Then there is the high end collector market, who spend the big bucks, and often purchase multiple guitars to stash away. Most guitar companies (such as Fender) try to become the 'be all and end all' across this range. Fender do have a high end custom shop to cater for the more wealthy or boutique market, but at the end of the day, they are spread pretty thin with their Mexican range, USA Standard range, Custom shop range etc.
The biggest problem with the low end market is that kids these days just don't seem to realise the work ethic required to become proficient at guitar. I've played for over 40 years, I have two young sons who play, and I have done some teaching. Lots of kids seem to think that they can be playing at a performance level after only a couple of lessons (perhaps Guitar Hero has something to do with that?), and they quickly become disenchanted and lose interest once they realise the gruelling (boring) practice routine that they have to repeat over and over again in order to build muscle memory etc.
But for a lot of beginners who approach me, I try and model the same thing I do when learning a new programming language, i.e. the best way to learn - REALLY learn - a new language is to actually build something with it. Which is why I find that it is useful to get a kid to tell me his favourite song, and just work out the melody or the riff to the song and build on that, just to keep their interest going and make the inconvenience of the other exercises less of a burden.
The world is also sadly lacking in 'guitar heroes' these days. Not the game, but actual players. Guys like Hendrix, Page and Clapton inspired kids in the 60's and 70's. Van Halen etc. in the 80's, but then the guitar solo ceased to be a central 'thing' in most bands. Modern guitar players like Joe Bonamassa, Guthrie Govan or Julian Lage etc. just don't pull the crowds in like they used to.