Abstract: The standardization and customization decisions of two types of firms with the assumption of consumer heterogeneity both in product attributes and firm preference are studied. By introducing product variety and customization level, an evolutionary game model is presented to study the evolution of production decision of firms with bounded rationality. Theoretical analysis and numerical examples show that the evolutionary equilibrium outcome depends on the effect of the firms' operational status as well as the degree of customer's intensity about product variety and customization level. Meanwhile, an index signifying the relative attractiveness of standardization and customization strategies is developed, which provides theoretical base for production mode choice of the firms.