Targeting Different Client Groups at Different Stages of a Product’s Life

Hybrid cars are now being bought by the early majority.

© iStockphoto/3alexd

The Product Diffusion Curve is a useful model that helps you think about who you should be targeting at different stages of the life of your product or service.

With an understanding of the Product Diffusion Curve, you can target your marketing efforts intelligently, getting the best returns from your effort. More than this, you can maximize the chances of success for your product, for example, by pinpointing the most influential target clients right at the start of your marketing effort.

Explaining the Product Diffusion Curve:

The Product Diffusion Curve model uses a bell-shaped curve or an s-shaped curve to show the stages in which a successful product is adopted by people within your market.

The curve is shown below:

People within the market are represented depending on how quickly they accept and purchase new products. Some welcome novelty, adopting new products as soon as they come to market. Others only purchase new products only when it becomes the last resort.

According to the model, five different groups of people will purchase your product at different stages of the product’s life

Conjoint Analysis

Measuring Buyer Preferences

Find the best combination.

What’s the best way to introduce a new product, or change an existing one? You could just move forward boldly with a new idea and keep your fingers crossed that it works. Or you could reduce risk by doing market research – before you go through all the trouble of creating something customers don’t want or don’t like.

Getting a product ‘right’ involves a lot of variables. The most obvious feature is functionality – how it works. However, other things also play a role in the final purchase decision – such as packaging, promotion, materials, and even where a product is manufactured.

For example, people buy cars to get from point A to point B. The type of car they buy is based on many things, including fuel consumption, styling, reliability, and color. While any of these product attributes may be the primary selling feature, people make decisions by considering all the attributes together.

Getting all of these features in the right combination is pretty difficult if you just rely on guesswork. So, how can you evaluate your goods and services by considering their attributes all together, or jointly? ‘Conjoint Analysis’ accomplishes exactly that.

What is Conjoint Analysis?

First and foremost, conjoint analysis is a tool that measures buyer preferences. Using statistical analysis, it establishes the impact on the buying decision of one combination of product attributes compared with other combinations. By doing this, you get an understanding of consumer preferences that’s much deeper than simply asking consumers to rate individual product attributes.

For instance, a typical preferences survey tells a restaurant that customers rank their priorities as service, price, location, and then cleanliness. So the restaurant makes improvements to service and price, but sales don’t increase significantly. They wonder what went wrong… until they try a conjoint analysis, which tells them that the combination of service and location actually ranks higher than the combination of service and price.

Conjoint analysis helps you truly understand consumer trade-offs. What are customers willing to trade if they can’t get the perfect set of attributes? To get the warranty they want, will they pay a higher purchase price? To get the 10% discount they want, will they buy a package of eight, rather than a package of six? To get the performance they want, will they settle for fewer color options?

Conducting a Conjoint Analysis

Conjoint analysis determines the utility (usefulness or desirability) values that consumers attach to different levels of a product’s attributes. By showing potential consumers different product offer combinations, and asking them to rank the various offers, you can identify the most appealing combination of attributes. From there, you can make a business decision using parameters like estimated market share and profit potential

Kano Model Analysis

Delivering Products That Delight

---

    Which attributes would give your product “star quality”?

© iStockphoto/alengo

Kano Model Analysis is a useful technique for deciding which features you want to include in a product or service.

It helps you break away from a profit-minimizing mindset that says you’ve got to have as many features as possible in a product, and helps you think more subtly about the features you include. This can be the difference between a product or service being profitable or unprofitable.

More than this, it helps you develop a product that will truly delight your customers.

Explaining the Kano Model

According to the Kano Model (developed by Dr Noriaki Kano in the 1980s), a product or service can have three types of attribute (or property):

• Threshold Attributes: Which customers expect to be present in a product.
• Performance Attributes: Which are not absolutely necessary, but which are known about and increase the customer’s enjoyment of the product.
• Excitement Attributes: Which customers don’t even know they want, but are delighted when they find them.

Threshold Attributes affect customers’ satisfaction with the product or service by their absence: If they’re not present, customers are dissatisfied. And even if they’re present, if no other attributes are present, customers aren’t particularly happy (you can see this as the bottom curve on the graph below).

Figure 1 – The Kano Model

Using the example of a cell phone, the ability to store people’s names and telephone numbers is a Threshold Attribute. While a cell phone without this function would work, it would be grossly inconvenient.

