However, an excessive degree of differentiation could cause the goods or services to lose their standard within a given industry, leading to a subsequent loss of consumers.
Hence, a balance of differentiation and association is required, and a point of parity has to be adopted in order to allow a business to remain or further enhance its competitiveness.
In addition to that, the threats brought by competitors would be lowered significantly, which means, by adopting differentiation strategy, it would allow businesses to be more competitive and be able to have a greater source of income.
In terms of offering similarities, businesses should look at the benefits and all the positive features of the competitor's product, and take advantage from it.
At the same time, businesses could work on the negative aspects or even further enhance the positive features of the particular product in order to achieve differentiation, and to take advantage from it.
In terms of advantages, one of the examples would be it enhances innovation, where new goods and services would draw public's attention, and allowing businesses to survive in the global competitive market, as differentiated products would stand out from other competitors and avoid the threats brought by substituted products.
It is because differentiated goods and services are likely to have a better user experience, hence, the chance of having returning customers would be significantly increased.
However, differentiation also contains disadvantages, an example would high cost and time consuming, especially in the introduction stage of the product life cycle.
[14] From a short-term point of view, differentiation strategy is less likely to favor businesses, as R&D (research and development) and marketing would require certain amount of money and time.
Arguably, differentiated products are able to draw attention and spark people's interest, as they are newly introduced.
[citation needed] On the other hand, from a long-term point of view, differentiation strategy is more likely to favor businesses.
Furthermore, differentiated products are likely to be recognized, as people would discover and examine them, which means, the risk of not gaining recognition would be reduced, and businesses are able to take advantage from brand loyalty if the user experience is exceptional.