Profiting by Adjusting to Changes in Market Winds

Bill Merry Sr. made some dramatic changes to save his 31-year-old ornamental iron company from extinction. In the 1960s and 1970s, the Nashville company’s core business was making decorative iron pillars for carports and patios. Iron stair railings were also brisk sellers.

But architectural tastes changed, and Merry was faced with the fact that homeowners began to prefer wood--not iron--railings.

“We just had to look for other things to do,” he said. “For a while there, we sold a lot of security doors and burglar bars.”

Although burglar bars didn’t inspire his designers, they did pay the bills and turned the company in a new and prosperous direction.

“As security became more important to well-to-do homeowners, we began to sell nice, big entrance gates,” Merry said.

In recent years, Herndon & Merry Inc. has crafted custom gates for Nashville’s top country music stars.

As Merry’s example illustrates, a great advantage a small business has over a big one is the ability to quickly adapt products or services to keep up with shifts in the marketplace.

“About 20 times a day, I remind people, ‘It isn’t what you want to sell, it’s what somebody wants to buy,’ ” said John Graham, president of Graham Communications, a marketing consulting firm in Quincy, Mass.

Savvy small-business owners are constantly evaluating signals from the marketplace. And, Graham said, they are more willing to change direction because “the distance between the cash register and the bank is so much shorter for a small business than for a big business.”

Graham and other consultants say you should be constantly rethinking your marketing strategy. When changes are needed, you can make them without spending a lot of money, hiring new people or abandoning your core business. Graham offers these tips:

* Ask “What does my customer want to buy?” not “What do I want to sell?”

* Educate, educate, educate. Share your expertise with your customers. What distinguishes one company from another is the amount of good information it is willing to share with others.

Here’s how Merry did it. In the late 1980s, with the gate business flourishing, Herndon & Merry branched off in a new direction. It opened Garden Park Antiques, which transforms antique ornamental iron into decorative indoor and outdoor furniture.

Merry opened the antique business because several customers asked the company to refurbish pieces of antique ironwork purchased abroad. Today, interior designers flock to the store to pick up one-of-a-kind pieces of wrought iron furniture for their clients.

Merry’s willingness to change has paid off. In 1991, sales at the family-owned firm exceeded $1 million.

Merry admits that he waited too long to take the business in new directions, because it was so easy to keep doing things the same old way. “But one day we woke up and made some drastic changes,” he said. While small-business owners such as Merry adapt to changing markets, large corporations, including IBM and Sears, Roebuck, are struggling to do the same thing.

Big corporations “reconstruct reality to fit their picture of it,” consultant Graham said.

A recent survey conducted by Yankelovich Clancy Shulman, a Westport, Conn., consulting firm, seems to prove Graham’s point. Most of the 1,000 chief executives taking a one-hour marketing test failed it, according to Robert Shulman, a principal in the firm.

About 88% of those surveyed believed that the best prospects for an established product were people similar to their current customers. In fact, almost the exact opposite is true. Shulman said if someone looks and thinks like your current customers, but isn’t one, there is a reason.