Two men are on an elevator in Toronto, and one asks, "Where are you from?"

"Pittsburgh," the other replies.

"Oh, you poor guy," says the first one. "Whudda horrible place."

The second man grins. He has heard it before. But never, before this year, has he had a better comeback to Pittsburgh bashers: The place where you once took two shirts to work because the first was soot gray by noon had been named 1985's Most Livable American City. Times change. Cities change.

"So I say to him, 'When was the last time you were in Pittsburgh?'" recalls Jay D. Aldridge. "And he says, 'Never.' The guy'd never been to Pittsburgh . . ." Images change slowly.

Aldridge has been blocking punchlines about Pittsburgh for 10 years. It's his job. He is president of Penn's Southwest Association, a nonprofit organization with branch offices in West Germany and Japan that tries to attract new industry and new job opportunities to a city that has found it is easier to clean up its air than to clean up its image.

Pittsburgh isn't the only city concerned about how it's perceived. In an increasing number of cities today, professional imagemakers are busy painting smiling faces on urban skylines. Even mid-size cities and towns, where 20 years ago public relations meant a tacky sign at the city limits that read "Welcome to the Apple Capital of . . ." or "Welcome to the Historic Home of . . .", are waging promotional battles to attract tourist dollars, convention income and -- the biggest targets -- new industry and new jobs. Those high-stakes territories once monopolized by New York, Chicago and San Francisco are now up for grabs. And may the best (sounding) town win.

"There's real warfare now for the dollar," says Philip Kotler, professor of marketing at Northwestern University's Kellogg Graduate School of Management. "Cities are now coming under what we call 'strategic marketing thinking.' They're asking, 'What would be a robust and balanced economic base for planning the future?' And marketing tends to be a big part of the answer. It's not a magic wand, but it is a systematic way of thinking how to attract and keep customers."

When Pittsburgh unseated Atlanta, last year's winner as "The Most Livable City" in Rand McNally's annual Places Rated Almanac, a Pennsylvania businessman needled Atlantans by plastering 11 billboards in the Georgia capital that read: "Greetings From Pittsburgh -- The Nation's Most Livable City. Y'all Come." While Atlantans were said to be waiting for sub-freezing northern temperatures to refresh Pittsburghers' memories of what livability's all about, another city beat them to the counterpunch. The new No. 1 woke up one recent morning to find billboards picturing a beach-blanket goddess and the message: "It's the Pitts If You're Not in San Diego in the Winter."

"There's a lot of good-natured kibitzing going on," says Aldridge, shying away from the No. 1 label, lest he should intensify rivalries. "Obviously we're pleased. People want to identify with a winner. But this is nothing you turn on overnight. It takes time."

To change a Detroit from "The Murder Capital of the Nation" to "The Renaissance City," or a Boston from "Beantown" to "The Bicentenniel City" takes more than time. Public relations experts are finding it takes money and plenty of imagination, some luck, a long-range plan, and a product. Especially a product. "If the message isn't backed by real performance," say Kotler, "it's no good. It doesn't matter how pretty a picture, say Houston, paints of itself if once you get there you can't drive through the streets because of traffic . . ." Aldridge agrees: "Puffery won't work. We don't try to pump up anything that isn't pumpable in Pittsburgh."

For most cities, discovering what will and won't pump up is the challenge.

"It can't be just cute -- it has to be meaningful," says Ted M. Levine, president of Development Counsellors International Ltd. (DCI), a New York firm that for 25 years has specialized in marketing cities, states, even nations. "The competition is incredible now," he adds. "The trick in this business is to come up with something that is different. I call it end-running the competition . . ."

Asked to polish the "dirty industrial town" image of Dayton, Ohio, Levine says he started by wondering, "What in the hell is different about this place that a lot of people only associate with tires?"

He uncovered a Dayton where the Wright Brothers invented their airplane, where John Patterson improved and manufactured the cash register, where the pop-top can was invented. "This city has more patents per capita than any where else in the United States," says Levine. "It's a place where inventors and innovators are treated like baseball players. That led us to the notion of 'Dayton -- The Innovation Location.' "

Even once overlooked areas like small but growing Fairfax County, Va., have taken up image shaping. Ten years ago it was known only as a bedroom suburb of Washington. But an aggressive plan of attack has changed that. With a lot of politicking and double-page ads in the Wall Street Journal and other publications headlining, "The Fastest Growing High-Tech Area East of The Mississippi Is Thriving Just West of the Potomac," Fairfax County has earned a reputation as one of the nation's top self-marketing locations. "It has nurtured precisely its most attractive advantages, and they're not taking a back seat to anyone," says Jeffrey Honig, a vice president of Richards Consultants in New York, an executive recruitment firm that relocates high-tech execs to new jobs and locales.

Negative images, says Levine, are more troublesome to shake off than no image at all.

When reports circulated this fall that an American city would host a 48-foot-tall sculpture of a rubber desk stamp by pop artist Claes Oldenburg, few were surprised to learn it was Cleveland. Sometimes referred to as "The Mistake on the Lake," it is the only city that has had both a river and a mayorial coif catch fire (one was loaded with combustible waste products; the other came too close to a welding arc). To counter the klutz image, the city has undertaken a "Cleveland's Got It" campaign -- although the ambiguity amuses some critics.

