In almost every industry you will find a premium product, and several tiers of brands or services falling in rank there after. Their order doesn’t matter. What matters is the premium, and the non premium.
Here is what I like. Premium sets the bar, the gold standard, and the price. The market and industry of that premium product depends on these factors, for the smaller fish to survive.
But here is the catch. You can’t expect to compete with the big dogs, yet offer value on one of the key factors (quality, price, service, etc). An amazing car, but at sacrifice on service wont work. Ask the 1996 Car and Driver best luxury car of the year Mazda Millennia. Rated better than the lexus, mercedes and BMW in the class, but failed to deliver the customer service. And it did poor in sales. Mazda stunk at pampering its customers.
There are other similar stories I’m sure, but here is my point. If you cant compete on all levels, and win at the expectations placed on the premium, then dont. Find a way to better compete with the smaller fish.
Nothing wrong with being the biggest medium fish possible. Let the big fish pay for infrastructure, R&D, market research, and so on. You keep up, push the limits where you can, and focus on the ways you are different. There are a lot of cars sold in the middle to low range. Far more volume than the top cars.