scoring about zero for the traditional/secular-rational values dimension and a slight preference to self expression values with a score of about 0.40. Countries that value current technology advancements will tend to be higher for secular-rational and self expression values. Therefore, Croatia will be more open to accepting GrubHub, especially as compared to countries that are in the lower-left quadrant.

SOURCE: World Value Survey graph, page 124 in Global Marketing Management5

High-Context Versus Low-Context Cultures

Croatia has a high-context culture based on its score of 58 on the pragmatism dimension of the Hofstede’s model. In a country that has a pragmatic orientation, people rely heavily on implicit signals, such as context, situation, and time when determining the truth.5 This is in contrast with the United States, a low-context culture, in which people believe that truth depends on explicit messages. Therefore, this is a weakness for entering the Croatian market since it will be more difficult to gain the trust of the people. The process of entering the market may be longer and promotional techniques need to be adjusted to pay special attention to the context and implicit messages of advertising campaigns. This will be critical to employ an effective advertising campaign in Croatia.

Other Cultural Dimensions

Education: Croatia has a relatively good education system. The literacy rate of men (aged 15 and over) is 99.5% and of women is 98.3% as of 2011.5 Croatia ranks slightly below the United States on the PISA 2012 survey, which is a standardized test for 15 year-old students in 65 participating countries.6 Croatia showed slight improvements for mean scores in mathematics (+0.6) and reading (+1.2) from last year, but a slight decrease in mean science scores (-0.3). While the PISA is a good way to evaluate education systems, the issue is that there is truly no way to provide a standardized exam that is not biased in some way, thus unintentionally giving some countries an advantage and others a disadvantage, especially for countries that prepare students for the exam rather than focusing on the individual needs of students.

Language: Like many of the EU countries, English is the most widely spoken language in Croatia, at 49%, followed by German (34%) and Italian (14%).7

Color: The meaning of colors is oftentimes different between countries. It is critical to ensure that certain colors used on websites, advertising campaigns, and logos do not have negative connotations in the foreign countries when entering the market. The following table compares the colors red, blue, white and green between Croatia and the United States:8

Red

Blue

White

Green

Croatia

Medicine

Art

Intelligence, neatness

Nature

United States

Excitement, warning, safety, hot

Trustworthy, official, soothing

Clean, pure, elegant

Environmental, freshness, jealousy

SOURCE: Compares the meaning of colors in Croatia and the United States8

None of the colors reviewed in the table have negative connotations in Croatia. There are some similarities, including green being associated with nature or environment. Also, white is similar in that the United States and Croatia associate white with pure and fresh. Red, the color of GrubHub’s logo, represents medicine in Croatia, which is a somewhat positive representation since it can be viewed as healing.

Payment methods: Most hotels and restaurants in larger cities accept credit cards.9 PayPal is widely used for online purchases in Croatia. Comment by Andras,Trina: really excellent job! You integrated class material well that was RELEVANT, and tied it to your project. Great job.

Technological environment

Broadband Internet

Croatia has taken many steps in 2013 to improve its technological infrastructure in terms of advancements in its broadband Internet network. These steps are opportunities for entering the Croatian market and reflect Croatia’s commitment to embracing technology. In the beginning of 2013, a program called “Hotspot Croatia” was developed by Croatia’s Ministry of Tourism to provide free Internet access at tourist destinations, including main plazas, walkways, public beaches, and bus stations.10 This program allows major cities to request funding for up to 50 percent of the cost needed to setup the network.

In efforts to improve broadband access, the Croatian Agency for Post and Electronic Communications (HAKOM) has used the unspent budget funds in 2012 to develop broadband access in less populated areas, including islands and mountainous areas.11 Additionally, HAKOM provided HRK 20 million in subsidies for further development of broadband networks in less developed areas.12 These subsidies are the third round of funding for broadband development in 2013 and are valid through 2016. The total subsidies, to support this effort since 2011, are worth HRK 50 million.

These subsidies and other efforts to develop the broadband network in Croatia have helped to increase Internet traffic in 2012 by 22.4 percent to 240 million Gigabytes.13 Furthermore, about 64 percent of people in Croatia over 15 years of age use the Internet, as indicated by a study by GfK Group in 2013.14 This is similar to some surrounding countries including Bosnia and Herzegovina (63%), Serbia (65%), and Macedonia (67%). Although, Internet usage rates are slightly higher in Slovenia (80%), Slovakia (70%), and Hungary (74%).

Though Internet usage has been steadily increasing, the Croatian people do have hesitancy when it comes to online shopping.15 Croatians only shop online a few times a year and primarily buy clothes, shoes, and electronics. According to the new global research Google Consumer Barometer (Google Adriatic), between 60 and 96 percent of Croatian Internet users get product information online, but only 12 percent actually make online purchases. A study by the GfK Group shows that online shopping in Croatia has increased from only 6 percent at the end of 2010 to 23 percent in 2013.14 The online shopping areas of interest in Croatia include travel and tourism, along with consumer electronics and mobile phones.15 For travel and tourism, of the 96 percent who researched online, 60 percent make an online purchase. For electronics and mobile phones, about 27 percent of individuals who research ahead of time make purchases online. The primary search engine used in Croatia by more than 90 percent of respondents is Google. Even though Croatian’s have a hesitancy to purchase online, this has little impact to the likelihood that they will accept GrubHub, which is a free service and will make it easier to order takeout food.

