From my understanding Lionel's bread and butter isn't the low end at all. I have heard they are making their money on the high end merchandise which seems obvious because that is what they seem to be investing most in and churning out. I think Menard's is way better positioned for the lower end of the market and am doubtful that this side of the market pushes people into the hobby to any large degree.
Unfortunately, your understanding is completely wrong. When Lionel introduced the Tier 4 starter set engine, Ryan of Lionel said the obvious, that it is the low end traditional starter set line where Lionel makes the profits that keeps Lionel in business.
It's also worth noting that this Menards engine sold out in 3 hours. There have been scale products that couldn't get preorders for 200 units in 3 months! The scale market gets far too much attention especially here on the forum, given how actually small that market is. Think about folks: K-Line didn't end up with a $5M debt from making the 027 starter products that put them on the map in the first place.
How about MTH? Mike Wolf said a number of years ago they were losing money. That would explain their lack of new product tooling save for the 44 ton switcher, and why the search to find a buyer for the company was so long and unfruitful.
It's a long story, but I got into a discussion with a Lionel rep at a dealer's event. When he noticed I was wearing a (self-made) K-Line 027 trains shirt, he humorously quibbled, why not Lionel. I told him point blank, I want to buy a train car... not make a welfare subsidy payment to tooling and production loses on the scale high end. And after a lengthy discussion, he never disagreed with what I said.
I also told him I thought they were holding down prices on scale stuff (IE: a US made LionScale car retails less than a Chinese made traditional car with die cast trucks). He didn't disagree with that point either.
YES, Lionel does really hawk up their scale product line. But the only way you're going to hear Lionel say the scale product line is what keeps them profitable is for them to sell a whole lot more of it, and to also raise prices a lot... a REAL LOT!