It’s on Performance Attributes that most products compete. When we weigh up one product against another, and decide what price we’re prepared to pay, we’re comparing Performance Attributes. These are shown as the middle line on the graph.

On a cell phone, Performance Attributes might be polyphonic ringtones or cameras (although to a teenager, polyphonic ringtones may be Threshold Attributes!)

Excitement Attributes are things that people don’t really expect, but which delight them. These are shown as the top curve on the graph above. Even if only a few Performance Attributes are present, the presence of an excitement attribute will lead to high customer satisfaction.

For the right person (and at the time of writing!), a free Bluetooth headset might be an Excitement Attribute on a cell phone.

(There’s also a fourth type of attribute: Things customers don’t care about at all.)

Using the Tool

To use Kano Model Analysis, follow these steps:

1. Brainstorm all of the possible features and attributes of your product or service, and everything you can do to please your customers.
2. Classify these as “Threshold”, “Performance”, “Excitement” and “Not Relevant”.
3. Make sure your product or service has all appropriate Threshold Attributes. If necessary, cut out Performance Attributes so that you can get these – you’re going nowhere fast if these aren’t present.
4. Where possible, cut out attributes that are “Not Relevant”.
5. Look at the Excitement Attributes, and think how you can build some of these into your product or service. Again if necessary, cut some Performance Attributes, so that you can “afford” your Excitement Attribute.
6. Select appropriate Performance Attributes so that you can deliver a product or service at a price the customer is prepared to pay, while still maintaining a good profit margin.

Tip:
Where possible, get your customers to do the classification for you. Partly this will keep you close to your market, but partly it will keep you and even the most out-of-touch people in your company up-to-date with people’s changing expectations.

Using the example above, only a few years ago, polyphonic ring tones (and even phone number lists!) were Excitement Attributes on cell phones.

Also, make sure when you choose customers, that you choose customers who are typical of the market you want to sell to

The Marketing Mix and 4 Ps

Understanding How to Position Your Market Offering

How to use the 4Ps,
with James Manktelow & Amy Carlson.

What is marketing? The definition that many marketers learn as they start out in the industry is:

Putting the right product in the right place, at the right price, at the right time.

It’s simple! You just need to create a product that a particular group of people want, put it on sale some place that those same people visit regularly, and price it at a level which matches the value they feel they get out of it; and do all that at a time they want to buy. Then you’ve got it made!

There’s a lot of truth in this idea. However, a lot of hard work needs to go into finding out what customers want, and identifying where they do their shopping. Then you need to figure out how to produce the item at a price that represents value to them, and get it all to come together at the critical time.

But if you get just one element wrong, it can spell disaster. You could be left promoting a car with amazing fuel-economy in a country where fuel is very cheap; or publishing a textbook after the start of the new school year, or selling an item at a price that’s too high – or too low – to attract the people you’re targeting.

The marketing mix is a good place to start when you are thinking through your plans for a product or service, and it helps you avoid these kinds of mistakes.

Understanding the Tool

The marketing mix and the 4 Ps of marketing are often used as synonyms for each other. In fact, they are not necessarily the same thing.

“Marketing mix” is a general phrase used to describe the different kinds of choices organizations have to make in the whole process of bringing a product or service to market. The 4 Ps is one way – probably the best-known way – of defining the marketing mix, and was first expressed in 1960 by E J McCarthy.

The 4Ps are:

• Product (or Service)
• Place
• Price
• Promotion

A good way to understand the 4 Ps is by the questions that you need to ask to define you marketing mix. Here are some questions that will help you understand and define each of the four elements:

Product/Service

• What does the customer want from the product/service? What needs does it satisfy?
• What features does it have to meet these needs?
  • Are there any features you’ve missed out?
  • Are you including costly features that the customer won’t actually use?
• How and where will the customer use it?
• What does it look like? How will customers experience it?
• What size(s), color(s), and so on, should it be?
• What is it to be called?
• How is it branded?
• How is it differentiated versus your competitors?
• What is the most it can cost to provide, and still be sold sufficiently profitably? (See also Price, below).

Place

• Where do buyers look for your product or service?
• If they look in a store, what kind? A specialist boutique or in a supermarket, or both? Or online? Or direct, via a catalogue?
• How can you access the right distribution channels?
• Do you need to use a sales force? Or attend trade fairs? Or make online submissions? Or send samples to catalogue companies?
• What do you competitors do, and how can you learn from that and/or differentiate?