One step that will encourage online shoppers in Croatia to make purchases online is that they are exempt from paying customs duties on parcels coming from other EU nations.16 VAT will be exempt for goods purchased from non-EU nations valued up to EUR 22, not including alcohol, tobacco, and perfume. For packages valued between EUR 22 and EUR 150, they will be exempt from customs duties, but will be charged for VAT. For packages valued above EUR 150, both customs and VAT will be charged.

Mobile Usage

Croatia’s technological infrastructure also supports a growing number of mobile users and an increasing level of activity. According to a survey by Deloitte in Croatia, 45 percent of online users in 2013 have a smartphone, and 10 percent have a tablet.17 A major opportunity is that in a GfK survey "Retail and Technology" in the first half of 2013, Croatia showed the largest increase in smartphones sold in the area with 349,000 smartphones sold, which is over a 61 percent increase from the prior year.18 This is compared to a 52 percent increase in smartphones sold in Serbia and a 30 percent increase in Slovenia. Additionally, a study by Nokia Solutions and Networks in 2013 shows that Croatia will have six times more smartphones by 2020 than it does today.19 The same study shows that for the first time, smartphone sales have surpassed the sale of classic mobile phones. In terms of mobile Internet usage, in the last two years, the number of mobile Internet users has increased by 60 percent, and in the past year by 70 percent. These increases in smartphone and mobile Internet users are both huge strengths and opportunities for introducing GrubHub into Croatia.

Current conditions show that mobile telephony penetration is approximately 120 percent.17 There are more than 5 million mobile devices in circulation; 21 percent are smartphones. About 84 percent of the online users use their mobile phone for email access, 70 percent for social networks, and 76 percent for searches.

Additionally, there was a considerable increase in the number of SMS messages sent in Croatia, with an increase of 11.1 percent to 3.25 billion SMS messages sent in 2012.13 According to Croatia’s Central Bureau of Statistics, fixed-line has a significant decrease in call minutes of 15.5 percent to 3.87 billion minutes in 2012. Consequently, there was an increase of 13.1 percent to 6.95 billion minutes in mobile network traffic in 2012. In the fourth quarter of 2012, mobile network traffic increased by a whopping 19.1 percent. During the same time period, fixed-line traffic decreased by more than 20 percent. These statistics show a growing dependence on mobile phones, which is an advantage for entering the market.

A potential weakness and a long-term threat is that despite the growing use of mobile phones in Croatia, 42 percent of smartphone owners have never installed an application.17 The smartphone users who download mobile applications are only willing to spend at most HRK 30 per month. Interestingly, half of Croatians with mobile phones connect to the Internet via Wi-Fi, rather than cellular networks. According to Deloitte, the main reason that Croatians resist downloading applications and do not primarily use cellular networks is the perception that mobile Internet is expensive. Furthermore, 39 percent of those polled cited that the price of voice and SMS tariffs as the main reason for switching operators. Only 7 percent cited the quality of the Internet access network as an issue. It will be a challenge to change the perception in Croatia that mobile Internet is expensive, but as noted earlier, there are huge increases in mobile Internet usage, so perception may slowly be changing, which is another opportunity for us to enter the market. The fact that GrubHub is a free application will be an added incentive for Croatians to download the application.

According to the annual survey conducted by local portal Mobil.hr, the best mobile phone in Croatia for 2013 is the Samsung Galaxy S4 smartphone with 26.35 percent of the votes.20 This survey had over 16,000 participants choosing between 40 mobile phone models, most of which were smartphones. This is the third year in a row that Samsung was voted as the best mobile phone in Croatia. The primary smartphone operating system used in Croatia is Android, with an 85.32 percent share of the market. Other popular Android devices include HTC, Sony, and LG. The next popular operating system in Croatia is iOS, used by iPhones, with 12.62 percent of smartphone users. Windows phones only account for 2.06 percent of the smartphone market. It is strength that Croatia’s infrastructure supports all major platforms that are also used in the United States, which are compatible with the GrubHub application. Comment by Andras,Trina: Fantastic job. Really.

GrubHub

GrubHub is the nation’s leading online and mobile food ordering and delivery company, which allows people to quickly find local takeout restaurants.21 Initially only providing services in the Chicago area, GrubHub’s service has since been expanded to major cities across the nation including San Francisco, Seattle, Boston, New York, and Philadelphia. Currently, GrubHub serves approximately 28,800 takeout restaurants in more than 600 U.S. cities and London.

