I respectfully disagree. Maximizing return is the key, and that takes many different forms.
Not every market is a mass market. In fact, most businesses aim at a niche market. They are thus limited in size by that niche; however, that does not effect return on investment. It only caps total profit, which is not an issue for most small business that prefer to self-limit scale to begin with.
There is no shortage of excellent products. You must simply pay the going price for them. Since most people prefer good at good price over excellent at high price, the cost of excellent remains at a premium as there is rarely any economy of scale.
If there is no demand for excellent, is it really that excellent? Certainly its not what the customer is after. Case in point, machining an ax head from a solid block of high grade steel to within 1/10,000" of specifications would no doubt be "excellent", but if it performs roughly the same as a hammer forged head, who would pay a premium for it? Certainly not me.
That said, if you badly desired such an ax, the free market would provide. Which excellent product do you believe the free market is incapable of providing?
I suppose my cynicism is showing.
But it is interesting to think about.