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Promotional Plan – Penfolds Bin 707

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Table of Contents Executive Summary Marketing Mix – Current & Future………………………… 2 {text:list-item} {text:list-item} {text:list-item} Environmental Analysis…………………………………. 4 {text:list-item} {text:list-item} {text:list-item} {text:list-item} {text:list-item} Legislations……………………………………………….. 7 Target Market…………………………………………….. 8 {text:list-item} {text:list-item} {text:list-item} {text:list-item} Marketing & Promotional Objectives………. …………. 11 10.

Marketing & Promotional Program…………. ……….. 11 11. Costs/Budget…………………………………………… 15 12. Schedule/Action Plan………………………………….. 16 Implementation……………………………………….. 16 10. 1. Staff……………………………………….. ….. ……………17 10. 2. Networks……………………….. …………….. ………. ……17 Evaluation………………………………………………. 18 Bibliography…………………………………………….. 19 Product Description ‘Product is a key element in the overall marketing offering. Marketing-mix planning begins with formulating an offering that brings value to target customers.

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This offering becomes the basis upon which the company builds profitable relationships with customers (Kotler.

P, Armstrong. G, pg – 218, 2008). ’ 1. 1. Features Penfolds Bin 707 is widely regarded as the ‘benchmark’ Australian Cabernet Sauvignon. The comparative scarcity of Cabernet Sauvignon of the desired standard sets a limit to the amount of Bin 707 made in any one vintage. Bin 707, a multi region blend, is the cabernet equivalent of Grange. Together, the two wines represent the Penfolds red wine style at its most rich and powerful.

Bin 707 seeks to express cabernet in a way that balances flavours derived from concentrated, fully-ripe fruit with equally strong flavours derived from fermentation and maturation for 18 months in new American oak.

This results in a wine of big, sometimes immense, structure, ripe, pronounced tannins, sweet, dark berry and dark chocolate fruit laced with liquorice, and smoky oak that is usually swallowed up by the fruit in the wine’s first few years. (Rare Australian Wine, 2009) The antioxidants in red wines have been shown to provide certain health benefits.

Antioxidants act like warriors, preventing the oxidation process in which reactive particles known as “free radicals” cause damage to healthy cells. For the moderate drinker, drinking one to two glasses of wine daily, the antioxidants in red wine offer some protection against heart disease. (Red Wine and Health, 2008) Marketing Mix – Current & Future 2. 1 Price Kotler. P, and Armstrong. G go on to mention the different approaches in pricing strategies, whether it be market-skimming pricing, market-penetration pricing, product-mix pricing, segment pricing, psychological pricing and so on.

Psychological Pricing is the one chosen for this product, as it targets the high-income earners taking into consideration the psychology of prices and how consumers respond to it. They state that in using psychological pricing, sellers consider the psychology of prices and not simply the economics. They speculate that consumers usually perceive higher-priced products as having higher quality. Penfolds Bin 707 wants to target the higher price points market, differentiating itself with the brand image of a premium quality wine. The Current Price calculated for a single bottle is at € 24. 0 per bottle. This figure is marked in relation to the psychological pricing – high price/ high quality strategy. A dozen bottles are marked as following: Penfolds Bin 707 Cabernet 2004 1. 5L As the German market is currently over-run by a vast quantity of low-priced domestically produced wine, future prices are likely to remain the same or rise by a small percentage to gain a share of the higher price points market, primarily for the purpose of building image; by increasing sales volume in the mid-price range, supporting wines of good to above-average quality. . 2 Promotion ‘The application of marketing communications is through the delivery of the marketing message across a range of different marketing-controlled mechanisms. These are commonly referred to as the promotional mix, which represents seven different marketing communications techniques that can be used to relay the marketing message. These seven include: Advertising, Direct marketing activities, Personal selling, Point of sale/point of purchase, Publicity, Sales promotions, and Public Relations (Dann & Dann, pg – 282, 2004). Penfolds Bin will be using Advertising and Sales Promotion techniques as its primary form of marketing communications. Promotion activities will be targeted at both end consumers and middlemen. A large focus of the promotion campaign will be developing good public relations among customers and the community. (See Table 1) Table 1 – 2. 3 Distribution ‘Distribution is the movement of a product from the point of production to the consumer and point of consumption (Dann & Dann, pg – 215 2004). ’ The first and most preferred wine marketing channel is direct sales to customers.