Price

• What is the value of the product or service to the buyer?
• Are there established price points for products or services in this area?
• Is the customer price sensitive? Will a small decrease in price gain you extra market share? Or will a small increase be indiscernible, and so gain you extra profit margin?
• What discounts should be offered to trade customers, or to other specific segments of your market?
• How will your price compare with your competitors?

Promotion

• Where and when can you get across your marketing messages to your target market?
• Will you reach your audience by advertising in the press, or on TV, or radio, or on billboards? By using direct marketing mailshot? Through PR? On the Internet?
• When is the best time to promote? Is there seasonality in the market? Are there any wider environmental issues that suggest or dictate the timing of your market launch, or the timing of subsequent promotions?
• How do your competitors do their promotions? And how does that influence your choice of promotional activity?

The 4Ps model is just one of many marketing mix lists that have been developed over the years. And, whilst the questions we have listed above are key, they are just a subset of the detailed probing that may be required to optimize your marketing mix.

Amongst the other marketing mix models have been developed over the years is Boom and Bitner’s 7Ps, sometimes called the extended marketing mix, which include the first 4 Ps, plus people, processes and physical layout decisions.

Another marketing mix approach is Lauterborn’s 4Cs, which presents the elements of the marketing mix from the buyer’s, rather than the seller’s, perspective. It is made up of Customer needs and wants (the equivalent of product), Cost (price), Convenience (place) and Communication (promotion). In this article, we focus on the 4Ps model as it is the most well-recognized, and contains the core elements of a good marketing mix.

Using the 4Ps Marketing Mix Model

The marketing mix model can be used to help you decide how to take a new offer to market. It can also be used to test your existing marketing strategy. Whether you are considering a new or existing offer, follow the steps below help you define and improve your marketing mix.

1. Start by identifying the product or service that you want to analyze.
2. Now go through and answer the 4Ps questions – as defined in detail above.
3. Try asking “why” and “what if” questions too, to challenge your offer. For example, ask why your target audience needs a particular feature. What if you drop your price by 5%? What if you offer more colors? Why sell through wholesalers rather than direct channels? What if you improve PR rather than rely on TV advertising?

Tip:
Check through your answers to make sure they are based on sound knowledge and facts. If there are doubts about your assumptions, identify any market research, or facts and figures that you may need to gather.

 

1. Once you have a well-defined marketing mix, try “testing” the overall offer from the customer’s perspective, by asking customer focused questions:
   1. Does it meet their needs? (product)
   2. Will they find it where they shop? (place)
   3. Will they consider it’s priced favorably? (price)
   4. And will the marketing communications reach them? (promotion)
2. Keep on asking questions and making changes to your mix until you are satisfied that you have optimized your marketing mix, given the information and facts and figures you have available.
3. Review you marketing mix regularly, as some elements will need to change as the product or service, and its market, grow, mature and adapt in an ever-changing competitive environment.

Key Points:

The marketing mix helps you define the marketing elements for successfully positioning your market offer.

One of the best known models is the Four Ps, which helps you define your marketing options in terms of product, place, price and promotion. Use the model when you are planning a new venture, or evaluating an existing offer, to optimize the impact with your target market

The Brand Pyramid

Building Customer Loyalty

(Also known as The BrandDynamics™ Pyramid. “BrandDynamics” is a trademark of Millward Brown.)

---

Build loyalty, and revenue, by climbing the pyramid.

© iStockphoto/TimArbaev

When you shop in your local grocery store, there may be some brands that you don’t feel any connection with.

On the other hand, you might be really passionate about other brands. For example, perhaps you drink only a certain brand of coffee, cook with a particular brand of olive oil, or use a certain brand of cell phone because, perhaps subconsciously, these products help to define “who you are.”

If you’re in marketing, then you’ll know how important it is that your brand speaks to your customers on an emotional level. When someone feels a strong positive emotional tie with a product, that emotion creates brand loyalty, and this inspires repeat purchase.

You can use the metaphor of a journey to describe how customers move from just knowing about your brand to feeling loyal to it. So, how do you know where your customers are on this journey, and how do you encourage them along it? Do most of your customers just recognize your brand and drop it as soon as competitors put similar products on sale? Or, does your brand create a sense of personal identity and loyalty with your customers?

