the marketing concept - what it is and what it is not_revised
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Franklin S
ouston
The Marketing Concept:
What
It
Is and What
It Is
Not
The marketing concept h as been m isunderstood and m isused o ver th e years . It
is
n o t o b s o l e t e n o r is it
the op t imal manager ia l approach to marke t ing . The marke t ing concep t
is
res ta ted in a way tha t more
clearly sh ow s wha t it
is
and what i t
is
not.
The Marketin8 Concept is so ubiquitous in the mar-
keting classroom that the naive student of marketing
is generally led to belleve that finns who fail to em-
ploy this philosophy are business criminals.
Iolson (1978. p. RI
Is is not time to discard the marketing concept ?
Sachs and Benson (1978. p. 74
F
R years the marketing concept has been so her-
alded by marketing academics and practitioners that
its acceptance as the optimal marketing management
philosophy is almo st universal. Infrequ ently articles
have appeared which have critically examined some
aspect of it but their impact on the marketing com-
munity has been slight. The following discussion is
an
examination of the marketing concept and
a
review
of both new and previously stated questions about it.
consistent statement is made as to what the mar-
keting concept is and is
not,
the conditions under which
the marketing concept is an attractive meaningful
managerial philosophy are expressed. and the rele-
vance of the sales and production concepts is exam-
Franklin S. Houston is
an
Associate Professor of Marketing at the
Uni
versity
of
Alabama. The author would like to acknowledge the support
and contributions of E. H Bonfield of Rider College. Pat Rudolph, and,
especially. J. Thomas Lindley of the University of Alabama in the writ-
ing of this article.
ournal
of Marketing
Vol.
50 (April
19861. 81 87.
ined. This examination concludes with the recognition
that the marketing concept has suffered in two ways:
first it has been established as the optim al manage-
ment philosophy when it is not necessarily so in all
instances and second. w e can see many examples of
poor marketing practice that have been adopted in the
name of the marketing concept. It is time that we
re-
learn the marketing concept.
The efinition of
The marketing concept has been described by differ-
ent authors as
corporate state of mind that insists on the integra-
tion and coordination of all of the marketing func-
tions which, in Nm, are melded with other corporate
functions, lor the basic objective of producing max-
imum long-range corporate profits (Felton 1959,
p.
55 .
The external consumer orientation as contrasted
to internal preoccupation and orientation around the
production function: profit goals as an alternative to
sales volume goals; and complete integration of
organizat~onaland operational effon (Konopa
and Calabro 1971, p. 9).
While customer focus profits and integration of
organizational efforts
are
frequently discussed when
the marketing concept is described the term has be-
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come synonymous with having a customer orienta-
Few, if any, of these organizations come into being
tion.
through
altruism
that is, organizations do not come
The marketing concept means that an organization
aims
all
its efforts at satisfying
its
customers-at a
profit (McCarthy and Perreault 1984, p. 35).
The marketing concept holds
that the
key to
achieving organizational goals consists of de-
termining the needs and wants of target markets.
(Kotler 1980, p. 22).
The
marketing concept calls for most of
the ef-
fort to
be
spent on discovering the wants of a target
audience and then creating the goods and services to
satisfy them (Kotler and Zaltrnan 1971, p. 5).
The Origin
of
Keith's article (1960 ) on the marketing conc ept is one
of the earliest and most popular. It is a descriptive
article illustrating the adoption of the marketing con-
cept in an applied setting. The intuitive appeal of the
concept and the illustration of its use in practice played
an important role in its acceptance.'
In the article, Keith describes the Pillsbury Com-
pany's evolution through three managerial phases, fi-
nally reaching what he calls a marketing confxol phase.
His description suggests that movement from the pro-
duction through the sales and later through the mar-
keting phase has been an evolutionary process which
left the organization a strong er entity. Th e implication
for the reader is that this evolutionary process is the
correct one for all organizations. The goal of any or-
ganization intending to be a viable entity is a mar-
keting dominated perspective.
The Why
o f .
Knowing the customer and satisfying him /her has be-
come the shibboleth of the marketing community since
Keith's time, yet the marketing concept has not been
subjected to formal scrutiny. What follows is an at-
tempt to assess the conditions under which the mar-
keting concept offers the proper guidance to the mar-
keter and the conditions under which the marketer
should not follow its prescription.