GrubHub is a free service that is available online and through the mobile application with the iPhone and Android devices.21 The GrubHub mobile application allows users to utilize a service called “Track Your Grub” that provides real-time status of their orders.22 Text messages will be sent to the user when the restaurant begins working on the order and when the food is out for delivery. For take-out orders, customers will get a text message when the food is ready to be picked up. For restaurants, GrubHub provides the services OrderHub to organize the order confirmation service and DeliveryHub to provide efficient delivery routes to delivery drivers.23 These services both feed the “Track Your Grub” to provide real-time information.

In August 2013, GrubHub completed its merger with Seamless, its leading rival.24 For the time being, GrubHub and Seamless will maintain their separate brand names. This merger combines the expertise and technology of GrubHub and Seamless, but it is yet to be seen how the two companies will combine resources. It is clear that GrubHub and Seamless are by far the premier food ordering services in the United States.

In January 2014, Foursquare has officially partnered with GrubHub and Seamless.25 Foursquare is a popular location-based check-in service, and is the perfect complement to GrubHub’s service model. For over 20,000 restaurants that participate in GrubHub and Foursquare in the U.S., users will be able to place orders through GrubHub using the Foursquare application.

Political/Legal environment

Since the Republic of Croatia’s independence from the former Yugoslavia in 1991,25 the former war-torn country has joined many other European nations as a member of the United Nations (UN), North Atlantic Treaty Organization (NATO), and the European Union (EU). It wanted to strengthen its image and foreign policy after many political trials for state independence and territorial integrity.26 Croatia was accepted into the UN in 1992 and into NATO in 2009. Admission into the EU took a decade, from applying to the union in 2003 to its acceptance in 2013.27

Croatia had been seeking membership into the EU since its independence because it believed integration into the West was the most obvious geopolitical choice.26 As a Central European and Mediterranean country, it was in the transitional area in the Balkans with many historical experiences. However, the EU saw Croatia as part of the general instability in the post-Yugoslav era, so the process of rapprochement with the EU continued until recently.

Because Croatia is now a member of the EU, the Electronic Commerce (E-Commerce) Directive is in effect. The EU adopted the E-Commerce Directive in 2000 as an internal market framework for e-commerce, providing legal certainty for businesses and consumers.28 It established rules on issues such as the transparency and information requirements for online service providers, commercial communications, electronic contracts, and limitations of liability of intermediary service providers. The directive covers services such as online information services, online selling of products and services, online advertising, professional services, entertainment services, and basic intermediary services provided free of charge to the recipient and funded, for example, by advertising or sponsorship.

Competitive environment

Foodpanda, and its affiliated brand hellofood, is a German-based, online food-delivery platform that launched in 2012.29 The company also released a mobile application in 2013 for iOS and Android to supplement its Web site.30 Foodpanda now is in 39 countries across Africa, Latin America, Middle East, Asia, and Europe.31 According to a company press release, foodpanda “helps restaurants to increase sales through online and mobile, and provides them with constantly evolving technology and analytics.”32 For consumers, it provides them with a platform to order various types of food from many different participating restaurants. Then foodpanda processes the order to the restaurant, who then delivers it to the consumer’s doorstep.

Foodpanda, which partners with more than 22,000 restaurants, received $20 million in funding in early 2014 from investors to help it launch into more than 40 markets.30 Since the company’s launch in 2012, it has received a total of $48 million in funding. One of the markets where foodpanda recently launched is Croatia. The company looks at countries like Croatia as an easy, inexpensive, emerging market to launch a startup, giving it a competitive advantage over its competitors Delivery Hero and Just-Eat. Foodpanda can grow its customer base. However, foodpanda does not have a business relationship with Foursquare, the location-based, check-in service. If GrubHub were to launch into Croatia, it would have this competitive advantage over foodpanda.

Target Market

Launching GrubHub into a foreign market like Croatia has many advantages. First, competitor foodpanda has launched into countries with emerging markets and are relatively inexpensive to build a massive customer base.30 Second, Croatia’s tourism industry is booming. According to a press release from Croatia’s Ministry of Tourism, “Croatian tourism could next year see a double digit increase in the number of British tourists travelling to Croatia, of perhaps 15% compared to [2013] or around 480,000.”33 The British market is a favorable one because Britons do not object to prices, and the timing of its holidays and off-peak travel. Approximately 55% more British tourists are visiting Croatia due to the Internet and on-line services. In 2012, a year before Croatia became a member of the European Union, its summer airport traffic increased in the cities of Dubrovnik, Split, Pula, and Zadar, and the capital city of Zagreb welcomed Qatar Airways.34

SOURCE: Dubrovnik Airport, Pula Airport, Split Airport, Zadar Airport, Zagreb Airport35

A third advantage that Croatia has is its location of public universities in coastal cities and the capital Zagreb—University of Zagreb, University of Pula, University of Split, University of Zadar, and University of Dubrovnik. As mentioned previously, the capital and coastal cities are tourism destinations, so they are crowded in the fall with university students and in the summer with tourists. Also, Zagreb was named the second best European destination in 2014.36

