There are inherent risks with budget lines though. Most budget lines offer approximations of much more expensive and popular models. Here are your Epiphone Les Pauls, or your Squier Telecasters. Gretsch was following a similar route with the 5120 (basically a cheap 6120), the Pro Jet (basically a Duo Jet), and a few other offerings. Oddly enough, the sleeper of the line was the Corvette - a guitar with no pro-line counterpart.
All of these budget guitars that had a pro-line contender was noticeably off somehow and this was the distinction that said if you want a guitar that looks and feels exactly like the pro-line, you're going to need to buy the pro-line. The number of knobs, switches, switch placement, the body routing (in the case of the Pro Jet) not being quite up to Duo Jet hollowness, these were all things used.
But maybe this is the wrong approach.
Think about smart phones. Analysts say that Apple should make a cheap iPhone. Apple, so far, has not agreed. Why would they? The iPhone is a status symbol, regardless of its functionality, and people are proud of them when they're brand new and the most current generation. They show them off to their friends and coworkers. If Apple made a cheap iPhone, it would need to look different enough from the real deal to not cannibalize themselves in sales. This difference in look (or functionality, but mainly look), would instantly highlight any buyer in a negative light. Yes, they have an iPhone, but it's not a REAL iPhone, people would say.
Analysts basically want from Apple what the guitar industry has been offering for generations. Don't believe me? Google "X (X being any budget guitar with an expensive counterpart like an Affinity Telecaster) mods" and you'll come up with a ton of results where people ask others how to bring the quality of their guitar up to the level of guitars costing thousands more. If you search for comparisons - Epiphone Vs Gibson, Squier Vs Fender, etc, you'll see people on both sides of the aisle screaming out the qualities of their guitars rather than the others. That's natural. No one wants to feel like they've been ripped off and everyone wants to feel like they got a good deal. But the phrase you'll read a LOT of is "not a REAL Y (Y being the expensive brand).
And I'm not hear to debate the value of cheaper instruments - what I'm saying is that there is a perceived difference (real or not) between these instruments and the people that buy the cheaper instruments are almost always unsatisfied with them in some way. Judging by the Internet, anyway.
So what do you do if you're the guitar company? You can't make your guitars more closely resemble expensive counterparts because you'll risk cannibalizing the sales, but leaving things as-is is having a detrimental effect on the buyers and their opinions on the quality of your company's offerings or the players that use them and they may move on to someone else. This move could have been based on nothing more than the online vitriol of guitar owners that spent more money on their guitars.
Well, if you're Gretsch, you take a page out of Apple's book: Apple doesn't sell cheap iPhones, but they do sell previous generations of iPhones right next to the latest and greatest one. Every time the new iPhone comes out, the previous generations go down in price and the buyer can snatch them up for less money than they would normally have to buy. No one has to know WHEN you bought your phone, but everyone knows you have an iPhone and since Apple doesn't make cheap iPhones, it's still a status symbol.
Gretsch has recently been working on their Electromatic line and it's become much more focused on the previous generation of Gretsch guitars - the Baldwin era.
At first I was confused because the Baldwin era is LARGELY regarded as Gretsch's low point. Even Gretsch, in a catalog to the public where they discussed the history of the brand said something to the equivalent that it wasn't the most natural fit, yet the new Electromatic line is being pushed as today's Baldwin guitars.
It makes sense when you think about it though. If you DECREASE the number of discrepancies between a budget and pro-line brand, you risk cannibalization. If you INCREASE the number of discrepancies, you increase a sense of identity. Now you have the buyer who feels like they're not sporting a guitar that relies on a smoky club to pass it off as its more expensive brother, and you have owners of the more expensive brother feeling good that their guitar is not being offered at a lower price, cheapening the value of their guitar.
Not only that, but I hear a lot of people say that they aren't actually Baldwin-spec guitars, but Baldwin inspired guitars and that there was actually a ton of work that went into making them awesome guitars and bringing them up past what Baldwin actually offered. If this is the case it's even more of a genius move because people will transfer the idea of quality to the past models as well, creating a vintage price swell.
I tell you, if I ran a guitar company like Gretsch, this is exactly what I would do as well.