In acomm ercial venture, the ultimate goal is some
form of profit achievement, whether that be described
as profit maximization or the attainment of some sat-
isfactory profitability (cf. Ackoff 1970). Similarly, a
nonprofit group will have a goal or set of goals which
defines the organization's reason for ex i ~ t i n g .~
'One
bit
of evidence as
to
the article s significanceis that it
appears
in tw separate collections purponing
to
contain seminal
works
in
marketing: Classics
in
Morkering
(Walten and
Robin
1978)
and M o r
kering Classics (Enis and Cox
1981).
'The following
discussion
describes the
marketer-to-be
or on who
represents an organization. Clearly.
the
entity could
be
a
single penon
as
well.
into being to achieve the goals of a nonmember con-
stituency. Instead, it is the set of objectives defined
by the membership that guides the organization.
The initiators of a commercial venture do so to
satisfy their own needs. The initiators of public pro-
grams, such as an infant immunization program or a
myriad of other public policy efforts, do so for the
benefit of the citizens of that political body. It is the
goals of the membership which define the organiza-
tion's purpose.3
Some organizations are self-sufficient; the satis-
faction of the organizational needs do not depend on
nonmembers (e.g., a bridge club). Many, however,
depend on the behavior of nonmembers for the at-
tainment of the organization's satisfaction. To the ex-
tent that the organization relies on exchange as the
means of obtaining compliance with the organiza-
tion's needs, we describe that organization as engag-
ing in marketing (cf. Bagozzi 1975, Kotler 1972).
One source of marketing expenditure for an or-
ganization is the time, effort, and financial expense
of gathering information about present or prospective
exchange partners. I f as the marketing concept sug-
gests, we a re to strive to understand exc hang e partners
and tailor offerings for them, information is a nec-
essary preparatory step to developing that proper blend
Borden (1964) calls the marketing mix. He notes that
each mix is necessarily unique.
Expenditures, financial and otherwise, resulting
from research into who might engage in exchanges
with the organization o r what those exchan ge partners
need and/or want, represent an increase in the value
given
up by an organization in any exchange. This
added expenditure furthers the organization's objec-
tives only to the extent that this added information
increases the value received in the exchange or iden-
tifies ways in which the organization can reduce the
value it gives up in the exchange.
The value received in exchange is increased by
creating more individual exchanges and by getting more
value from each exchange. The value given up in an
exchange is reduced by expending less effort in m&-
ing those exchanges and by giving up less in the ex-
change. T o restate this, an organization
henefits from
additional information about its exchange partners
through:
more exchanges,
an increase in value received from each ex-
change,
'Some argankations change their objectives
e.g.,
the
March
of
Dimes) or
lose
s i ~ h t f their
original
purpose see Houston
and Ho
mans
1977
for
a discussion
of this).
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less effort needed for each exchange. and
that would have done a better job of satisfying the
less value given up in each exchange.
Understanding when these occur allows us to recog-
nize when the organization's objectives are furthered
by added research into current or potential exchange
.
More exchanges can occur when there are unsatis-
fied exchange partners remaining. They
c nnor
occur
when all potential exchange partners are satiated, nd
they cannot occur when the organization has nothing
valued by the potential exchange partner to offer in
such an exchange.
Illustrations of situations where added information
is not needed
re
not new to this discussion. The tra-
ditional example of a good for which there is no m ar-
ket i s a ir , s ince people have e n ~ u g h . ~s examples of
offerings that cannot he made available, we can in-
clude products that re conceivable but not feasible-
the transportation industry would l i e a modestly priced
teleportation system, but such a system is not avail-
able outside of science fiction. Products which are
temporarily or permanently exhausted-certain natu-
ral resources, like water and a variety of energy re-
lated products-are limited in supply and periodically
become unavailable; certain species of animals no
longer exist.
In addition to these examples where a product can-
not be procured because of its general lack of avail-
ability, there are also instances where the specific or-
ganization under study cannot or will not make the
product available. An example would be the restau-
rant that refuses to stock and serve certain less ex-
pensive wines. In general, there are many examples
of potential exchanges that could occur but one of the
potential exchange partners cannot or will not engage
in that exchange, nd this is known without the ben-
efit of additional research.