Finally, when it comes to advantages in this emerging market, technology cannot be overlooked. It is critical to focus our promotion efforts in attracting people that use the Internet and who have smartphones. As mentioned in the Technological section, about 64 percent of people in Croatia that are more than 15 years of age use the Internet in 2013.14 This equates to approximately 2.44 million people of the total population of Croatia (4.47 million).1 There are more than 5 million mobile devices in circulation, 21 percent of which are smartphones.17 This equates to about 1 million smartphones in circulation. There are approximately 1.1 million people that use smartphones in Croatia, which is equivalent to 45 percent of the 2.44 million online users. The market share of smartphones is composed of Android (85.32%), iOS (12.62%), and Windows phone (2.06%).20

( SOURCE: Internet users in Croatia, Bosnia and Herzegovina, Bulgaria, and Serbia as a percentage of population 37 )

Marketing plan

Market Entry Strategy

Our market entry strategy will be to assist students in public universities and tourists find local restaurants. At the public universities, international students will benefit since they are unfamiliar with the area and GrubHub language settings can be changed to their native country. While Croatia has more than 100 higher education institutions and many large cities, we are planning our first entrance into the market at the University of Zagreb.38 There are more than 75,000 students enrolled, and the population of the surrounding metropolitan area is more than 1 million. This will allow for a strong first presence, likely providing immediate success, and will begin the process of a larger implementation of GrubHub all around the country. We are looking to benefit both from a financial standpoint through immediate success and from a knowledge standpoint regarding best practices in Croatia. The city of Zagreb will allow us to dive into the market, but will also allow us to operate on a smaller scale followed by vast, immediate implementation throughout the entire Croatian marketplace.

We will need to first build a Croatian centered website that is specific for Zagreb and in Croatian. We will then focus on establishing partnerships with restaurants in the area, focusing of course on those that offer take-out as an option and are typically frequented by college students in the area. Since partnering with the restaurants is going to drive our success, we will have to show them the advantages that GrubHub offers, including data on deliveries and top tier customer service. We will find the correct restaurants through a study to be done in the months prior to entry. As has become commonplace at GrubHub, we will send several employees into Croatia to observe student behavior. We will also attempt to find GrubHub ambassadors at the University who can help us to both spread the word about the new service and survey students regarding which vendors they would like to be part of the GrubHub network. Following some analysis, we can begin negotiations and implementation in Zagreb. Once that venture has proven successful, we will look to invest more in Croatia and use this model of market entry in other cities with large universities, such as the University of Split, located in the second largest city in Croatia and home to about 25,000 college students.38

Product/Service Decisions

GrubHub’s service is fairly straightforward and will not need an enormous amount of adjustment to succeed in the Croatian marketplace. There is even a similar service, Foodpanda, which has already begun operations in the country.

What GrubHub will need to do is twofold. First of all, we will want to offer the restaurants we work with a price that is competitive with Foodpanda. If GrubHub, as a new entity, is overpriced, there is little chance of success against the competition. We will have to ensure that business is sustainable at whatever price point that may be. Secondly, GrubHub will need to continue offering analytics and excellent customer service to its new clients. Both customers and restaurants will need to see a substantial response whenever there is an issue, especially in the primary launch of the service. 24/7 live support will allow us to build trust with the student population and the restaurants they are ordering from. It is likely that GrubHub will want to have one or two community managers on the ground, at least in the beginning stages. These steps will likely allow for a successful launch in Zagreb and will help lead us into a sustainable future in Croatia. In the event that the launch in that city is abysmal, we will be able to leave the Croatian market (or hold off on expansion) with minimal loss.

Distribution Decisions

There will be two main channels of distributing the GrubHub application to our target market in Croatia. The first channel will be through broadband Internet on personal computers. The second channel will be through the mobile Internet on smartphones (Android, iPhone, and Windows platforms). In both distribution channels, we will be targeting users that are in big cities, public universities, and tourists.

Promotion Decisions

It is critical to focus the promotion decisions in Croatia on its high-context culture, which has a pragmatic orientation and a collectivist orientation. Therefore, gaining the trust of our target market will be crucial for them to accept GrubHub. The use of ambassadors, who will act as cultural consultants, will be beneficial in driving our promotion initiatives to work in parallel with its high-context culture. Advertising will primarily be on the college campuses to target students, and at hotels and travel information centers in large cities to target tourists. We will use the ambassadors, student interns, to work with their universities to make GrubHub sponsors for different school events, including new student orientations and pep rallies. These cultural consultants will talk with our participating restaurants and have them setup stands at different events. Flyers will also be distributed on college campuses, restaurants, travel centers, hotels, and at different events at colleges. Since people in Croatia put such a large emphasis on saving money due to its pragmatic orientation,3 GrubHub will implement a discount system, which may appear as discount codes on flyers for a certain percentage off orders, free appetizers, and other similar discounts of that nature. The discount may even total the cost of GrubHub’s cut for one particular order, for referrals and first time customers. This will help to build the customer base and will likely result in a high level of customer retention. We will also reach out to hostels to recommend to tourists to utilize GrubHub in the event that they are ordering in. Though this will not be an overwhelming blitz of advertisement, it will allow GrubHub to grow via word-of-mouth in an atmosphere that is extremely susceptible to that type of advertising, a college campus. Positive word-of-mouth marketing will be a consequence of our promotion activities, and is an effective method in a society that has a collectivist orientation.

