> It turns out a lot more money is spent on marketing ...
The cost structure of marketing has diminishing returns with a very long tail. The first $100M might give $1B in revenue, the next $100M might give $400M, then $100M/$150M, then $100M/$105M, then $100M/$101M, and so forth.
The last $100M of the markeing budget only has a miniscule percentage profit, but a miniscule percentage is $1M. So it gets spent. So marketing budgets appear to be gigantic, but is is because most of the customers are marginal and barely need the product, not because R&D is being short-changed. In fact, this approach maximizes absolute R&D funding. Yes, R&D becomes a smaller slice of the pie, but this only matters to people who cannot do math.
I think you explain why it is smart to spend money on marketing. But really for medical use, I find that marketing can be dangerous. I mean creating a need for a drug? really?
The cost structure of marketing has diminishing returns with a very long tail. The first $100M might give $1B in revenue, the next $100M might give $400M, then $100M/$150M, then $100M/$105M, then $100M/$101M, and so forth.
The last $100M of the markeing budget only has a miniscule percentage profit, but a miniscule percentage is $1M. So it gets spent. So marketing budgets appear to be gigantic, but is is because most of the customers are marginal and barely need the product, not because R&D is being short-changed. In fact, this approach maximizes absolute R&D funding. Yes, R&D becomes a smaller slice of the pie, but this only matters to people who cannot do math.