Final answer:
The potential pitfalls of a differentiation strategy include uniqueness that is not valuable, setting too high a price premium, and when all rivals share a common input or raw material.
Step-by-step explanation:
One potential pitfall of a differentiation strategy is when the uniqueness of a product is not valuable to customers. If a company spends resources on creating unique features or attributes that customers do not find useful or attractive, it can lead to wasted effort and ineffective differentiation.
Another pitfall is setting too high a price premium for the differentiated product. Customers may be willing to pay a premium for certain unique features, but if the price is too high compared to the perceived value, it can deter potential customers and hurt sales.
Lastly, when all rivals share a common input or raw material, it can limit the ability to differentiate products significantly. If competitors have access to the same resources and materials, it becomes harder to create truly unique and differentiated products.