The “Brand Pyramid” is a useful tool that can help you identify where your customers are on this journey to loyalty. In this article, we’ll explore how you can use it to increase people’s loyalty to your brand, product, or organization.

Note:
According to marketing expert Seth Godin, a brand is a “set of expectations, memories, stories, and relationships that, taken together, account for a consumer’s decision to choose one product or service over another.”

Brands can distinguish products, services, and even entire organizations.

Overview

There are several different versions of the Brand Pyramid, but most are based on the model originally created by Millward Brown, a global marketing research and consulting firm, in the mid-1990s.

The firm spent 30 years tracking brand-health studies from thousands of organizations. It then used this research to create its original model.

The pyramid, as shown in figure 1, illustrates the five key stages that customers go through with a brand, starting with basic awareness and finishing with complete loyalty.

Figure 1 – The Brand Pyramid

Clearly, your goal is to get as many of your customers as possible to the higher levels of the pyramid. After all, the higher people are up the pyramid, the more money they’re likely to spend with your brand. (This is why the pyramid is inverted.)

Let’s look at each level in more detail:

Level 1: Presence

At this level, customers are aware of your brand, but little else. They may have tried your products and services before, but they have little or no emotional attachment to them.

Level 2: Relevance

At this level, customers start to think about whether the brand meets their wants and needs. It’s here that they begin comparing the cost of your products with respect to the value these provide.

Customers begin asking questions like:

• “Does this brand fit my needs?”
• “Is it in the right price bracket for me?”
• “Is it worth it?”

Level 3: Performance

Here, customers begin comparing the brand with others, to see whether it delivers on its potential.

They’re also starting to associate the brand with a specific identity, and they’re beginning to recognize it and associate with it.

By now, the brand is on the customer’s “short list” of brands to choose from.

Level 4: Advantage

At this level, customers have determined that there is a distinct advantage to using the brand, compared with others. They’re also beginning to associate the brand with their emotions and with their sense of self.

Level 5: Bonding

Here, customers have established a bond with the brand. They’ve determined that cost, advantage, and performance are all at levels that they’re happy with.

They’ve also formed a strong emotional attachment to the brand; the brand has become an integral part of their self-image, and helps represent who they are. This, in turn, encourages them to exclude other brands in favor of this one.

Customers at this level are also likely to be vocal advocates of the brand, which helps build further awareness within their family, social, and professional circles.

Note:
It’s usually best to assume that customers move through each stage in sequence, from Presence to Bonding.

Applying the Tool

You can use the Brand Pyramid when developing a marketing strategy for your brand, product, or service. When you understand the five stages that people go through while they build loyalty to your brand, you can focus your marketing efforts on leading target customers through them.

Remember, however, that there is some crossover between each of the levels, and it may be difficult or impractical to focus on just one stage at a time.

Here are some strategies and tools that you can use when applying the Brand Pyramid to your own situation:

Presence and Relevance (Levels 1 and 2)

Here, you can use The Marketing Mix and 4 Ps to lay the foundation for your marketing strategy, and to help build awareness of your brand.

Additionally, you’re likely to have different groups of customers, with different wants and needs and with different potential levels of profitability. It helps to use market segmentation here, so that you can focus your marketing strategy on delivering offerings targeted at the distinct groups of people most likely to engage with your brand.

Your customers will also want to know how your brand fits with their wants and needs. Price is important here: if the price is too high, customers won’t buy your product. If the price is too low, they might assume that quality matches the low price.

It can also be helpful to use the Conjoint Analysis tool to measure buyer preferences. This can help you identify what your customers truly want from your product or service; in turn, this information can help you fine-tune your product design and marketing to address these issues. (Kano Model Analysis can also be useful here.)

Remember, there is still little to no emotional attachment to your brand at this stage; customers are comparing price and value. As such, make sure that your marketing strategy addresses these key concerns.

Tip:
Different customers will be at different levels of the pyramid at different times. The Product Diffusion Curve helps you think about how you can target different customers at different stages of a product’s lifecycle.

Performance (Level 3)

To reach this stage, you need to show that your brand is better than your competitors’ brands.

Ensure that your marketing materials give customers the information they need to compare your product with competing products. Depending on your audience, show your customers how much better your brand or product is by communicating its benefits rather than its features.

If you haven’t already done so, conduct a USP Analysis, which will help you identify your brand’s uniquely valuable features.

