> That is, you can plausibly make me want a BigMac over a Whopper, but you can't make be want a burger if I'm already full.
But that's all the power in the world because it's what allows you to sell something not as good for more money instead of selling something better at razor-thin margins.
Go back to the diamonds. If the purpose you state is correct then anything of similar value could substitute instead. It could be an emerald, or a platinum bracelet, or real estate. Anything that serves as an appropriately valuable engagement present.
Moreover, diamonds have been particularly poor at serving that purpose because they don't have high value. Ever try to sell one? De Beers had a de facto diamond monopoly and artificially inflated retail prices by restricting supply and controlling resellers. But if you go try to sell a diamond as a private individual, you won't get anything like what someone would pay for it at retail, because the retail prices were set artificially high by De Beers. Compare this to e.g. precious metals where you can walk into a pawn shop and buy or sell for only a small percentage deviation from the spot price. Meanwhile you're just asking for someone other than De Beers to discover large deposits of diamonds and break the monopoly which will cause prices to crash much harder than they would for a normal commodity with the same new resource discovery, which is exactly what happened a little more than a decade ago. And this is before we even get to the whole issue with conflict diamonds.
"All the power in the world" is overstating the case a bit.
> because it's what allows you to sell something not as good for more money instead of selling something better at razor-thin margins
Competition isn't turned off because of marketing. Any company that has a poor product with a large margin is subject to a competitor selling a better product at the same price or a similar quality product at a lower price. McDonald's and Burger King sell competitive (to each other) products at razor thin margins for this reason, and, by the way, not generally at higher prices than smaller competitor with much smaller marketing budgets.
The diamond case is tricky because it has to convey solid honesty on the top of a many-layered set of explicitly un-stated expectations - so any attempt to "get out of it" would be viewed with suspicion, voiding the entire purpose. De Beers definitely and cleverly cornered that market and yes, that gave them some power. That said, it would be silly to expect that there did not exist substitutes in the market. Emerald jewelry goes way back.
> "All the power in the world" is overstating the case a bit.
I don't think it is. Einstein said compounding interest is the most powerful force in the universe. That's what it gives you. Higher margins that can be reinvested into growing the company. Over the lifetime of, say, Coca Cola (incorporated 1892), a 2% annual ROI which is then reinvested into the company will result in a company which is not quite 11 times as large. Make the ROI 8% instead and the company will be more than 11,000 times as large.
> Competition isn't turned off because of marketing. Any company that has a poor product with a large margin is subject to a competitor selling a better product at the same price or a similar quality product at a lower price.
This is provided the competition has equivalent marketing. Take the companies that charge you money for getting your credit report even though you can get it for free. Or any of the services offered by local towns (e.g. use of gym at the community center) at or below cost, with any number of for-profit gyms just down the street which charge much higher rates and see no shortage of business. Or the people who pay for proprietary software when there exists superior free software. Or, most relevantly for this place, the scads of companies run by engineers without good marketing (e.g. Novell) that had superior products and failed in the market because someone like Microsoft came in with something inferior and marketed it better.
> McDonald's and Burger King sell competitive (to each other) products at razor thin margins for this reason, and, by the way, not generally at higher prices than smaller competitor with much smaller marketing budgets.
Higher prices, no. Higher margins, yes. Because that market is highly price sensitive so it is more successful to expand margins by reducing quality than by raising prices.
But that's all the power in the world because it's what allows you to sell something not as good for more money instead of selling something better at razor-thin margins.
Go back to the diamonds. If the purpose you state is correct then anything of similar value could substitute instead. It could be an emerald, or a platinum bracelet, or real estate. Anything that serves as an appropriately valuable engagement present.
Moreover, diamonds have been particularly poor at serving that purpose because they don't have high value. Ever try to sell one? De Beers had a de facto diamond monopoly and artificially inflated retail prices by restricting supply and controlling resellers. But if you go try to sell a diamond as a private individual, you won't get anything like what someone would pay for it at retail, because the retail prices were set artificially high by De Beers. Compare this to e.g. precious metals where you can walk into a pawn shop and buy or sell for only a small percentage deviation from the spot price. Meanwhile you're just asking for someone other than De Beers to discover large deposits of diamonds and break the monopoly which will cause prices to crash much harder than they would for a normal commodity with the same new resource discovery, which is exactly what happened a little more than a decade ago. And this is before we even get to the whole issue with conflict diamonds.