You notice the wriggly rubber hand he's carrying first. Then his fangs and the blood dripping from his mouth. Meet werewolf Michael Good, of Reamstown, Pa., a sixth-generation funeral director who is using the first Halloween party officially sponsored by the National Funeral Directors Association to embody the public's worst fears about morticians.

"The association was afraid to do it before," says a gray-faced Leslie Peake, owner of the Peake Memorial Chapel in Milwaukie, Ore., as he holds up his vampire cape with one hand and adjusts his wife Frieda's wedding veil with the other. "We decided we can enjoy Halloween in public now."

Welcome to the death care industry's annual bash -- a convention where you can win arterial fluid as a door prize, and where the sound of Olivia Newton-John singing, "Let Me Hear Your Body Talk," booms from speakers placed next to revolving caskets and hearses.

No other profession could put on this kind of show. Who else would bring in an organ to trill introductions of its officers? Or hold an abbreviated memorial service, complete with choir, for members who had died since the last meeting? Or carpet its convention hall in tasteful burgundy so that not a footfall is heard as conventioneers pad between the displays of shrouds and burial underwear, tastefully arranged under subdued lighting.

This is the 104th time the nation's largest federation of funeral directors -- membership stands at 14,000 -- has assembled. And it comes at a crucial time for practitioners of one of the nation's most stress-filled occupations. Shaken by a public that increasingly embraces cheap cremations, and by watching cemeterians invade their turf by selling vaults and advance funeral packages, the funeral directors are fighting back.

The association has hired a big-name Washington law firm, Jaworski and Fulbright; launched a political action committee; engaged a public relations firm; and searched college campuses for 50 supporters of funeral rituals to speak for the industry when the news media require "expert" opinions. And if your school-age children come home talking about the importance of sealer caskets, it will mean that the NFDA's newest campaign -- to win the hearts, minds and future contract signatures of the "thought leaders of tomorrow" -- is succeeding. Teams of funeral directors are being dispatched to high schools and colleges to lecture about the need for rituals and the value of funeral merchandise.

There's also a game plan to revive the industry's talisman, the "traditional" full-service funeral, which includes embalming, viewing, a casket and burial. If the body in the casket doesn't look like a person you lived with for 40 years, says David Bohardt, the association's executive director, "then the family has no incentive the next time to buy a traditional funeral."

To improve bad makeup jobs, the convention featured workshops on embalming and "cosmetizing," featuring two bodies from a local morgue. Embalmer Janene Cunningham, who is responsible for 1,000 bodies a year at the Laurel Land Funeral Home in Dallas, brought her pink Mary Kay cosmetic case and shared her skills. "There are three basic hair styles for women," says Cunningham, a master artist who wears no makeup herself. "The poodle doodle; half bangs to the right or left; and soft curls to the face -- the two little curls right there." She gestures to her temples. "You've seen 1,000 grannies that way."

The association also is sponsoring a new embalming textbook for the nation's mortuary schools.

Casket manufacturers are fighting back too, refusing to let cremation get in the way of sales. They're selling hardwood -- and even metal -- caskets to be burned.

"We've sold our most expensive mahogany caskets for cremation," says Mike Ertel, vice president for marketing for Batesville Casket Co., the largest U.S. manufacturer. "People recognize that whether you bury the casket or burn the casket, it's a fairly limited-use product."

Is it hard to convince the customer that it's not a waste to buy a $4,000 casket on Tuesday just to burn it on Wednesday?

"Is it kind of a waste of money to have a big wedding?" Ertel counters. "It's only going to last a day. You can't take it with you either."

Indeed, the message to funeral directors is to work with "the cremation-minded" to convert cremation into a full-service funeral -- or at least not to let it become a cheap alternative.

"The yuppies see cremation as an ecologically clean means of disposal," says Mark Pennington, vice president of Superior Products of Cleveland, pointing out the clean, Italian lines of stainless steel cremation cubes that are more attractive -- and more expensive -- than conventional urns. To "yield a reasonable return on funeral services and cremation," as Bohardt puts it, funeral directors are selling extras like Kiwanis emblems, ground burial for urns and even heavy-gauge plastic vaults for cremation urns.

But the industry is doing much more than adapting the old. The death supply suppliers have new lines, too.

How about personalized caskets, on which the deceased's name is affixed with brass letters? "As in Pierre Cardin and Louis Vuitton, it's important to have that name," says Howard Kornstein, vice president of Hallmark Monograms, which got into the funeral business four years ago.

At the National Music Service Corp. ("Where Words Fail, 'Musical Presence' Speaks"), founder and crooner Merrill Womach often hires sidemen from the Lawrence Welk Orchestra to update traditional religious hymns. "On 'Just a Closer Walk With Thee,' we wanted a western twang," explains the blue-tuxedoed Womach, flipping on one of the 2,500 selections his firm offers.