Advantage and Bonding (Levels 4 and 5)

To reach these final stages, you need to communicate the perceived further advantages of your brand.

It might be lower in price or superior in quality to your competitors. However, “softer” influences may also be relevant here. Customers might begin to identify your brand with emotions such as fun, excitement, or approval from peers. In your marketing strategy, you need to address and enhance these emotions.

Once your customers have a strong emotional tie with your brand, they’re more likely to advocate its benefits to others in their social, family, and professional circles.

Here your brand likely has a culture surrounding it. Provide reinforcing rewards and incentives to your most vocal advocates, host events that are important to your key customer base, and do whatever you can to reach out to your customers, on a personal level.

Key Points

The Brand Pyramid illustrates the five key stages that customers go through as they build loyalty to a brand, product, or organization. The five stages are:

1. Presence.
2. Relevance.
3. Performance.
4. Advantage.
5. Bonding.

You can use the Brand Pyramid as part of the process of developing an effective marketing strategy. Your aim is to get as many customers as possible to the higher levels of the pyramid.

French and Raven’s Five Forms of Power

Understanding Where Power Comes From in the Workplace

---

Lead at full power!

© iStockphoto

Leadership and power are closely linked. People tend to follow those who are powerful. And because others follow, the person with power leads.

But leaders have power for different reasons. Some are powerful because they alone have the ability to give you a bonus or a raise. Others are powerful because they can fire you, or assign you tasks you don’t like. Yet, while leaders of this type have formal, official power, their teams are unlikely to be enthusiastic about their approach to leadership, if these are all they rely on.

On the more positive side, leaders may have power because they’re experts in their fields, or because their team members admire them. People with these types of power don’t necessarily have formal leadership roles, but they influence others effectively because of their skills and personal qualities. And when a leadership position opens up, they’ll probably be the first to be considered for promotion.

Do you recognize these types of power in those around you – or in yourself? and how does power influence the way you work and live your life?

Understanding Power

One of the most notable studies on power was conducted by social psychologists John French and Bertram Raven in 1959. They identified five bases of power:

1. Legitimate – This comes from the belief that a person has the right to make demands, and expect compliance and obedience from others.
2. Reward – This results from one person’s ability to compensate another for compliance.
3. Expert – This is based on a person’s superior skill and knowledge.
4. Referent – This is the result of a person’s perceived attractiveness, worthiness, and right to respect from others.
5. Coercive – This comes from the belief that a person can punish others for noncompliance.

If you’re aware of these sources of power, you can…

• Better understand why you’re influenced by someone, and decide whether you want to accept the base of power being used.
• Recognize your own sources of power.
• Build your leadership skills by using and developing your own sources of power, appropriately, and for best effect.

The most effective leaders use mainly referent and expert power. To develop your leadership abilities, learn how to build these types of power, so that you can have a positive influence on your colleagues, your team, and your organization.

The Five Bases of Power

Let’s explore French and Raven’s bases of power according to these sources.

Positional Power Sources

Legitimate Power

A president, prime minister, or monarch has power. So does a CEO, a minister, or a fire chief. People holding these formal, official positions – or job titles – typically have power. Social hierarchies, cultural norms, and organizational structure all provide the basis for legitimate power.

This type of power, however, can be unpredictable and unstable. If you lose the title or position, legitimate power can instantly disappear – since others were influenced by the position, not by you. Also, your scope of power is limited to situations that others believe you have a right to control. If the fire chief tells people to stay away from a burning building, they’ll probably listen. But if he tries to make people stay away from a street fight, people may well ignore him.

Therefore, relying on legitimate power as your only way to influence others isn’t enough. To be a leader, you need more than this – in fact, you may not need legitimate power at all.

Reward Power

People in power are often able to give out rewards. Raises, promotions, desirable assignments, training opportunities, and even simple compliments – these are all examples of rewards controlled by people “in power.” If others expect that you’ll reward them for doing what you want, there’s a high probability that they’ll do it.

The problem with this basis of power is that you may not have as much control over rewards as you need. Supervisors probably don’t have complete control over salary increases, and managers often can’t control promotions all by themselves. And even a CEO needs permission from the board of directors for some actions.

So when you use up available rewards, or the rewards don’t have enough perceived value to others, your power weakens. (One of the frustrations of using rewards is that they often need to be bigger each time if they’re to have the same motivational impact. Even then, if rewards are given frequently, people can become satiated by the reward, such that it loses its effectiveness.)