Wineries favour direct sales because it allows them to collect retail prices for their wines. The most common form of direct sales in Germany is tasting room sales. The second marketing channel consists of direct sales to in-state retailers. An advantage of selling directly to retail outlets is higher margins, self-representation, and the ability to develop a relationship with retail customers. However, selling to retail outlets can be very time consuming because of the need to regularly visit and service these accounts. The third marketing channel involves selling to distributors.

Distributors are necessary for reaching restaurants and wine markets located throughout the nation. Distributors with their vast contacts are also able to place wines in select restaurants and wine shops. Dann & Dann (pg – 216, 2004) detail in Introduction to Marketing, how essential channel distribution is as they involve the process of getting products to the consumers. Channels of distribution refer to all those processes and people involved in the timely and efficient distribution of products. It is for these reasonswhy the three marketing channels were chosen.

Environmental Analysis Germany is the economic heart of Europe and has its finger on the pulse of the Western economy, where tradition and modern values merge. The attractions of “Marketplace Germany” are underpinned by low inflation, a host of well-known companies and brands, and an extremely successful economic track-record. The exchange of goods with the world’s third largest economy provides Australian companies with direct access to future-oriented sectors and key markets (Schenker, 2008). 3. 1 Socio/Cultural ‘Different cultures possess different values, rules, family structures, symbols and languages.

Individual cultures also behave differently because of the attitude and beliefs they hold about time, the future, right and wrong, authority figures, family obligation, tolerance of personal differences and mobility between social classes (McColl-Kennedy, J. R. & Kiel, G. C. pg – 636, 2000). ’ Germans have a reputation for being industrious, thrifty, and orderly. They have a strong sense of regional pride, a fact that the federal system of government recognizes and accommodates. Most Germans have a strong classical education because of the nation’s rich heritage in music, history and art.

The language spoken in Germany is predominantly German; however various dialects have a strong influence in most areas. English is widely understood and many Germans from the former East Germany speak Russian. Cultural relations between Australia and Germany go back a long way, Germans being among the first European settlers in Australia. Numerous societies, many of which provide a point of contact for groups of visitors from Germany, have been set up by ethnic Germans and have become well established over the years (Country Reports, 2009). . 2 Technological Germany is also known as one of the most affluent countries in the world, not to mention it is also one of the very few technological powers among the world’s nations. Due to the high standards of living, the existence of a progressive social security system and the many scientific and technological accomplishments of Germany, its economy have grown significantly and in now known as the third largest economy in the world. (Country Reports, 2009) 3. 3 Political/Economic

Kotler, P ( pg- 234, 2008) states in Principles of Marketing how a country’s economy reflects its industrial base – where its people derive employment and income – and hence it is important to have an understanding of the industrial base of a given country. The four different types of economic structures he mentions are: Subsistence economies, Raw material exporting economies, Industrialising economies, and Industrial economies. Kotler reveals which of the structures offer the most opportunities for trade, with subsistence economies falling lowest on the scale for trade opportunities, and industrial economies ranking the highest. The large and varied manufacturing activities of these industrial nations and their sizeable middle class make them rich markets for all sorts of goods (McColl-Kennedy, J. R. & Kiel, G. C. pg – 638, 2000). ’ From the information provided we can gather that Germany, as the world’s third biggest economy and the second biggest exporter after the USA, is a major industrial economy within European Union, which has ongoing moves towards increasing integration/expansion. A number of the key economic centres include Frankfurt, Hamburg, Munich, Berlin, Stuttgart and the Ruhr region.

Key economic indicators and statistics for 2009: GDP – AUD $ 4,195. 13 billion GDP per capita – AUD $ 51,085. 05 Real GDP growth – 1. 3 per cent Inflation – 2. 8 per cent (AusTrade, 5 Aug 2009) 3. 4 Legal/Ethical The strict environmental specifications in Germany are becoming more numerous every year. The basis for the environmental specifications is a Federal Act on the prevention of harmful effects on the environment caused by air pollution, noise, vibration and similar phenomena. The areas covered by environmental provisions and laws run from waste and noise through emissions and water to dangerous goods.