And of course, there's a computer angle. There are now 19 companies offering software for the funeral industry. With names like "Cemetery Master" and "The Perfect Arrangement," the programs will generate everything from dunning notices to obituaries, death certificates and even sympathy letters.

Handwritten letters are one tradition that's crumbling. But nothing is changing as fast as the race for the death dollar.

Traditionally, this battle has been fought between the funeral home and the cemetery. Cemeterians complain that funeral directors drain the family of cash before they have a chance to buy burial property. In retaliation, the cemetery industry uses door-to-door selling and direct mail campaigns to encourage people to buy their burial property first. The hostilities between the two industries have been so great that "five years ago, I would not put a copy of American Funeral Director and American Cemetery on the same table," says Adrian Boylston, advertising director of the firm that publishes both magazines.

So it was cheered as a historic moment this week when the president of the American Cemetery Association simply showed up here and traded pleasantries with Pat Mayes, president of the funeral group. Ironically, both men are "crossovers" -- people who run both funeral homes and cemeteries, a growing practice that may help thaw the chill.

But the two "allied" professions are not out of the freezing zone yet. A resolution to allow cemeterians to become associate members of the funeral group "hasn't got a snowball's chance in hell of succeeding," says Bohardt.

Instead of merely fighting over turf, however, funeral directors are being urged to grab more of it. As a result, the funeral director -- who must know religion, psychology, medicine, sales and other fields -- now is learning financial counseling. Just like department stores that began offering stock-brokering services, funeral homes are beginning to offer life-insurance-like plans that provide for prepaid funerals.

"Pre-need" is the buzz word, and it's hot. So hot that SCI Inc., one of the country's largest funeral chains, dropped its largest supplier last month when it learned that the supplier -- Batesville Caskets -- had set up a new division, "Forethought," to test-market its own pre-need plan.

The Batesville move is big news here, and the message is clear: The big boys are jumping into pre-need, and you'd better jump in, too.

"We have always been more reserved in our aggressiveness in soliciting pre-need," says association president Mayes. "We've come to realize soliciting's not so bad . . . just look at dentistry and medicine. Would you have believed that major hospitals would be running ads on TV? The funeral industry will now use all the marketing techniques that other industries have."

Still, some practices remain too radical -- like the Family First Casket Outlet store, which opened this summer between a shoe store and a tanning salon in Springfield, Mo. Several dozen local funeral directors are considering a boycott of the outlet's customers, despite a federal law that allows families to supply their own casket. "You can't sell caskets like soap," complains funeral director Don Catchen of Covington, Ky.

Unlike most trade groups, the funeral industry remains largely segregated. The black funeral directors' association meets at another time in another city. "I have no answer why there aren't that many minority members," says executive director Bohardt One funeral director's wife attended the Halloween bash dressed as a comic version of a Ubangi woman, complete with blackface, huge lips and an ape's midsection. Her efforts won her a portable telephone, awarded for "the most creative costume."

Women funeral directors also see the industry as slow to change. "A girl in our homes is now doing pallbearing calls," licensed funeral director Ann Marie Coletti of New York proudly announced to one of her mentors, funeral director Annette Wolfe of Queens. "She wears a black suit -- they can't stop her."

Sandra Strong, owner of Albuquerque's largest mortuary and manager of 11 funeral directors, has formed a "crisis support team" to make sure wives and daughters don't automatically sell funeral homes when the men in their families die. "We can do more than just answer the phones and stand by the door," Strong says. "The stereotype should die."

But age-old images linger. In an essay encouraging funeral directors to raise their often "deplorable" income level, Richard Bryan, president of the Michigan Funeral Directors Association, notes, "It is ironic that if a funeral director had the boorish manners and paltry compassion of some doctors or lawyers he would soon be out of business. Yet somehow he allows himself to be portrayed as the avaricious 'merchant of death' buying black Cadillacs with the proceeds of people's grief, while the doctor or lawyer earning three or four times as much is living the life style people come to expect of them."

A truer picture of the American funeral director might encompass the small-town virtue of Don and Margaret Dobmeir, who raised seven children over their funeral home in Barnesville, Minn. (population 2,207).

"I'll never forget our Bathroom Days," says Margaret Dobmeir, who has kept a diary for 20 years of the cases they handled. "It was the only place we could keep the children so the guests didn't hear the noise. I'd put two boys in the bathtub, let one play on the floor and I'd sit with the baby on the toilet."

"We'd run the fan," her husband adds, "tell people it was for ventilation -- but it was really so you couldn't hear the patter of feet."

To supplement their income, they ran a Ben Franklin store for 20 years. Conventions are among the rare vacations they get. This one, as others have been, was interrupted by a 3 a.m. death call -- which meant the Dobmeirs cut their week short.

"No one in a small town would understand if you weren't there," says Don Dobmeir. "We can't be replaced."