ice range of $8,355 to $11,933, while the Tracer had a range of $10,155 to $12,023. These figures represent the cost for the base model and the fully equipped model. The price differential closes over the range, with the Tracer's base price exceeding the Escort's by 22 percent. The top of the line Tracer exceeds the top of the line Escort by only $90, or less than one percent. The price difference can be explained by the fact that as a Mercury, the base Tracer comes with more standard equipment than does the Escort (it is equivalent to the middle Escort model). The difference of the top models of both cars are insignificant; thus the price equilibrium.
That Ford chooses to have two cars positioned in the small car niche and not two, for example, in the high-end luxury market (where the Lincoln Continental is the top model), indicates the importance of the small car market. These cars are workhorses, bought for basic transportation, and are often new consumers' first automobiles. Gas mileage is important to consumers in this market, as is perceived value for price. These consumers are not interested in luxury cars, but there is a tendency toward sportiness among some consum
...