The racial strife in the '60s has plagued the image of Birmingham, Ala., says Levine, whose company the city hired to help reshape its reputation. Birmingham's biggest plus to date, he adds, is its mayor, Richard Arrington, a black reformer.

"He's one of the better mayors in the country and he shows the place has changed," says Levine. The city's current ad campaign pictures a boxer's midsection, a Birmingham logo on the shorts, gloves posed for a bout. "The New Contender" is the slogan. The promotional copy reads: "If you're going to play with the big boys, you have to play tough . . . Check out the new kid on the block."

Dastardly deeds of individuals have also marred perceptions of cities. It took a decade and a hit TV show for Dallas to duck the reputation as the city where John Kennedy was assasinated. And Richard Nixon tarnished Washington, D.C.'s pin-striped image in the late '60s when he declared it "The Crime Capital of the Nation." That gradually faded from lack of fact, but wasn't totally forgotten until the early '80s when The Mayor's Committee To Promote Washington adopted the slogan, "A Capital City."

Says Tom Murphy, public relations manager for the Washington, D.C., Convention and Visitors Association, who claims no recollection of the Nixon moniker: "Every city has its slogan. Washington didn't have one for a long time. But Washington now is the city. It's image has changed from being a city of government . . . to a major, international, very cosmopolitan city. And that's the image we're pushing. We've kind of got it all here -- a lot of other cities don't have it and they're really having to fight for it."

Only this year did Montreal decide to jump into the urban fracas. It's initial pitch, "Montreal Is Happily Lacking," wasn't quite understood by its American targets to mean "lacking traffic jams and other big-city troubles," says Aniele Lecoq, an industrial commissioner at the Economic Development Office of the Montreal Urban Community. The current ad campaign, "Montreal Has Outgrown Canada," which has run in the Wall Street Journal, Industry Week and Canadian Business, has caught on nicely, she says.

Desperation forces cities into image introspection more often than does enlightenment, says Kotler. When faced with a rapidly declining metals market in the mid-'70s, and an urgent need to diversify its economic base, Pittsburgh tried to retire its "Steel Town USA" nickname and replace it with the tamer but more appealing "City of Champions." City fathers began boosting sports champs such as Terry Bradshaw and Willie Stargell as well as the city's expanding arts and science arenas. The result: Pittsburgh's image is slowly shifting from blue collar to button down.

If success in image alterations is measured in acceptance, Pittsburgh has taken the right steps. Besides its "Most Livable" ranking, it has lured new multibillion dollar industries to the area. When the U.S. Department of Defense chose Pittsburgh as the home of its new software engineering institute, the city announced the tough fought victory (Bowie, Md., was a finalist) in a full-page ad in the Wall Street Journal: ". . . we have the talent, the experience, the skills, the resources, the environment and the dedication to get the job done."

But Aldridge admits it wasn't easy convincing proud Pittsburghers to drop the "Steel Town" label. "Some radio deejays still use the term, and we still have the Pittsburgh Steelers running around with 'Steelers' on their helmets," he says feigning frustation. "Maybe we should rename them the 'Pittsburgh Softwares.' "

Image reworking in cities such as Baltimore, Mobile and New York led Levine to conclude that the critical reason for adopting a new name or slogan isn't for outsiders. "You create a slogan to unify the local community. The main reason for a theme is really right at home. Take 'I Love New York' -- it's a marvelous slogan because it's saying to New Yorkers, 'By God, be proud of your city.' And that's where you have to start changing the image -- in your own backyard."

Dick Bryant, the spokesman for the Houston Economic Development Council, agrees: "It's a standard marketing and p.r. maxim that every employe is a billboard -- and I think that is true of the residents of a city. First you have to educate your citizenry and really identify the city. Then, you begin taking that out to the rest of the world."

For Houston, that should read "the rest of the universe." In its second year of an aggressive self-marketing campaign to recover from a bad case of big-city identity crisis, Houston still claims to be "The Oil Capital of the World."

In the early '60s, it became known as "Space City" and "Can-Do City." Ten years later, the energy crunch annointed oil-rich Houston as "The Golden Buckle of the Sun Belt."

But its Texas-sized ego suffered a blow when the oil glut of the '80s belittled its importance and shook its economic foundations. "When we had a slowdown -- and let me impress that it was only a slowdown," says Bryant, "you started seeing stories about boomtown going bust and tumbleweed in the streets." Houston was suffering other image cracks. It was seen as a city that wasn't solving its problems and its traffic jams are legendary.

"We looked around and found it is about what you probably should get when you become the fourth largest city," says Bryant, "but even people here didn't realize we'd grown so. It was obvious that since we had reached a point of maturity and had become a well-rounded, cosmopolitan city, we really needed to do a better job of seeing who we are and telling the world about us."

The Houston Economic Development Council hired a nationally recognized authority to develop its program: Don Meyer, fresh from putting Baltimore back on the map, started doing the same for Houston.

How will you recognize the new Houston? The slogan: "Houston Works for Business." But it's next popular image, says Bryant, comes from the upcoming commercialization of space. The city currently has an ad campaign that shows a space station city orbiting the distant Earth, and the message: "The First Word From the Moon? Houston." Says Bryant of the slick poster version, "We think they're going to be cult collector's items."