In terms of using technology for promotion, search engine optimization will be utilized for Google, which is the primary search engine used in Croatia.15 This will make GrubHub more visible and easier to find when searching for delivery services within Croatia. In addition, advertising will take place on Facebook for our target market, which is the primary social media network in Croatia.39 We can add different incentives for “liking” GrubHub on Facebook, which will help to further promote GrubHub.

Conclusion

GrubHub is the leader of the American food online ordering industry and plans to expand its services globally. The evidence suggests expanding into Croatia as the test target market due to its popularity among European and other tourists, coastal cities with university students, inexpensive and emerging market, and its growing technological environment. GrubHub also has a competitive advantage over other European food online ordering companies due to its new business relationship with Foursquare and its recent merger with Seamless. It is recommended that GrubHub stay ahead of its competition though aggressive mobile and social media promotions. These advertising efforts will lead to positive word-of-mouth marketing throughout our target market, which will build a level of trust and ultimately influence them to accept and use GrubHub to meet their needs.

Really a fantastic job. You did a great job with your background research on very relevant areas. Love your ideas (except circumspect about targeting tourists). Great job (that’s why there are so few comments)

A+

Endnotes

1. Central Intelligence Agency. (n.d.). The World Factbook. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/hr.html on March 10, 2014.

2. BloombergBusinessweek. (2013). GrubHub Seamless Pitches Data Analytics to Restaurants. Retrieved from http://www.businessweek.com/articles/2013-12-19/grubhub-seamless-pitches-data-analytics-to-restaurants on March 8, 2014.

3. Hofstede, G., Jan Hofstede, G., & Minkov, M. (2010). Cultures and Organizations: Software of the Mind. Revised and Expanded 3rd Edition. New York, NY: McGraw-Hill.

4. The Hofstede Centre. (n.d.). [Graph illustration of the Hofstede 6-D Model of Croatia and the United States]. Retrieved from http://geert-hofstede.com/croatia.html on March 4, 2014.

5. Kotabe, M., & Helsen, K. (2010). Global Cultural Environment and Buying Behavior. In Global Marketing Management (pp. 103-137). Hoboken, NJ: John Wiley & Sons, Inc.

6. OECD. (2013). PISA 2012 Results in Focus: What 15-year-olds know and what they can do with what they know. Retrieved from http://www.oecd.org/pisa/keyfindings/pisa-2012-results-overview.pdf on March 9, 2014.

7. European Commission. (February 2006). Europeans and their Languages. Retrieved from http://ec.europa.eu/public_opinion/archives/ebs/ebs_243_en.pdf on March 9, 2014.

8. De Bortoli, M., & Maroto, J. (2001). Colours Across Cultures: Translating Colours in Interactive Marketing Communications. Global Propaganda. Retrieved from http://globalpropaganda.com/articles/TranslatingColours.pdf on March 9, 2014.

9. Frommer’s. (2014). Money in Croatia. Retrieved from http://www.frommers.com/destinations/croatia/622170 on March 9, 2014.

10. Telecompaper. (24 February 2013). Croatia offers HRK 1.5 mln in grants for Wi-Fi hotspots. Retrieved from http://www.telecompaper.com/news/croatia-offers-hrk-15-mln-in-grants-for-wi-fi-hotspots--926812 on March 4, 2014.

11. Telecompaper. (19 April 2013). Croatia to earmark additional resources for broadband. Retrieved from http://www.telecompaper.com/news/croatia-to-earmark-additional-resources-for-broadband--938474 on March 4, 2014.

12. Telecompaper. (20 August 2013). Croatian regulator to award HRK 20 million for broadband. Retrieved from http://www.telecompaper.com/news/croatian-regulator-to-award-hrk-20-million-for-broadband--961901 on March 4, 2014.

13. Telecompaper. (18 March 2013). Croatians send 11.1 percent more SMS messages in 2012. Retrieved from http://www.telecompaper.com/news/croatians-send-111-percent-more-sms-messages-in-2012--931546 on March 4, 2014.

14. Telecompaper. (20 November 2013). Croatian internet penetration reaches 64% in September. Retrieved from http://www.telecompaper.com/news/croatian-internet-penetration-reaches-64-in-september--980920 on March 4, 2014.

15. Telecompaper. (27 September 2013). Only 12 percent of Croatian internet users buy online. Retrieved from http://www.telecompaper.com/news/only-12-percent-of-croatian-internet-users-buy-online--969556 on March 4, 2014.

16. Telecompaper. (3 July 2013). Croatia e-commerce gets tax exemption with EU entry. Retrieved from http://www.telecompaper.com/news/croatia-e-commerce-gets-tax-exemption-with-eu-entry--953264 on March 4, 2014.

17. Telecompaper. (15 February 2013). 45 percent of Croatian online users have a smartphone. Retrieved from http://www.telecompaper.com/news/45-percent-of-croatian-online-users-have-a-smartphone--925294 on March 4, 2014.