Coercive Power

This source of power is also problematic, and can be subject to abuse. What’s more, it can cause unhealthy behavior and dissatisfaction in the workplace.

Threats and punishment are common tools of coercion. Implying or threatening that someone will be fired, demoted, denied privileges, or given undesirable assignments – these are examples of using coercive power. While your position may give you the capability to coerce others, it doesn’t automatically mean that you have the will or the justification to do so. As a last resort, you may sometimes need to punish people. However, extensive use of coercive power is rarely appropriate in an organizational setting.

Clearly, relying on these forms of power alone will result in a very cold, technocratic, impoverished style of leadership. To be a true leader, you need a more robust source of power than can be supplied by a title, an ability to reward, or an ability to punish.

Personal Power Sources

Expert Power

When you have knowledge and skills that enable you to understand a situation, suggest solutions, use solid judgment, and generally outperform others, people will probably listen to you. When you demonstrate expertise, people tend to trust you and respect what you say. As a subject matter expert, your ideas will have more value, and others will look to you for leadership in that area.

What’s more, you can take your confidence, decisiveness, and reputation for rational thinking – and expand them to other subjects and issues. This is a good way to build and maintain expert power. It doesn’t require positional power, so you can use it to go beyond that. This is one of the best ways to improve your leadership skills.

Click here to read more on building expert power, and using it as an effective method of leadership.

Referent Power

This is sometimes thought of as charisma, charm, admiration, or appeal. Referent power comes from one person liking and respecting another, and strongly identifying with that person in some way. Celebrities have referent power, which is why they can influence everything from what people buy to whom they elect to office. In a workplace, a person with charm often makes everyone feel good, so he or she tends to have a lot of influence.

Referent power can be a big responsibility, because you don’t necessarily have to do anything to earn it. Therefore, it can be abused quite easily. Someone who is likable, but lacks integrity and honesty, may rise to power – and use that power to hurt and alienate people as well as gain personal advantage.

Relying on referent power alone is not a good strategy for a leader who wants longevity and respect. When combined with other sources of power, however, it can help you achieve great success.

For more on how to develop referent and expert power, see Winning Expert Power.

Key Points

Anyone is capable of holding power and influencing others: you don’t need to have an important job title or a big office. But if you recognize the different forms of power, you can avoid being influenced by those who use the less effective types of power – and you can focus on developing expert and referent power for yourself. This will help you become an influential and positive leader.

Apply This to Your Life

1. Go through each of the power bases, and write down when and how you’ve used that source of power in the past.
2. Ask yourself if you used the power appropriately, consider the expected and unexpected consequences of it, and decide what you’ll do differently next time.
3. Think about the people who have power and influence over you. What sources of power do they use? Do they use their power appropriately? Where necessary, develop a strategy to reduce someone else’s use of illegitimate power over you.
4. When you feel powerless or overly influenced, stop and think about what you can do to regain your own power and control. You’re never without power. Make an effort to be more aware of the power you have, and use it to get what you need, confidently and effectively.

Core Leadership Theories

Learning the Foundations of Leadership

---

© iStockphoto/DNY59

Why are some leaders successful, while others fail?

The truth is that there is no “magic combination” of characteristics that makes a leader successful, and different characteristics matter in different circumstances.

This doesn’t mean, however, that you can’t learn to be an effective leader. You just need to understand the various approaches to leadership, so that you can use the right approach for your own situation.

One way of doing this is to learn about the core leadership theories that provide the backbone of our current understanding of leadership.

Since the early 20th century, four main groups of theories have emerged. We look at these core leadership theories in this article.

Tip:
Our article on Leadership Styles explores common leadership styles that have emerged from these core leadership theories. These include the “transformational leadership” style, which is often the most effective approach to use in business situations.

The Four Core Theory Groups

Let’s look at each of the four core groups of theory, and explore some of the tools and models that apply with each. (Keep in mind that there are many other theories out there.)

1. Trait Theories – What Type of Person Makes a Good Leader?

Trait theories argue that effective leaders share a number of common personality characteristics, or “traits.”

Early trait theories said that leadership is an innate, instinctive quality that you do or don’t have. Thankfully, we’ve moved on from this idea, and we’re learning more about what we can do to develop leadership qualities within ourselves and others.

Trait theories help us identify traits and qualities (for example, integrity, empathy, assertiveness, good decision-making skills, and likability) that are helpful when leading others.

