While few people associate elephants with computer disks, Michael Shane is betting that a rather macho-looking pachyderm will do for computer-disk marketing what an apple did for computer-hardware sales. Shane is using a colorful elephant logo -- along with a careful courtship of computer dealers -- to position his product, Elephant Memory Systems disks, for the expected growth of the home and office segments of the desktop-computer market.

Shane predicts that his company, Leading Edge Products Inc., in Canton, Mass., will sell 10 million of the Elephant Memory disks in 1983, at a little more than $2 apiece. Last year, Elephant Memory's first on the market, LEP sold 5 million disks through retail outlets.

While it may not seem surprising that a computer products company is riding a wave of fast growth, LEP's success came as a result of leading the computer market, rather than trailing in its wake. In late 1979, when Shane organized LEP as a distributor of computer peripherals, he estimated that there were less than 1,500 computer stores in the United States outside the Radio Shack network -- a modest dealer base for a distributor with plans for selling a broad group of products nationally. Shane positioned his company for a time several years hence when the retail segment of the computer market would become increasingly important.

"The prognosis for computer retail stores was excellent," the 34-year-old LEP chairman notes. Shane says he based his conclusion on a market survcy of 600 computcr dealers conducted by his fledgling company in January 1980. Leading Edge polled the dealers on what Shane called the need for a "super-distributor" -- one that would evaluate computer products on the basis of what would do best at retail stores, warehouse selected merchandise, and ship it nationally with no minimum order. Eleven percent of the dealers responded to the survey. Shane found their replies favorable enough to proceed with his distributor plans.

Those close to Shane say that the survey simply served to confirm his marketing instinct. In this case, he was confident he could apply the lessons he had learned in the apparel industry to the computer sector.

In the mid-1970s, the young entrepreneur was able to combine snappy marketing and attention to retailers into a remarkable, although short-lived, success. His company, Faded Glory Jeans by Appendagez Inc., rocketed to sales of $55 million within three years of introducing one of the clothing industry's first lines of prefaded denim.

With Faded Glory, Shane had gambled that the teenage propensity for washing a new pair of jeans umpteen times to fade the material meant there was a market for prefaded jeans. Working on that instinct, he manufactured a line of fashion jeans and sold it through a network of specialty stores and independent boutiques. In doing so, he profited handsomely.

But the Faded Glory saga ended sadly. The company's sales peaked at $55 million in 1976, plateaued for the next few years, then plummeted. Shane sold his interest in 1979; Faded Glory folded operations a few years later.

Shane had spread himself too thin, fashion industry observers say. They attribute the demise of the company to its inability to manage balanced growth in its sales and manufacturing divisions. In Faded Glory's heyday, according to Shane, its sales force booked $150 million annually in orders, but its manufacturing division could produce only enough jeans to supply one-third of that amount. Dealer dissatisfaction increasee accordingly, and the company finally crumbled.

Sincc Leading Edge is set up strictly as a distributor of computer goods, it seem unlikely that Shane will allow the company to repeat Faded Glory's boom-andbust history. LEP can take advantage of Shane's proven ability to spot markets before they develop. As new technologies appear, the company can shop around among manufacturers to find the most appropriate items to carry. With Faded Glory, the company lived and died on the fortunes of one fashion item. LEP, on the other hand, sells a wide group of products along with computer disks -- including printers, modems, and computer screens -- so a drop in the sales of any one line would not doom the business as a whole.

From LEP's beginning, Shane saw an opportunity in computer disks. Here was a low-budget item that was an integral part of almost all small computer systems. Disks would give LEP an entree into the thousands of computer stores that Shane expected would open. Disks also were low priced, which would make dealers less hesitant about taking a flyer with an unknown supplier. And after LEP Established itself with these dealers, the company could anticipate selling them expensive computer printers, which it also planned to carry. In 1980, computer dealers sold about 10% of the 50 million disks sold in the United States. To attract retail buyers, Shane recognized, image and price were particularly important. In LEP's first foray into disk marketing, the company stressed price.