18. Telecompaper. (11 October 2013). Smartphone sales up 61 percent in Croatia. Retrieved from http://www.telecompaper.com/news/smartphone-sales-up-61-percent-in-croatia--972556 on March 4, 2014.

19. Telecompaper. (11 November 2013). Croatia to have six times more smartphones by 2020. Retrieved from http://www.telecompaper.com/news/croatia-to-have-six-times-more-smartphones-by-2020--978682 on March 4, 2014.

20. Telecompaper. (27 January 2014). Samsung Galaxy S4 named best mobile phone in Croatia. Retrieved from http://www.telecompaper.com/news/samsung-galaxy-s4-named-best-mobile-phone-in-croatia--992352 on March 4, 2014.

21. GrubHub.com. (2014). GrubHub Inc. Fact Sheet. Retrieved from http://press.grubhub.com/index.php?s=20301 on March 4, 2014.

22. Moscaritolo, A. (13 November 2012). GrubHub ‘Track Your Grub’ Let’s You Keep Tabs on Your Order. PC Magazine. Retrieved from http://www.pcmag.com/article2/0,2817,2412066,00.asp on March 4, 2014.

23. Perez, S. (13 November 2012). With GrubHub’s New Driver-Tracking Feature DeliveryHub, GrubHub Now Alerts Diners About Order Status, Shows Deliveries On A Map. TechCrunch. Retrieved from http://techcrunch.com/2012/11/13/with-grubhubs-new-driver-tracking-feature-deliveryhub-grubhub-now-alerts-diners-about-order-status-shows-deliveries-on-a-map/ on March 9, 2014.

24. Ovide, S. (20 May 2013). GrubHub and Seamless Create Combo Platter. The Wall Street Journal. Retrieved from http://online.wsj.com/news/articles/SB10001424127887324787004578495411888526172 on March 4, 2014.

25. Wagner, K. (30 January 2014). Foursquare Now Lets You Order In Directly From U.S. Restaurants. Mashable. Retrieved from http://mashable.com/2014/01/30/foursquare-grubhub-seamless/ on March 4, 2014.

26. The Miroslav Krleza Institute of Lexicogrpahy. (n.d.). Contemporary Croatia. Retrieved from http://www.croatia.eu/article.php?lang=2&id=24 on March 10, 2014.

27. European Union. (n.d.). Croatia. Retrieved from http://europa.eu/about-eu/countries/member-countries/croatia/index_en.htm on March 10, 2014.

28. European Commission. (n.d.). E-Commerce Directive. Retrieved from http://ec.europa.eu/internal_market/e-commerce/directive/index_en.htm on March 10, 2014.

29. Crunch Base. (n.d.). Foodpanda/hellofood. Retrieved from http://crunchbase.com/company/foodpanda on March 10, 2014.

30. Shu, C. (February 4, 2014). Foodpanda gobbles up $20m in fresh funding to fatten its global pawprint. TechCrunch. Retrieved from http://techcrunch.com/2014/02/04/foodpanda-gobbles-up-20m-in-fresh-funding-to-fatten-its-global-pawprint/ on March 10, 2014.

31. Foodpanda. (n.d.). About us. Retrieved from http://www.foodpanda.com/about on March 10 2014.

32. Foodpanda. (February 6, 2013). Online delivery platform foodpanda ready for global rollout: launch in twelve further countries / Announcing new global managing director Ralf Wenzelof iOS and Android mobile apps in 14 countries. Retrieved from http://press.foodpanda.com/post/44611895496/online-delivery-platform-foodpanda-ready-for-global on March 10, 2014.

33. Republic of Croatia Ministry of Tourism. (November 4, 2013). Tourism minister promotes Croatia at World Travel Market in London. Retrieved from http://www.mint.hr/default.aspx?id=10567 on March 11, 2014.

34. Croatia’s summer traffic is booming in Dubrovnik, Pula, Split and Zadar; Zagreb welcomed Qatar Airways in May. (August 2, 2012). AnnaAero. Retrieved from http://www.anna.aero/2012/08/02/croatias-summer-traffic-is-booming-in-dubrovnik-split-and-zadar/ on March 11, 2014.

35. Croatia Airports Traffic. (2012). AnnaAero. Retrieved from http://www.anna.aero/2012/08/02/croatias-summer-traffic-is-booming-in-dubrovnik-split-and-zadar/ on March 11, 2014.

36. Croatian National Tourist Board. (February 27, 2014). Zagreb named second best European destination. Retrieved from http://croatia.hr/en-GB/Representative-offices/United-States-Canada/27-Feb-2014/Zagreb-named-second-best-European-destination?bmlcMjgxMyxwXDc4MQ%3d%3d on March 11, 2014.