Alongside EU competition law, national rules also exist to ensure functioning and sustainable competition. In Germany, these instruments are the Act against Restraints on Competition – sometimes known simply as the Cartel Act and the Unfair Trade Practices Law. The Act against Restraints on Competition includes provisions on merger control, anti-cartel and control of abusive practices, while the Unfair Trade Practices Law outlaws practices such as the belittlement and disparagement of a rival’s goods, activities or services. (European Commission, 2008) 3. 5 Competitive & Natural Trends

The German wine market is very competitive. While Germany has been importing a lot of wine, Italy, France and Spain are the top three suppliers to Germany account for approximately 80% of the market share of wine imports. There are currently approx. 200 Australian wineries represented by more than 45 importers in Germany. Feedback from the market suggests that there are limited opportunities for Australian Wineries waiting to enter the local market. (AusTrade, 2009) Legislations The European Union developed a complex regulatory system regarding to wine, which affects third countries.

The regulatory framework on the produce and marketing of wine is set out in Regulation (EC) 1493/1999 (Department of Foreign Exchange and Trade, 2009) 4. 1 Industry Standards German wine standards are governed by European Union (EU) regulations for imports. Wine exports to the EU require a VI1 certificate. Since the implementation for the EU single market policy, imports from listed third countries (non-EU countries such as Australia) are permissible only at the external borders of the EU and this only at certain points of entry (including seaports Bremerhaven, Hamburg and Frankfurt airport) (Wine Australia Magazine. 008). 4. 2 Trade Policy Bilateral trade links between Australia and Germany are substantial, but heavily in Germany’s favour. In 2008, total two-way merchandise trade was valued at over AU$13. 4 billion, of which AU$11. 4 billion were imports from Germany. Australia’s merchandise exports to Germany in 2008 rose over the year to AU$2. 1 billion. Alcoholic beverages exports peaked at AU$72 million (Department of Foreign Exchange and Trade, 2009). 4. 3 Tariffs Tariff is based on the Harmonized System. Most duties are ad valorem (%), based on the WTO Valuation Code (approximately CIF value).

A Common External Tariff (CET) is applicable to other countries (including Australia). (Department of Foreign Exchange and Trade, 2009) 4. 4 Other Regulation 19 applies to wine sold in Australia, imported into Australia, or exported from Australia. It requires the label on wines sourced from multiple countries to declare the presence of material from each of those countries, with the relevant proportions from each country listed in descending order. There is no minimum “foreign” component that is exempted from this requirement.

Furthermore, the operation of Regulation 21 is such that once more than 15% of a foreign wine is blended with Australian product the resulting blend can no longer be described by one or more geographical indications. A blended wine which carries an Australian Geographical Indication must include at least 85% fruit from that region (Wine Australia Magazine, 2008). With this in mind, generalization of target consumers will be avoided. And all segmentation within the market will be conducive to the German market as opposed to Australia’s market.

The proposed brand of wine will be targeting consumers who are wealthy, college-educated baby boomers. These ideal customers are highly wine-educated, enjoy dining out, and regularly entertain friends or business associates. These consumers will have a household income of $100,000 and over, within the age group of 40 – 65. The model winery’s second target market consists of various business groups; the first being wholesale distributors. Distributors are responsible for selling wine to premier restaurants and wine shops located throughout the nation.

The second targeted business group is in-state restaurant managers and sommeliers. The winery is looking for gourmet restaurants that carry a variety of premium wines. The final business group the winery is targeting is in state wine shop owners. The winery is looking for specialty wine shops that focus on carrying premium wine. 5. 1 Traditions Most aspects of German living and working are defined and regulated by structures. This is seen through laws, rules and procedures, which are evident in all economic, political and even social spheres.

Germany’s culture was developed by major intellectual and popular currents in Europe from both the secular and religious sectors. German culture also rose before the climax of Germany as a nation-state and started to gain recognition of its own. This is why German traditions are usually linked with the general European high culture. (Country Reports, 2009) 5. 2 Culture /Influences Culture in Germany represents the traditional heritage of Germany in the field of literature, music, arts, cinematography, sports, cuisines etc. Most Germans have a strong classical education because of the nation’s rich eritage in music, history and art. The language spoken in Germany is predominantly German; however various dialects have a strong influence in most areas. English is widely understood and many Germans from the former East Germany speak Russian. Cultural relations between Australia and Germany go back a long way, with Germans being among the first European settlers in Australia. (Country Reports, 2009) A big part of German culture is classical music, being responsible for only the finest composers and musicians known all over the world.