To
be
assured that the organization will obtain the
greatest value possible in any single exchange,
it
is
necessary to understand exactly what the potential ex-
change partner needs or wants, nd to know exactly
what the exchange partner would be willing to offer
to consummate that exchange. Without these condi-
tions. the organization can typically assume that they
could have negotiated
an exchange under d ifferent terms
1A fifth sinration that is not developed hem is the role information
plays in identifying those exchanges which should be
avoided
An
entity might spend resources and decide not lo engag e in an exch ange,
based on thc information received.
Here
there would be
a
net loss
in value. yet its position is superior
t
the entity s pasition had
t
engaged
in the exchange.
Clearly.
this remark
c n
lead 10
a
lengthy didiseuioion
of
the sale oF
compressed air. its constituents, products to
clean
it. and the need for
mechanisms to help some people use t properly. It does not serve
our
purpose
to explore these avenues. Most of
us
find air to
he
freely
available
organization's goals. Further, such exchanges can only
be made under conditions that allow the organization
to negotiate and consummate exchanges uniquely. For
those cases where an organization negotiates with more
than one exchange partner at a time, and the organi-
zation makes a single offering available to all mem-
bers of that gtoup, the usefulness of the information
received about any single exchange partner is in-
versely related to the number of individual exchange
partners in each group with which the organization
negotiates. urther, if fo r som e reason one or both
of the exchange partners is prevented from negotiating
and/or adjusting the terms of an exchange, the infor-
mation cannot
be
used to further the organization's
goals.
Illustrations of these conditions under which in-
formation loses value are straightfonvard and com-
monplace. Much of retail marketing in the above-
ground economy consists of marketers interacting with
groups of exchange partners, and the usefulness of in-
formation about a single ind ividual is inversely related
to the size of the market segment of which he/she is
a member. In a society where marketers are free to
vary their product offerings, more knowledge is better
if that knowledge is free, but since gaining and re-
taining knowledge can be expensive for an organi-
zation, the information must be assessed as to value.
In a society where marketers are unable to vary their
offerings, such information holds no value: such an
instance would be the butcher in Poland who is not
able to vary the price of his/her me at. Ln the U nited
States, milk and liquor prices are often bounded in
some manner.
The mirror image of obtaining greater value in an
exchange is the giving up of value in that same ex-
change. Therefore, briefly, the added information from
investigating a single, specific potential exchange
panner loses its value to the degree that terms of ex-
change must be negotiated with groups of exchange
partners, and to the degree that restrictions are placed
on what can be offered in exchange.
Finally, added information can be used to reduce
the organization's effort in making exchanges. This
value is directly related to the effort required to make
exchanges. In the extreme, if finding exchange part-
ners and consummating exchanges is effortless, such
information holds no value.
Several impnaot
caveats
must e inserted. First. this statemcnt
holds if all other conditions are constant. That is, in comparing a
smaller with
a
l a r p group. the statistical characteristics of the dis-
tribution of the offerings made by individuals in each emup must be
identical. Second. t is important to recognize that the usefulness of
the total set of information about the individuals in a group is directly
related to the s i x o f that gmup, though generally
t
can
h
assumed
that additional amounts
of
information are of decreasing
value
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A wide variety of circumstances creates situations
where exchange partners seek out a marketer. leaving
the marketer with no need to pursue the custom er. For
example, when product offerings are highly desired
but in limited supply, there is little incentive for the
marketer to seek out his/her customers. This is illus-
trated by most government services. Liquor monopo-
lies in various states also illustrate this.
To summarize, the following briefly restates the
identified conditions under which gaining
ddition l
inform tion about exchange partners
hol s
no v lue
to an organization:
Exchange partners are satiated
desired offering is not to be made available.
The value of incremental bits of information
about individuals who are members of groups
of exchange partners will not exceed the value
of gathering that information.
The organization or all of its exchange partners
re restricted from varying and/or negotiating
what they will offer.
Imposing Product Related Goals
o n .
The
why
of the marketing concept ties directly to the
ability of the organization to meet its own needs. In
fact, if we were to ask the question asked of every
introductory marketing student, Wh ose needs com e
first?, the answe r
should be the marketer's
.
