Final answer:
Mass customization is best suited for competitive industries with diverse customer needs, enabled by economies of scale and effective brand and market strategies.
Step-by-step explanation:
Mass customization is most appropriately applied in industries where there is significant market competition and a diverse range of customer preferences. The goal of mass customization is to offer personalized products or services that meet the specific needs or desires of individual customers. Economies of scale play a crucial role in making mass customization viable. As production quantity increases, economies of scale allow the average cost per unit to decrease, making it more affordable to offer customized options.
From an economic standpoint, decisions about production and cost structures, as well as market structure, drive the applicability of mass customization. Firms utilize least costly production technology and optimal scales of production to achieve cost efficiency. A well-respected brand name along with an established reputation for competitive pricing can support the mass customization effort. These factors together enable companies to differentiate their products and cater to the unique demands of customers in competitive markets.