Germany is responsible for legendary artists like Ludvig Van Beethoven, Johann Sebastian Bach, and Johannes Brahms. Germany is also recognized as the fifth largest music market in the entire world. In the field of literature the country has world renowned poets and writers such as – Lessing, Goethe, Schiller, Kleist, Hoffmann, Brecht and Schmidt. These comprise fairy tales collections by Jacob and Wilhelm Grimm. During the middle ages the Bible was also translated in Germany, and the language used in the translation was lately started knowing as the High German language.

In the field of architectural excellence Germany has always led with beautifully crafted buildings. It has some minor Roman and Carolingian monuments, but it is with the Romanesque and Gothic that German building design really came to the fore. Germany culture is also enriched with religious influences. The Culture and Tradition Germany is developed on Catholic, Protestant, Jewish and Minor Muslim religions. All of these influences combined over centuries have formed what is known today as Germany culture. (Country Reports, 2009) 5. 3 Behaviour Germans are strongly individualistic.

They tend to follow strict protocol and are often uneasy with uncertainty, ambiguity and unquantifiable risk. This has become manifest in both social and business spheres. Socially, Germans lean towards conservatism and conformism. Germans generally do not tend to welcome strangers with open arms or invite them into their homes right away. They usually prefer to extend official invitations and to arrange for a fixed date or appointment. Spontaneity is not one of the Germans’ strong suits. Marketing & Promotional Objectives Earn brand recognition and image as a premium producer of Australian Vintage wine.

Establish 30% minimum gross profit margins (retail price less wholesale cost) from inception. Achieve a profitable return on investment within three years. Marketing & Promotional Program Activities that will commence the promotion of Penfolds Bin 707 Cabernet Sauvignon will adhere to the company’s objectives and goals, & will be adjusted annually according to the sales revenue and percentage of funding allocated. The basic slogan of these messages given to the public will be: “_A glass of good wine… come drink it together. _ We’ll know each other better. Year 1 campaign is projected as followed:

Print and broadcast ads: Newspaper articles, magazines, radio The purpose of this action is to take advantage of the different elements related to the wine production and bottling and offer the tourists some itineraries combined with gastronomy and knowledge about wine Packaging Inserts: Special deals and offers will be included with a select number of bottles purchased within the first couple months of launching. Issuing a brochure: Penfold Bin’s wine guide will be an effort to promote wine, particularly through the reinforcement of the cultural and social aspects of consumption.

Include information in directories: Deutschland Directories is a high traffic, low cost directory that is used by most organization across Germany. Euroseek is another that is used across Europe, easy to set up and not too costly to obtain. Penfolds Bin will be able to benefit through brand awareness. Information leaflet: An effort to inform consumers of the quality, the correlation between wine and nutrition, and the elements which will permit them to evaluate the art and the enjoyment of drinking wine.

Billboards: Meant to catch an individual’s attention, provide information and leave a favourable or memorable impression. Rupaon Billboards will be employed to cover all aspects of billboard advertising. Display signs: Widely used for indoor and outdoor information displays and advertising. These will be located in shopping centres, restaurants, wine shops.. etc. Point-of-purchase displays: Used to grab a prospective customer’s attention as they are contemplating making a purchase.

These displays will be placed strategically near competitors and wine shops to grab the attention of consumers already knowledgeable about wine, who will be attracted by product differentiation. Premium & gifts: Offered as an incentive to generate brand awareness and consumer interest. Gifts and premiums will include items such as bottle openers, corkscrews, bottle coolers, wine stoppers, wine carry bags & accessories etc. Fairs and Trade Shows**: Germany has countrywide Exhibitions and Trade shows all throughout the year.

Some of which are: {text:list-item} {text:list-item} {text:list-item} {text:list-item} {text:list-item} {text:list-item} Demonstrations (Wine Tastings): The Wurstmarkt, in Bad Duerkheim near Heidelberg, is the largest wine festival in the world. Visitors sample wine at small, traditional wine stands, with wooden tables and benches, ride a ferris wheel and other fairground rides. Dates for Frankfurt’s Wine Festival are August 29 – September 7. Visitors sample more than 600 wines and sparkling wines from the region along Grosse Bockheimer Strasse.