. .
It is the organiza tion's nee ds that are served by learn-
ing about exchange partners and tailoring product of-
ferings to their needs, whether these needs are finan-
cial profits or some other nonfinancial goal.
Hirschman (1 983) recognized that producers in the
world of art and ideology often have personal goals
which are not satisfied by commercial success. These
goals stem from a desire to be recognized by one's
peers or from some internal sense of accomplishment.
As a result, she states
.
. that the marketing con-
cept-as a norm ative framework-is not app licab le
to two broad classes of producers [artists and ideol-
ogists] because of personal values and social norms
that characterize the production process (p. 46 ).
Hirschman proposes that marketers adopt a modified
version of the marketing concept that accommodates
these producers.
Being a marketer is a role, and marketers, like other
people, can y mo re than one role at a time. W hen the
roles of marketer and producer are vested in the same
person, it is not unusual to se e conflicting goa ls. Pro-
ducers, whether they re widget makers, bus drivers,
assembly line workers, marketing professors, artists,
or ideologists, h ave product related constraints as part
of their need set: that is, they often take pride in their
work, holding that work up to the standards set by
colleagues or to internally held standards. On some
occasions this pride of production conflicts with the
product design that would be appropriate if one were
serving the marketer's set of needs exclusive of these
product related constraints. In cases where the most
desirable product design conflicts with the producer's
values or with the producer's desire to meet the stan-
dards set by som e alternative market (e.g ., peers within
the profession), the marketer must incorporate these
product design standards into his/her set of goals.
Certain organizations will not only have product
standards that are integral to the mem bership's set of
needs but will have a specific, fixed product form as
part of its need set.
A
subset of these is the class of
producers that has adoption of a fixed, given product
as its reason for being. T his includes religious leaders
who seek to have their own religious tenets accepted
and would not be willing to modify them to achieve
greater market acceptance. Many artists and ideolo-
gists fall into this categ ory, and these artists and ideol-
ogists are the proselytizers who achieve their objec-
tives by having the markets accept
their
unique
offerings. Included here re artists who have their own
style or vision and achieve success in their own eyes
by having their artistic offering accepted by peers or
by the marketplace. Similarly, some ideologists achieve
success only by having their concepts adopted (see
Dixon 1978).
A
second class of marketer who cannot design the
product offering as a result of studying exch ange part-
ners is the marketer w ho c nnot redesign the product.
This is an important case because it is a very common
situation: very few product offerings are custom de-
signed, and the salesperson is typically given a prod-
uct to sell and cannot m ake product m odifications. A lso,
the commercial marketer who has established produc-
tion facilities (sunk costs) or h as inventories w ill find
no opportunity to develop alternative products in light
of a better understanding of exchange partners
(Zelt-
ner 1976 ). Th e decision s that this latter marketer will
make include whether it is worth the cost of modi-
fying existing produ ction facilities to produce a p rod-
uct variation desired by potential exchange partners
(see Zeltner 1 976 ), or wh ether he/she should discon-
tinue o perations.
Therefore, there is a wide variety of marketers who
do not rely on the maxim of learning about customer
needs and designing new product offerings to suit those
needs. These marketers are constrained from modi-
fying their core produc t, yet they still have needs wh ich
depend upon exchange partners and successfully cul-
minated exchanges.
Alternatives to . . .
Keith (1960) describes the production and sales con-
cepts as inferior and antecedent to the marketing con-
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cept. Where the marketing concept directs the orga-
nization to design its marketing mix-including
product-only after the needs and wants of curren t
and potential exchange partners have been assessed,
the sales and the production concepts describe the or-
ganization that makes an offering available without
having tailored it as a result of this information. The
sales concept describes an organization which ag-
gressively studies and seeks out exchange partners fo r
already established offerings, where the production
concept is passive with regard to marketing. The pro-
duction concept w s illustrated by the Bell Telephone
System prior to its court-imposed restructuring, o r the
artist who derives his/her satisfaction from the crea-
tion of a unique product that meets some internally
held standard. That same artist would be relying on
the sales concept if he/she sought information about
potential buyers and used that information in an at-
tempt to engage in an exchange.
