As marketers we want to, check that, we need to better understand consumers. Dr. John Medina provided his unique perspective on consumer behavior based on his knowledge as a developmental molecular biologist. Dr. John Ratey M.D., author of Spark - The Revolutionary New Science of Exercise and the Brain looks at consumers through another clinical lens.

In these challenging times, with the unemployment rate at its highest since 1992, what should we know about the link between stress/anxiety and exercise?

The phrase I’ve coined is “excernomics”. This is the time for people to get themselves into a peak level of fitness - physically, intellectually and emotionally. I know from previous downturns one of the things that was so important was for people to stick with their fitness program even if they were out of work. The best way to deal with these times from an evolutionary perspective is to be at the most fit level of fitness that we can be in. Being at the top our games physically helps us be there emotionally and cognitively. This is the time to get fit!!

Children are not immune to stress and anxiety yet surfing the Web, playing video games, sending IM / text messages, encourage sedentary behavior. What would you tell them?

We need to gets kids in shape. The co-opting of the gaming environment with the WII and WII-fit and Dance Revolution is a step in the right direction. There are a host of other “exergaming” options that grab gamers’ interest and can be as exciting as traditional video games, and they use physical activity as part of the game.

Also, physical education (PE) in the schools has to change. We need more of it and the concept of PE has to switch from a sports-coaching model to a fitness-wellness everyday athlete model.

How can advertisers spark the revolution you advocate and become agents for change?

I would encourage them to support programs by going into the schools to establish PE as a real entity, not just a place to collect athletes. Focus on working with schools and giving them the materials for healthy school lunch programs and then use those opportunities to educate them on what we know about what is good for us and what makes the brain much healthier.

Which advertisers are making strides?

SPARQ/Nike is trying to get into the schools to have kids follow their fitness on the Internet. It started with 100,000 kids as part of a summer program and they are now broadening that to schools in general. The Healthy Student Bodies program will make a big difference in using the Web to track their progress and get advice.

About Dr. John J, Ratey, M.D.

Dr. John J. Ratey, M.D., is an associate clinical professor of psychiatry at Harvard Medical School and has a private practice in Cambridge, Massachusetts. As a clinical researcher he has published more than 60 papers in peer-review journals in the fields of psychiatry and psychopharmacology.

At first glance, interviewing a developmental molecular biologist might seem unusual for the Compete blog. After all, what does the discipline have to do with marketing? It turns out to be very significant. The 12 brain Rules that Dr. John Medina identifies in his book are directly relevant for marketers. As Garr Reynolds put simply in my interview with him: “….his ideas will change the way we all work and learn.”

Rule #4: We don’t pay attention to boring things. What can marketers do to make campaigns more interesting to consumers?

The brain cycles through six questions whenever it confronts an input, whether it is running away from saber toothed tigers in the savannah or looking at product placement on a website: Can I eat it? Will it eat me? Can I mate with it? Will it mate with me? Have I seen it before? Have I never seen it before? Any marketing campaign that hooks the brain will have done so because it will have snagged the organ on one of those questions.

Rule #5: Repeat to remember. Should we take this rule literally?

Repeat to remember. Remember to repeat. You should take that rule literally. The brain can only hold seven pieces of declarative information for about 30 seconds. If the information is not repeated in that time frame, the brain will dump it.

Given the 12 Brain Rules, what advice do you have for marketers?

Three pieces of advice:

1. The brain is not interested in learning. And it is not interested in buying. It is interested in surviving.
2. It fleshes out this pre-occupation by creating and responding to two internal motivations, both strikingly Darwinian. The brain is interested in anything that will provide it a benefit. And it will do whatever it can to avoid pain.
3. Both motivations are related to a single goal: passing our genes onto the next generation. That sounds like it all comes down to sex, but it really comes down to endurance – in terms of millions of years. We barely survived our womb in the Serengeti, but we did so because of the overwhelming dictatorship of these twin interior forces.

Who should I interview next for the Compete blog?

I would interview John Ratey. He’s terrific.

About Dr. John J Medina

John J Medina is a developmental molecular biologist focused on the genes involved in human brain development and the genetics of psychiatric disorders. He has spent most of his professional life as a private research consultant, working primarily in the biotechnology and pharmaceutical industries on research related to mental health. Medina holds joint affiliate faculty appointments at the University of Washington School of Medicine, in its Department of Bioengineering, and at Seattle Pacific University, where he is the director of the Brain Center for Applied Learning Research.

I recently created my first photo book online as a holiday gift. Judging by the slow speed of the site I was on, I wasn’t alone! In fact, traffic to photo service sites Kodak Gallery, Shutterfly, Snapfish and MyPublisher each rose in November. Snapfish experienced the biggest gain with a whopping 40% increase to a record 4.725 million people. And, only Snapfish enjoyed a year-over-year increase in traffic (up 25.7% from last November).