Continuity Programs (Wine-clubs): Germany already has a saturated market with ‘_German Wine Society, VDP, Dund Deutscher Oenologen Wine Tasting’ _dominating the wine-club sector. A low-profile program will be set up in the beginning, to become more of a high-profile system once brand recognition is in place. Research will be conducted before, during and after the initiation of Year 1’s campaign. The Promotional and Advertising analysts will then determine a new campaign to retain existing consumers while looking into a different segment of demographics to promote the product to.

Costs/Budget The 2009-2010 budget and forward estimates have been prepared to ensure the corporation has sufficient financial resources to enable it to perform its functions and exercise its powers for the purpose of achieving the objectives specified. The total estimated revenue for 2009-2010 is AUD$1. 8 million, 15% of which will be going into promotional and advertising activities for the first year (AUD$270,000). For the next year, the total estimated revenue is predicted to increase by 11% bringing it up to AUD$1. 99 million in total.

Estimated costs of promotion & advertising is going to drop to 10% (AUD$198,800) as brand recognition and image has already been established, further promotional will be aimed at retaining existing customers. Schedule/Action Plan Implementation ‘The first step in implementing the plan is to acquire the necessary financial and human resources. Personnel must be organized so that they can properly execute the plan. The assignments of tasks and the scheduling of activities and deadlines must be undertaken so that the plan can be carried out on a day-to-day basis (McColl-Kennedy, J.

R. , Kiel, G. C. , pg – 758, 2000). ’ Penfolds Bin will hire a Marketing firm called Semaphore Inc. based in Germany to handle all aspects to do with Promotional activities, Advertising, Marketing, Public Relations, Staff Recruitment & Management. A listing of staff currently working in Semaphore who will be directly handling the marketing affairs of Penfolds Bin are: *Cynthia Gilliam* | President *Roc Jackson* | Creative Director *Kathy Shuler-Cousson* | Senior Art Director *Cindy Wade* | Media/Public Relations Director *Todd Hudak* | Advertising Analyst Frankie Bridges* | Promotional Analyst *Suzanne Elhosary* | Client Services *Allen Bardin* | Front Desk & Support Services Other staff such as sales team will be hired by Semaphore as needed. (Semaphore, 2009) Evaluation Baines, Fill & Page (2008) cite in Marketing, the different aspects of measuring the success of organizational marketing efforts. There are many metrics to evaluate the process, such as; Profit/Profitability, Sales/Value, Gross margin, Awareness, Market Share Number of products, Relative Price, Consumer satisfaction and so on.

PenFolds Bin will be relying on two main areas to determine and evaluate the effectiveness of this Marketing Plan. By the end of the year, the Chief Financial Officer who will integrate both financial and non-financial marketing metrics will present the reports to the Board. From the information gathered, the Board will then decide on appropriate measures to take and adjust further campaigns accordingly. An evaluation will be made at the end of each year to establish whether or not there has been a progression or decline in levels of profitability. As this will be the starting year, low margins will be anticipated.

However, for the years following, we will use this as a measure of the success of the advertising and sales promotion campaign and adjust further campaigns accordingly. ‘Brand awareness is a very useful metric for determining whether the marketing communications activity is entering consumers’ consciousness more generally. The more a target market recognizes a brand, the more likely they are to become purchasers of it (Baines, Fill & Page, pg – 334, 2008). ’ As this product will rely on consumer’s tastes preferences, measuring brand awareness will be a major part in determining the success or failure of this launch.

If the promotional campaign intended for this year doesn’t produce the amount of awareness expected, further attention into sales promotion, personal selling & public relations will be given. Bibliography AusTrade (2009) Germany Profile – Current Business Situations http://www. austrade. gov. au/default. aspx? FolderID=2247 Accessed on 16/09/09 AusTrade (2009) Germany Profile – Market trends http://www. austrade. gov. au/default. aspx? FolderID=2249 Accessed on 17/09/09 Country Reports (Sept. 17. 2009) Germany – Population Demographics http://countryreports. org/people/overview. aspx?

