SAN DIEGO — Whenever anyone suggested that WD-40 Co. needed a second product, President Jack Barry always gave the same response: Why mess with success?
By concentrating on its only product, WD-40 Co. last year sold $57.3 million of the versatile lubricant, penetrant and rust preventive that "stops squeaks, protects metal, loosens rusted parts and frees sticky mechanisms."
Consequently, Barry raised some eyebrows when he recently indicated a willingness to consider adding a second product.
"Heretofore we have simply said 'no' to people who asked us to look at (another) product," said Barry, WD-40's president since 1969. "Now all we're saying is that we have some time to conduct research to see if (a product) does or doesn't meet our product criteria."
Simple economics generally force one-product companies--those which receive the lion's share of their revenue from a single product group--to grow into multiproduct companies, according to Leon Danco, president of Cleveland's Center for Family Business and adviser to managers of small, family-owned companies that often need to bolster their product lines.
"To be successful, the (one-product) company has to take its segment of the market and develop it with more goods or services, and they have to have some unique way to market it," Danco said.
Companies such as WD-40 dominate their limited and clearly defined market niches because their products are "so unique or their promotional activities are so intense" that they somehow become identified as the "generic product" in their categories, Danco said.
Although some one-product companies prosper, said Danco, "a peddler with only one product on the wagon (generally) doesn't make enough money per stop."
Minnesota Mining & Manufacturing, which began as an abrasives company, and Du Pont, which started out as a gunpowder manufacturer, are the two best examples of one-product peddlers that successfully diversified, said Barry, who worked for St. Paul-based 3M before joining WD-40 in 1969.
And, Barry observed, "for years the old Coca-Cola company was intent upon staying a one-product company."
However, broad diversification does not always appeal to one-product companies.
Since its founding in 1922, Rustoleum Corp., a privately held, family-owned company in Vernon Hills, Ill., has stuck to its core business of manufacturing metal coatings that inhibit rust.
Rustoleum's rust-inhibiting paints grew from a "fish formula" created in 1922 by founder Capt. Robert Fergusson, a New Orleans whaling captain who discovered that some ingredient in whale blubber protected iron bolts on his whaling ship from rust, according to Arnie Silberman, Rustoleum's vice president of human resources and administration.
The "whaling captain, thinker and entrepreneur" eventually turned that observation into "Formula 769," an effective--but at the outset, smelly--rust-inhibiting industrial paint that generated all of the company's revenue until the early 1950s, Silberman said.
During the 1950s, a declining whaling industry and a rapidly evolving chemical industry forced Rustoleum to replace the whale-based formula with synthetically produced alkyd, epoxy and urethane coatings.
And, during the 1950s and 1960s, Rustoleum modified its product line to include the popular consumer products--which restore luster to everything from lawn furniture to automobiles--that now produce 60% of the company's revenue.
Still, Don Fergusson, the whaling captain's grandson who is Rustoleum's president, is determined that Rustoleum will "remain a manufacturer of products that inhibit rust," said Silberman.
The Murphy-Phoenix Co., a small, family-run company in Cleveland, has won overwhelming consumer confidence with its Murphy's Oil Soap, a gentle-cleaning household product that has been strong enough to fend off assaults from marketing giants that produce powerhouse cleaners such as Spic and Span, Lysol, Ajax and Mr. Clean. Consumers use Murphy's Oil Soap to clean wood and other delicate surfaces that could be harmed by stronger cleaning products, Murphy said.
Last year the Murphys, who generate all but one-fifth of their revenue from the gentle cleaner, anxiously watched as a string of heavy retail hitters--including Noxell Corp. which introduced Kind, and Bristol-Myers, which tested O'Cedar--attacked the oil soap niche.
"They were unsuccessful tests," observed Vice President Paul Murphy.
But few one-product companies are armed with a product as successful as WD-40 or Murphy's Oil Soap. And most one-product companies "really don't have a vision about what to do once a product runs its life cycle," said G. Dale Meyer, a professor in the Graduate School of Business Administration at the University of Colorado and chairman of Boulder-based Western Consulting Corp. "They don't know what they're going to be able to do for their next act."
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