What made Snapfish so popular, particularly against its close rival Shutterfly? A quick look at the top referring sites to Shutterfly and Snapfish provided a big hint.

• Nearly 4% of all traffic referred to Snapfish.com in November came from Oprah.com, a 29,475 percent increase in referral share from the prior month.
• A quick check revealed that Oprah announced a credit for her viewers to receive a free 20 page 8×11 custom photo book through Snapfish.com during November (using an online coupon)
• In all, Snapfish.com had the advantage compared with Shutterfly.com in 9 of the top 15 referring sites

So, what’s next for these rivals in competing for consumers’ attention this holiday season? Consider this:

Snapfish: Focus on retention and greater share of wallet. The Oprah promotion clearly drove viewers to Snapfish. The question now is, will they return to make other paid purchases? And, can Snapfish convert these Oprah viewers into loyal customers? Watch to see if November’s surge in traffic is a one-time windfall or is sustained. If the site’s Daily Reach is a harbinger, it may signal that the hard work is just beginning.

Shutterfly: Evaluate your paid search program. Shutterfly received an average 32% of its search engine referrals from paid ads compared with Snapfish’s 25%. On the one hand, Shutterfly has 9% more overall search referrals than its rival to show for its spending. And non-branded search terms “photo book” and “photo cards” are among the top 10 keywords driving traffic to Shutterfly. But overall traffic still lags Snapfish. And, what do these searchers do when they get to the site? How does this compare with what happens at Snapfish? Are searchers more or less likely to purchase online compared to rivals? Benchmarking against competitors could provide valuable competitive information.

It wouldn’t surprise you if I said that this holiday shopping season is expected to be weak. But would you be taken aback if I said that there is a fundamental shift in consumer values underway that may have a lasting impact on retailers? If your eyebrows are raised, listen up.

What changes are you observing in consumer values?

What I am seeing is the pendulum swinging away from the conspicuous consumption of the 1980’s and 1990’s and toward conscious consumption. And this is having a profound impact on the retail industry. Overall, the current economic situation is accelerating trends toward frugality and placing importance on relationships and people instead of things. The importance on things to make someone happy is being questioned. I am seeing almost an anti-consumerism sentiment.

The immediate change for retailers is that people are shifting from premium brands to down-market channels. Wal-mart is a big beneficiary of this trend with its lower prices and higher value. There is also a move into dollar stores and thrift shops as well as Freecycle or Craigslist and other places where people can barter and exchange goods versus just throwing away unwanted items.

In the long run, some of these new spending patterns will stick with consumers who may not return to spending more when the economy rebounds or who will stay with lower-end brands in some categories.

Is there another time in history where there has been a big shift in consumer values? How did it impact retailers then?

During the Great Depression there was a profound amount of frugality. People made the best use of what they had. This value system stuck with that generation for their lifetime. They purchased high-quality goods that would last a long time. They didn’t want to be wasteful.

There were also profound shifts in the opposite direction, during the 1980’s and 1990’s. During the tech bubble when people started to feel rich they wanted to display that affluence with a Rolex or perhaps a BMW or large home. During this period of high consumption the retail industry experienced tremendous growth and also consolidation as the rise of behemoths like Wal-Mart occurred.

Is there a brand or campaign that you think is getting in right in addressing the current shift in values?

Dentyne is taking a very basic product, a discretionary product, and instead of positioning it around taste or fun they are relating it to specific relationships and social issues. Their campaign (supported by TV spots, billboards and the internet) is all about people and your relationships with them – “Make face time.” Obviously the connection they want consumers to make is that if you are going to be with people you need fresh breath. So, Dentyne encourages people to get off the internet and re-connect with friends by providing visitors with 3 minutes to explore dentyne.com. It’s an original concept.

What advice do you have for retailers who are (re)developing their marketing strategies?

The most important thing for retailers is to tie value and values together. When you can make a statement to offer lower price or great value and also that you are doing things “right” (such as making a donation with each purchase or using environmentally friendly materials), it will help justify the purchase for shoppers. You need to provide a reason for consumers to prioritize your purchase in their life above other things they need to spend money on.

Who should I interview next for the Compete blog?

You should speak with Miranda Tisdale at Kohls about its 2008 “Inspired by the Artists…worn by you” campaign.

About Dan Stanek, Executive Vice President, TNS Retail Forward

Dan has more than 20 years of experience in consumer marketing and retail consulting for Fortune 500 companies. He specializes in marketing strategy, channel strategy and brand development. Dan has extensive experience developing brand and retail marketing positioning strategies for many of the nation’s leading retailers and consumer products companies.