Countryname=&countryId=91 Accessed on 17/09/09 Dann, S. J. , Dann, S. , (pg – 282, 2004) Introduction to Marketing John Wiley & Sons Australia, Ltd. Accessed on 09/10/09 Dann, S. J. , Dann, S. , (pg 215 – 216, 2004) Introduction to Marketing John Wiley & Sons Australia, Ltd. Accessed on 09/10/09 Department of Foreign Affairs and Trade (2009) Bilateral agreements http://www. dfat. gov. au/geo/germany/germany_brief. html Accessed on 17/09/09 Department of Foreign Affairs and Trade (2009) Australian Trade and Investment strategies http://www. dfat. gov. au/geo/germany/germany_brief. html

Accessed on 17/09/09 Department of Foreign Affairs and Trade (2009) Foreign Policy http://www. dfat. gov. au/geo/germany/germany_brief. html Accessed on 17/09/09 European Commission (2008) Meeting environmental rules – Germany/Legal requirements http://ec. europa. eu/youreurope/business/doing-business-responsibly/meeting-environmental-rules/germany/index_en. htm Accessed on 17/09/09 Baines, Fill, Page (pg 174, 2008) Marketing Strategy Oxford University Press Inc. , New York Accessed on 10/10/09 Kotler, P. , Armstrong, G. , (pg- 234, 2008) Principles of Marketing 12 Edi, Pearson Education, Inc. Upper Saddle River, New Jersey Accessed on 09/10/09 Kotler, P. , Armstrong, G. , (pg- 218, 2008) Principles of Marketing 12 Edi, Pearson Education, Inc. , Upper Saddle River, New Jersey Accessed on 09/10/09 Kotler, P. , Armstrong, G. , (pg- 320, 2008) Principles of Marketing 12 Edi, Pearson Education, Inc. , Upper Saddle River, New Jersey Accessed on 09/10/09 Kotler, P. , Armstrong, G. , (pg- 64, 2008) Principles of Marketing 12 Edi, Pearson Education, Inc. , Upper Saddle River, New Jersey Accessed on 09/10/09 Maps of the World (2008) Germany, cultural influences ttp://www. mapsofworld. com/germany/germany-country-and-germany-states/germany-culture/ Accessed on 23/09/09 McColl-Kennedy, J. R. , Kiel, G. C. , (pg – 636, 2000) Marketing, A strategic Approach Nelson Thomson Learning, Melbourne – Australia Accessed on 09/10/09 McColl-Kennedy, J. R. , Kiel, G. C. , (pg – 638, 2000) Marketing, A strategic Approach Nelson Thomson Learning, Melbourne – Australia Accessed on 09/10/09 McColl-Kennedy, J. R. , Kiel, G. C. , (pg – 758, 2000) Marketing, A strategic Approach Nelson Thomson Learning, Melbourne – Australia Accessed on 09/10/09

Nillumbik Cellars (2009) Penfolds Bin 707 Cabernet 2004 1. 5L MAGNUM http://www. penfoldsgrangeforsale. com/forsale. php? Penfolds=1389 Accessed on 16/09/09 Rare Australian Wine (2009) About Penfolds – Bin 707 Cabernet Sauvignon http://www. rareaustralianwine. com/history/bin707. asp Accessed on 16/09/09 Red Wine and Health (2008) Heart Disease, Cholesterol, Blood Pressure and Stroke http://www. red-wine-and-health. com/articles/heart-disease-protection/index. php – Accessed on 16/09/09 Schenker – Stinnes Logistics (2008) “Herzlich willkommen”– Welcome to Germany http://www. chenker. com. au/services/specialoffer/brochure. pdf? ID=cb0ffbfc99ce7a55ede8fcb1df083a0b Accessed on 16/09/09 Wine Australia Magazine (2008) Industry News/InternationalReports http://www. wineaustralia. com/Australia/LinkClick. aspx? link=Publications%2FWineAustraliaMagazine%2FWAM+Feb+2008. pdf&tabid=327&mid=9041 Accessed on 17/09/09 Wine Australia Magazine (2008) Wine Sector Analysis http://www. wineaustralia. com/Australia/LinkClick. aspx? link=Publications%2FWineAustraliaMagazine%2FWAM+Feb+2008. pdf&tabid=327&mid=9041 Accessed on 17/09/09

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