Figure I restates the distinction between the mar-
keting, sales, and production concepts. It shows the
buyer side of a m arketing exch ange, pointing ou t that
buyers can also gather information about current and
potential exchange partners. tailoring offerings as suit
the needs and wants of those exchange partners. Like-
wise, the buyer may elect not to negotiate on what
he/she is seeking or offering in exchange, though ag-
gressively pursuing the exchange through the other in-
gredients of the marketing mix. This is shown in the
Figure as the Buying Con cept, since it is the buy er s
form of the sales concept. In the same vein, some
buyers are quite passive in their buying behavior, ac-
cepting o r rejecting that which has been made avail-
able but not choosing to actively seek an exchange.
This is shown as the O ffering Con cept, since it is the
buyer s form of the production concept.
In summary, it is important to recognize that un-
der some circumstances, the production co ncept or the
sales concept would
be
a more appropriate manage-
ment philosophy for the organization than the mar-
keting concept. Fluthermore. ex change consists of both
buyers and sellers, and as noted many years ago , buy-
ers are marketers too (Ko tler and Levy 1973). Buyers
FIGURE
1
Defining Alternative Concepts
Av a il ab le t o t h e M a r k e t e r
Behavior
L
can and do use the marketing, sales, and production
concepts (or the relaheled equivalents, shown in Fig-
ure 1 .
Statement of
The following provides a succinct and com prehensive
statement of what the marketing concept is, its pur-
pose, and how it is bounded.
The marketing concept is a managerial pre-
scription relating to the attainment of an enti-
ty s g oals. For certain we ll-defined bu t re-
strictive market conditions and for exchange
determined goals which are not product re-
lated. the marketing concept is a prescription
showing how an entity can achieve these goals
most efficiently.
The marketing concept states that an entity
achieves its own exchange determined goals
most efficiently through a thorough under-
standing of potential exchange partners and
their needs and wants, through a thorough un-
derstanding of the costs associated with sat-
isfying those needs and wants, and then de-
signing, producing, and offering products in
light of this understanding.
Notice that the marketing con cept requires an un-
derstanding of the market and does not suggest that
products be designed to satisfy the market s deman d.
Satisfaction of the market s dem and is imp ortant to
the extent that doing so yields profits.
A
commercial
organization that has decided to offer a single, undif-
ferentiated offering instead of designing products to
suit each perceived m arket segment, may have arrived
at th ~ s ecision with a thorough understanding of the
market s response and the accompanying cos ts, and.
thus, be
an exemplary user of the marketing concept.
Misconstruing
Unfortunately, many marketers have taken the mar-
keting concept to mean that marketers should take their
lead from the expressed needs and wants of cus-
tomers. As a result, wben the limitations of doing so
are recognized, the marketing concept is criticized,
when it would be more appropriate to criticize the way
in which the concept is implemented.
the marketing concept is an inadequate pre-
scription for marketing strategy. because
it
virtually
ignores a vital input of marketing strategy-the
cre-
ative abilities of the
fum
(Kaldor 1971. p. 19).
While this may seem obvious, some argue that ofits (or implic-
itly.
satisfactionof the
marketing
entity s
own
objstive
function)should
be
a
consequence of
satisfying the market's nee s (cf.
Bell
and
Emory
1971).
nd
not
p
of the allocation process
in which
the
m ecides
to
wh t
extent
t
will satisfy the demand of the marker
he
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Kaldor notes that the customer does not always know
what is needed. An extreme example of this is the
medical doctor-patient relationship, where the patient
does not specify the treatment; it is the doctor's task
to assess the specific product needs of the patient. Yet,
this does not mean that the doctor is not addressing
the needs and wants of the patient; the doctor's unique
offering is that special capability to identify.and sat-
isfy the patient's needs.
Rather than describing the marketing concept as
an inadequate prescrip tion, it would e
better to de-
scribe it as an 'incomplete prescription. Th e mar-
keting concept focuses the marketer's attention on the
customer but does not tell the marketer to disregard
his/her unique capabilities and resources when decid-
ing how to serve the customer's n eeds and wants best.