37. World Bank. (10 January 2014). [Graph illustration of the Internet users in Croatia, Bosnia and Herzegovina, Bulgaria, and Serbia as a percentage of population]. Retrieved from http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=it_net_user_p2&hl=en&dl=en&idim=country:HRV:BIH:BGR#!ctype=l&strail=false&bcs=d&nselm=h&met_y=it_net_user_p2&scale_y=lin&ind_y=false&rdim=region&idim=country:HRV:BIH:BGR:SRB&ifdim=region&hl=en_US&dl=en&ind=false on March 4, 2014.

38. Studying in Croatia. (n.d). Types of higher education institutions. Studying in Croatia!. Retrieved from http://www.studyincroatia.hr/studying-in-croatia/croatian-higher-education-system/types-of-higher-education-institutions on March 9, 2014.

39. Passport to Trade 2.0. (2013). Social media guide for Croatia. Retrieved from http://businessculture.org/southern-europe/business-culture-in-croatia/social-media-guide-for-croatia/ on March 9, 2014.

Works Cited

BloombergBusinessweek. (2013). GrubHub Seamless Pitches Data Analytics to Restaurants. Retrieved from http://www.businessweek.com/articles/2013-12-19/grubhub-seamless-pitches-data-analytics-to-restaurants on March 8, 2014.

Central Intelligence Agency. (n.d.). The World Factbook. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/hr.html on March 10, 2014.

Croatia Airports Traffic. (2012). AnnaAero. Retrieved from http://www.anna.aero/2012/08/02/croatias-summer-traffic-is-booming-in-dubrovnik-split-and-zadar/ on March 11, 2014.

Croatian National Tourist Board. (February 27, 2014). Zagreb named second best European destination. Retrieved from http://croatia.hr/en-GB/Representative-offices/United-States-Canada/27-Feb-2014/Zagreb-named-second-best-European-destination?bmlcMjgxMyxwXDc4MQ%3d%3d on March 11, 2014.

Croatia’s summer traffic is booming in Dubrovnik, Pula, Split and Zadar; Zagreb welcomed Qatar Airways in May. (August 2, 2012). AnnaAero. Retrieved from http://www.anna.aero/2012/08/02/croatias-summer-traffic-is-booming-in-dubrovnik-split-and-zadar/ on March 11, 2014.

Crunch Base. (n.d.). Foodpanda/hellofood. Retrieved from http://crunchbase.com/company/foodpanda on March 10, 2014.

De Bortoli, M., & Maroto, J. (2001). Colours Across Cultures: Translating Colours in Interactive Marketing Communications. Global Propaganda. Retrieved from http://globalpropaganda.com/articles/TranslatingColours.pdf on March 9, 2014.

European Commission. (n.d.). E-Commerce Directive. Retrieved from http://ec.europa.eu/internal_market/e-commerce/directive/index_en.htm on March 10, 2014.

European Commission. (February 2006). Europeans and their Languages. Retrieved from http://ec.europa.eu/public_opinion/archives/ebs/ebs_243_en.pdf on March 9, 2014.

European Union. (n.d.). Croatia. Retrieved from http://europa.eu/about-eu/countries/member-countries/croatia/index_en.htm on March 10, 2014.

Foodpanda. (February 6, 2013). Online delivery platform foodpanda ready for global rollout: launch in twelve further countries / Announcing new global managing director Ralf Wenzelof iOS and Android mobile apps in 14 countries. Retrieved from http://press.foodpanda.com/post/44611895496/online-delivery-platform-foodpanda-ready-for-global on March 10, 2014.

Foodpanda. (n.d.). About us. Retrieved from http://www.foodpanda.com/about on March 10 2014.

Frommer’s. (2014). Money in Croatia. Retrieved from http://www.frommers.com/destinations/croatia/622170 on March 9, 2014.

GrubHub.com. (2014). GrubHub Inc. Fact Sheet. Retrieved from http://press.grubhub.com/index.php?s=20301 on March 4, 2014.

Hofstede, G., Jan Hofstede, G., & Minkov, M. (2010). Cultures and Organizations: Software of the Mind. Revised and Expanded 3rd Edition. New York, NY: McGraw-Hill.

Kotabe, M., & Helsen, K. (2010). Global Cultural Environment and Buying Behavior. In Global Marketing Management (pp. 103-137). Hoboken, NJ: John Wiley & Sons, Inc.

Moscaritolo, A. (13 November 2012). GrubHub ‘Track Your Grub’ Let’s You Keep Tabs on Your Order. PC Magazine. Retrieved from http://www.pcmag.com/article2/0,2817,2412066,00.asp on March 4, 2014.

OECD. (2013). PISA 2012 Results in Focus: What 15-year-olds know and what they can do with what they know. Retrieved from http://www.oecd.org/pisa/keyfindings/pisa-2012-results-overview.pdf on March 9, 2014.

Ovide, S. (20 May 2013). GrubHub and Seamless Create Combo Platter. The Wall Street Journal. Retrieved from http://online.wsj.com/news/articles/SB10001424127887324787004578495411888526172 on March 4, 2014.

Passport to Trade 2.0. (2013). Social media guide for Croatia. Retrieved from http://businessculture.org/southern-europe/business-culture-in-croatia/social-media-guide-for-croatia/ on March 9, 2014.