From July 1980 to November 1981, Leading Edge distributed Memorex Corp. disks, opening up 900 accounts and building sales to a rate of 150,000 disks per month, according to Shane. Why push price? The Memorex brand name was already well known to consumers through countless television ads featuring Ella Fitzgerald and a shattered wine glass. LEP could build on that consumer familiarity -- and add to Memorex's market share -- by advertising the disks for as little as $2 each, about 50% less than other discounted brands.

While LEP's campaign quickly made it Memorex's largest distributor, the companies parted ways with ill feelings on both sides. Memorex, perhaps fearful of becoming too dependent on a single distributor, cut back LEP's discount for volume buying. Leading Edge, ready to strike out on its own, introduced its own label, Elephant Memory Systems, and dropped Memorex.

With Elephant Memory, LEP had to create an entirely new marketing strategy. The company chose Dennison KYBE Corp. in nearby Waltham, Mass., as its new disk supplier. Instead of promoting KYBE disks, however, Leading Edge decided to sell the product under its own trademarked name, gearing its marketing to the home-computer and office-computer users who frequent retail stores. By November 1981, the ranks of computer dealers had swelled to about 2,000.

The heart of the Elephant Memory disk campaign is a logo featuring a fullface depiction of an indigo-skinned elephant. The LEP elephant, with its menacing tusks, no-nonsense stare, and what appears to be a triangular jewel embedded in its forehead, stands apart from conventional disk marketing, in which promotions tend to feature square, black disk packages in a number of uninspired poses.

The Elephant Memory logo draws attention to the consumer product as one with a tie-in to the memory storage function of computer disks. An elephant, after all, never forgets. The connection of product to function, however dramatic, is done with a sense of humor.

LEP, of course, was not the first company to choose a friendly image to promote a computer product. Apple Computer Inc.'s colorful apple logo is now connected in the minds of millions of consumers with personal computers. But LEP is relying on its logo to a greater extent than the hardware leader is. Apple uses its symbol as a backdrop to marketing that stresses the technical virtuosity of its computers. LEP is making its elephant the heart of its promotions, technical messages are secondary.

LEP has intensively advertised Elephant Memory disks to drive home its consumer image. Each quarter, LEP budgets 3% of anticipated disk sales for Elephant Memory advertising, which worked out to about $350,000 for the first year and more than twice that amount for 1983. With that money, Leading Edge has been able to blanket the growing number of computer magazines with full-page ads featuring the elephant against a yellow background, with the word "remember" in large, flamingo red type above the logo. By the end of 1982, these ads had appeared in about 60 computer trade and specialty magazines.

Despite LEP's success with Elephant Memory, none of its disk competitors has matched its flashy advertising. And none has used a catchy symbol like an elephant to name its products. This may not necessarily represent conservatism on the part of other disk producers but rather an orientation to different parts of the disk market. Verbatim Corp, for example, which is estimated to control about one-quarter of the worldwide disk market (Elephant Memory controls 3%), uses subdued promotions to emphasize its reputation for quality.

The reason for this approach is apparent by looking at Verbatim's sales. Approximately 60% of the company's output, according to a study by Venture Development Corp., of Wellesley, Mass., is bought by hardware and software suppliers who package the disks under their own names. These customers demand engineering reliability, a concern Verbatim has carefully addressed in its marketing. A sophisticated advertising campaign, which could win points with consumers, could undermine Verbatim's standing with its largest accounts.

LEP, however, can hardly expect to remain unchallenged with its consumeroriented marketing. Memorex and Maxell Corp. of America, audio tape mainstays that now produce computer disks, have many years of experience in selling to consumers and retailers. They will be joined shortly in the disk field by audio stalwart TDK Electronics Co. All three can be expected to give Elephant Memory increasing competition in retail sales.