> "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.
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.