Want a list of this season’s Top 25 hottest retail products?
Go to Compete’s DataHub.

Dunkin’ Donuts took the gloves off in its battle against rival Starbucks with the October 21 launch of its “Dunkin Beat Starbucks” campaign featuring a national blind taste test where Dunkin’ coffee was preferred over Starbucks. Has the campaign resonated with coffee drinkers?

*Daily reach is the number of people that visit a website on a given day
as a percentage of all U.S. Internet users online that day.

• 45,516 people visited the dedicated microsite dunkinbeatstarbucks.com the week ending October 25
• Weekly traffic to dunkindonuts.com jumped 61% to more than 196,000 the week after the initial media launch
• The daily reach of dunkindonuts.com saw a temporary increase on October 26 & 27

So, will the battles for coffee drinkers continue? Starbucks has already launched a new media campaign with a TV ad during Saturday Night Live offering free coffee to voters on Election Day. Daily reach to Starbucks.com the day before the Election skyrocketed. Coincidence? Not likely.

Below is some advice from one coffee drinker.

Taste matters. So does staying top of mind with coffee enthusiasts. Creative marketing campaigns that break through the media clutter and reach coffee enthusiasts regardless of their brand preference may help to grow the overall market, even if only temporarily. Consumers who visited both Dunkin Donuts’ and Starbucks’ sites last week jumped to more than 485,000, its highest level since mid-September.

Stay true to your brand promise. Make sure your brand strikes a chord with the coffee drinkers that are core to the brand’s identity. Go beyond demographic-inspired or comparison pricing messages to see how the behavior of your coffee drinkers differs from your rival’s. Find out what we’re searching for, our attitudes, and where we spend time online versus (hint – I have been known to spend time on hsus.org versus either Dunkin’ Donuts or Starbucks despite my love for and daily cup of, coffee!). How would you reach and engage me?

As marketers we know that the need to listen to, understand and engage customers more intently is intensified during difficult market conditions. I recently interviewed Diane Tarr-Smith, VP of Marketing at Communispace to find out how private online communities can help.

How can a company use a community as part of a larger marketing and social media strategy?

Think of it this way – imagine you sell soft drinks and you’re constantly looking for an edge over your major competitors. Now, imagine if every morning – while you’re drinking your first cup of coffee –you could chat directly with 500 of your best customers and hear their reactions to the new ad campaign, get the unvarnished truth about your new fruit-flavored water and hear some breakthrough ideas for a new diet iced tea. You’d hear free-flowing honest feedback from people who are invested in your brand. Well, that’s what a private online community is. The community can be used for pre-ad campaign testing, in-campaign tweaking for online initiatives, landing page effectiveness and even search engine optimization.

How do marketers turn the insights from customers into meaningful change for the company?

Let me give you a specific example. When our AXE community gives feedback on an ad, saying it won’t fly with AXE’s core demographic, the value is immediate – phew, glad we caught that one early. When campaigns can cost hundreds of thousands, it’s easy to track the ROI of the community and understand its meaningful impact. In the longer-run, what better way to ensure future marketing success than to build consumer insights directly into the ideation process

What are some practical tricks for companies looking to get started with online communities?

There are many public and private ways to use communities. Some tips to consider:

• Smaller is better – the key to success – and greater insights – is having the right people in a private, intimate setting. Participation rates skyrocket, engagement explodes and insights emerge.
• Recruit wisely – recruiting is paramount to success. Communispace has experts who do nothing but refine techniques for finding the best community members who create a special community dynamic.
• Don’t dominate – community facilitation isn’t easy. Don’t overtax or over-direct members. These are your advisors, so treat them with care and respect.

Where do you think market research is heading in 2009?

Take a look at the Economist Intelligence Unit (EIU) report, which mentions that in some cases customers are actually driving product strategy and development. In fact, the report states that “in 2013 customers will represent by far the leading source of new product and service ideas.” Moving forward we’ll likely see more companies following in the footsteps of GlaxoSmithKline, Kraft, Welch’s and others who already understand the need to listen to, understand and engage their customers more intently.

Who should I interview next for the Compete Blog?

Charlene Li. She recently left Forrester to start Altimeter Group and she has a unique understanding of what marketers must do to better engage today’s consumer.

About Diane Tarr-Smith
Diane has almost 20 years marketing for leading brands including Yahoo!, Fidelity Investments, Avid Technology, and Engage Technology. Most recently, Diane was VP of Corporate Marketing for Perseus/WebSurveyor, the only online research technology that ties market research directly with business results. Diane lives in Boston with her husband Jim and their Pomeranian, Maggie.