Kerby (1972) and Tauber (1974) make the point
that by looking to customers for guidance in new
product research, marketers fail to take advantage of
the creative capabilities of product research person-
nel.
it is quite certain that few if any of the really
significant product innovations which have been placed
on the market to date were developed because the
inventor sensed that a latent pool of needs was yeam-
ing to be satisfied (Kerby
1972.
p .
31).
The marketing concept
does not
urge us to depend
solely on marketing research (customer surveys) for
guidance in new product research.
Dependence on customers' expressions of their own
needs and wants suggests that some marketers have
failed to take a long run view of the marketing con-
cept. Customers are not necessarily good sources of
information about their needs a decade from now. They
don't necessarily know how they will react under dif-
ferent environmental conditions. They don't have in-
sight into the possible value of major technological
innovations. Sometimes customers have to learn about
new technologies, beliefs, and ways of behaving.
Anticipating future needs and wants is consistent
with the marketing concept. Earlier the point was made
that some marketers, like religious groups, would find
the marketing concept inappropriate: these are mar-
keters who want to persuade customers that what the
marketer has to offer is desirable. The innovator who
has an unfamiliar offering likewise must educate and
persuade the customer, but this m arketer has not nec-
essarily rejected the marketing concept, which is not
limited to the
current expressed
needs and wants of
customers. If the marketer sees an innovative offering
that has the potential to satisfy needs and wants and
is w illing to develop this offering with the customer's
satisfaction in mind, the marketing concept is being
used. It is the marketer who has a fixed offering which
he/she is unwilling to change who is not using it.
Bennett and Cooper (1981) illustrate how the
meaning of the marketing concept can be confused
with its weak implementation:
Twenty years o f adherence to the marketing concept
may have taken its toll
on
American enterprise. The
marketing concept has d iverted our attention from the
product and its manufacture; instead, w e hav e fo-
cused our strategy on responses to market wants and
have become preoccupied with advertising, selling,
and promotion. And in the pm ces s, product value has
suffered.
What is ironic about this statement is that it follows
a discussion of the success foreign competitors have
had by addressing the needs and wants of buyers. The
authors do a good job of addressing a number of se-
rious issues in today's business community, but the
management practices criticized are not inherent in the
marketing concept.'
The marketing concept does not consist of adver-
tising, selling, and promotion. It is a willingness to
recognize and understand the consumer's needs and
wants, and a willingness to adjust any of the mar-
keting mix elements, including product, to satisfy those
needs and wants.
The Positive Side of
The marketing concept has been an expression of the
marketer's recognition of the importance of the con-
sumer in the buying process. This understanding did
not begin with the introduction of the term marketing
concept; the customer focus clearly existed when the
king ordered boots from the bootmaker. Yet, the la-
beling of the concept is an important aid to our un-
derstanding and provides a focal point around which
to organize our thoughts.
The marketing concept has suffered in two ways:
first. it has been established as the optimal manage-
ment philosophy when it is not necessarily so in all
instances, and second, we can see many examples of
p m r marketing practices which have been adopted in
the name of the marketing concept. It is time that we
releam that the marketing concept is one of a set of
three concepts-marketing. sales, and
production-
that form the basis for understanding the management
of marketing. And it is time that we remember that,
under differing circumstances, each can be the ori-
entation that best furthers the objectives of thc orga-
nization.
This discussion has gone far in identifying the many
circumstances under which the guiding managerial
'In
n
earlier article, they state they are less concerned with defi-
nitions as
such.
. .
he
resultsq imp l rm nr in~ he
marketing
con-
cept, rather
th n
the concept itself,
re
examined (Bennen
w Cooper
1979, p . 761. This anicle makes imponant points about the need to
rely oo the unique capabilitiesof the organizalion, which may
be
non
marketing capabilities.
his
lheme is also present
in the
arlirles
by
Kaldor (1971), Kerby (19721. and Tauber (1974).
8 ournal of Marketing April 1986
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philosophy should be something other than the mar-
keting concept. The examples given merely scratch
the surface and are designed to illustrate general con-
ditions rather than to demonstrate the degree to which
such conditions exist around us. Probably the list is
not exhaustive and it remains our task to recognize
and enumerate others. It is important to examine these
conditions more closely to understand their nuances
and to assess their implications.
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