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The weird thing is they had this figured out in the 2000s. You could get an American Strat, a Mexican/Japanese Strat, or a Squier if you were ultra cheap. And the second tier Strats weren't crappy! I have a Mexican Strat from 2003, which cost $500 at the time (so more like $900 today), so it was pretty reasonable in price, and is honestly a nice guitar. It might not be as nice as the American models were, but it's still a good instrument that can last you a long time (I mean, it's going strong for me 23 years later).
Then you look today, and I honestly have no idea what kind of guitar I would get from Fender if I was in the mood to upgrade. There was no need to add more models until a casual purchaser has no hope of figuring out what the product line is all about. They had a pretty good system, and then trashed it for... no reason that I can tell.
At least on the bass guitar side, things have really changed at the lower price points. It used to be that a $300 bass was barely useable. These days, the advent of CNC machining and better QA means that a $300 bass today is probably nicer than a bass that cost $800 back in the 90s. If you're willing to replace the tuners and pickups, it'll compare favorably to an older MIA model.
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