Even while our dads were swearing by Craftsman, better tools existed. You're right that Craftsman was good enough for most people's needs. Craftsman is still an OK brand for hand tools (not power tools). It was just easier to get Craftsman, because they sold it at a store that wasn't too far away. Back in the day you could only get Snap-On etc. if you were affiliated with e.g. a mechanic's shop that was on a Snap-On truck route. Now thanks to Amazon, Home Depot, etc. there are more ways to get quality tools.

Snap-On may makes quality tools, but their prices reflect it. Unless you're actually a mechanic that uses those tools constantly, the prices are tremendously prohibitive. Enter Craftsman. Combined with the warranty, they were a FAR better deal with 90% of the quality.

Sear's return policy for Craftsman pro tools was exceptional; lifetime warranty. If it broke, bring it in to exchange for a replacement.

I was just going to mention this! The warranty is the real reason my father had quite a few craftsman tools. Well, at least the ones he used the most, anyway.

This happens so often, I would not be surprised if it was a widely accepted business process. The MBA's come in and run a good brand into the ground. It happened a lot with bike brands.