However, none of these traits, nor any specific combination of them, will guarantee success as a leader.

Traits are external behaviors that emerge from the things going on within our minds – and it’s these internal beliefs and processes that are important for effective leadership.

We explore some of the traits and skills that you need to be a good leader in our articles What a Real Leader Knows, Level 5 Leadership, and What is Leadership?

2. Behavioral Theories – What Does a Good Leader Do?

Behavioral theories focus on how leaders behave. For instance, do leaders dictate what needs to be done and expect cooperation? Or do they involve their teams in decision-making to encourage acceptance and support?

In the 1930s, Kurt Lewin developed a framework based on a leader’s behavior. He argued that there are three types of leaders:

1. Autocratic leaders make decisions without consulting their teams. This style of leadership is considered appropriate when decisions need to be made quickly, when there’s no need for input, and when team agreement isn’t necessary for a successful outcome.
2. Democratic leaders allow the team to provide input before making a decision, although the degree of input can vary from leader to leader. This style is important when team agreement matters, but it can be difficult to manage when there are lots of different perspectives and ideas.
3. Laissez-faire leaders don’t interfere; they allow people within the team to make many of the decisions. This works well when the team is highly capable, is motivated, and doesn’t need close supervision. However, this behavior can arise because the leader is lazy or distracted. This is where this approach can fail.

Clearly, how leaders behave affects their performance. Researchers have realized, though, that many of these leadership behaviors are appropriate at different times. The best leaders are those who can use many different behavioral styles, and choose the right style for each situation.

Our article “Laissez Faire” versus Micromanagement looks at how you can find the right balance between autocratic and laissez-faire styles of leadership, while our article on the Blake-Mouton Managerial Grid helps you decide how to behave as a leader, depending on your concerns for people and for production.

3. Contingency Theories – How Does the Situation Influence Good Leadership?

The realization that there is no one correct type of leader led to theories that the best leadership style depends on the situation. These theories try to predict which style is best in which circumstance.

For instance, when you need to make quick decisions, which style is best? When you need the full support of your team, is there a more effective way to lead? Should a leader be more people-oriented or task-oriented? These are all questions that contingency leadership theories try to address.

The Hersey-Blanchard Situational Leadership Theory is a popular contingency-based leadership framework, which links leadership style with the maturity of individual members of the leader’s team. Other contingency-based models include House’s Path-Goal Theory and Fiedler’s Contingency Model.

You can also use the Leadership Process Model to understand how your situation affects other factors that are important for effective leadership, and how, in turn, these affect your leadership.

4. Power and Influence Theories – What is the Source of the Leader’s Power?

Power and influence theories of leadership take an entirely different approach – these are based on the different ways that leaders use power and influence to get things done, and they look at the leadership styles that emerge as a result.

Perhaps the most well-known of these theories is French and Raven’s Five Forms of Power. This model highlights three types of positional power – legitimate, reward, and coercive – and two sources of personal power – expert and referent (your personal appeal and charm). The model suggests that using personal power is the better alternative, and that you should work on building expert power (the power that comes with being a real expert in the job) because this is the most legitimate source of personal power.

Another leadership style that uses power and influence is transactional leadership. This approach assumes that people do things for reward and for no other reason. Therefore, it focuses on designing tasks and reward structures. While this may not be the most appealing leadership strategy in terms of building relationships and developing a highly motivating work environment, it does work, and leaders in most organizations use it on a daily basis to get things done.

Similarly, leading by example is another highly effective way of influencing your team.

Effective Leadership Styles

As we mentioned above, transformational leadership is often the best leadership style to use in business.

Transformational leaders show integrity, and they know how to develop a robust and inspiring vision of the future. They motivate people to achieve this vision, they manage its delivery, and they build ever stronger and more successful teams.

However, you’ll often need to adapt your style to fit a specific group or situation, and this is why it’s useful to gain a thorough understanding of other styles. Our article on Leadership Styles takes a deeper look at the different styles that you can use.

Key Points

Over time, several core theories about leadership have emerged. These theories fall into four main categories:

1. Trait theories.
2. Behavioral theories.
3. Contingency theories.
4. Power and influence theories.

“Transformational leadership,” is the most effective style top use in most business situations. However, you can become a more effective leader by learning about these core leadership theories, and understanding the tools and models associated with each one.