During the 1960s and 1970s, Japanese housing manufacturers focused solely on the `mass production' of their products, resulting in a supply of virtually identical, rather monotonous houses. Due to the `inferior' image associated with the low-quality appearance of these houses, the public immediately rejected them. Since then, manufacturers have placed greater emphasis on improving industrialized housing quality, and thereby customer satisfaction, such that today Japanese housing manufacturers enjoy a reputation for providing quality housing that, while still mass-produced, is customized – i.e., `mass customization'. In order to meet today's diverse demands for housing, Japanese manufacturers apply a quality-oriented production approach in the manufacturing of industrialized homes based on a cost-performance marketing strategy, which considerably increases housing quality by providing standard fittings. As a result, even though affordable homes are still in great demand, manufacturers have actually been successful in producing and marketing more expensive high-quality homes. This study examines the effect of the quality-oriented production approach on the delivery of prefabricated homes in Japan, and highlights the interrelationship between the quality-oriented industrialized production method that, in theory, helps reduce production costs and the marketing strategies aimed at maintaining relatively high retail housing prices.