Perez, S. (13 November 2012). With GrubHub’s New Driver-Tracking Feature DeliveryHub, GrubHub Now Alerts Diners About Order Status, Shows Deliveries On A Map. TechCrunch. Retrieved from http://techcrunch.com/2012/11/13/with-grubhubs-new-driver-tracking-feature-deliveryhub-grubhub-now-alerts-diners-about-order-status-shows-deliveries-on-a-map/ on March 9, 2014.

Republic of Croatia Ministry of Tourism. (November 4, 2013). Tourism minister promotes Croatia at World Travel Market in London. Retrieved from http://www.mint.hr/default.aspx?id=10567 on March 11, 2014.

Shu, C. (February 4, 2014). Foodpanda gobbles up $20m in fresh funding to fatten its global pawprint. TechCrunch. Retrieved from http://techcrunch.com/2014/02/04/foodpanda-gobbles-up-20m-in-fresh-funding-to-fatten-its-global-pawprint/ on March 10, 2014.

Studying in Croatia. (n.d). Types of higher education institutions. Studying in Croatia!. Retrieved from http://www.studyincroatia.hr/studying-in-croatia/croatian-higher-education-system/types-of-higher-education-institutions on March 9, 2014.

Telecompaper. (15 February 2013). 45 percent of Croatian online users have a smartphone. Retrieved from http://www.telecompaper.com/news/45-percent-of-croatian-online-users-have-a-smartphone--925294 on March 4, 2014.

Telecompaper. (3 July 2013). Croatia e-commerce gets tax exemption with EU entry. Retrieved from http://www.telecompaper.com/news/croatia-e-commerce-gets-tax-exemption-with-eu-entry--953264 on March 4, 2014.

Telecompaper. (24 February 2013). Croatia offers HRK 1.5 mln in grants for Wi-Fi hotspots. Retrieved from http://www.telecompaper.com/news/croatia-offers-hrk-15-mln-in-grants-for-wi-fi-hotspots--926812 on March 4, 2014.

Telecompaper. (19 April 2013). Croatia to earmark additional resources for broadband. Retrieved from http://www.telecompaper.com/news/croatia-to-earmark-additional-resources-for-broadband--938474 on March 4, 2014.

Telecompaper. (11 November 2013). Croatia to have six times more smartphones by 2020. Retrieved from http://www.telecompaper.com/news/croatia-to-have-six-times-more-smartphones-by-2020--978682 on March 4, 2014.

Telecompaper. (20 November 2013). Croatian internet penetration reaches 64% in September. Retrieved from http://www.telecompaper.com/news/croatian-internet-penetration-reaches-64-in-september--980920 on March 4, 2014.

Telecompaper. (20 August 2013). Croatian regulator to award HRK 20 million for broadband. Retrieved from http://www.telecompaper.com/news/croatian-regulator-to-award-hrk-20-million-for-broadband--961901 on March 4, 2014.

Telecompaper. (18 March 2013). Croatians send 11.1 percent more SMS messages in 2012. Retrieved from http://www.telecompaper.com/news/croatians-send-111-percent-more-sms-messages-in-2012--931546 on March 4, 2014.

Telecompaper. (27 September 2013). Only 12 percent of Croatian internet users buy online. Retrieved from http://www.telecompaper.com/news/only-12-percent-of-croatian-internet-users-buy-online--969556 on March 4, 2014.

Telecompaper. (27 January 2014). Samsung Galaxy S4 named best mobile phone in Croatia. Retrieved from http://www.telecompaper.com/news/samsung-galaxy-s4-named-best-mobile-phone-in-croatia--992352 on March 4, 2014.

Telecompaper. (11 October 2013). Smartphone sales up 61 percent in Croatia. Retrieved from http://www.telecompaper.com/news/smartphone-sales-up-61-percent-in-croatia--972556 on March 4, 2014.

The Hofstede Centre. (n.d.). [Graph illustration of the Hofstede 6-D Model of Croatia and the United States]. Retrieved from http://geert-hofstede.com/croatia.html on March 4, 2014.

The Miroslav Krleza Institute of Lexicogrpahy. (n.d.). Contemporary Croatia. Retrieved from http://www.croatia.eu/article.php?lang=2&id=24 on March 10, 2014.

Wagner, K. (30 January 2014). Foursquare Now Lets You Order In Directly From U.S. Restaurants. Mashable. Retrieved from http://mashable.com/2014/01/30/foursquare-grubhub-seamless/ on March 4, 2014.

World Bank. (10 January 2014). [Graph illustration of the Internet users in Croatia, Bosnia and Herzegovina, Bulgaria, and Serbia as a percentage of population]. Retrieved from http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=it_net_user_p2&hl=en&dl=en&idim=country:HRV:BIH:BGR#!ctype=l&strail=false&bcs=d&nselm=h&met_y=it_net_user_p2&scale_y=lin&ind_y=false&rdim=region&idim=country:HRV:BIH:BGR:SRB&ifdim=region&hl=en_US&dl=en&ind=false on March 4, 2014.

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