In the maturity phase of the product life cycle, firms may try to differentiate their product. What is a potential downside of this strategy?

Firms often seek to differentiate their products during the maturity phase of the product life cycle to maintain market share and competitiveness. However, this differentiation strategy can lead to increased costs. Differentiation may involve investing in new features, enhanced marketing, or improved customer service—which can incur significant expenses. If these costs are not carefully controlled or justified by an increase in sales or market share, they can negatively impact the firm's profitability.

While increased sales might be a goal, the investment in differentiation does not always guarantee that the costs will be recouped through higher revenue. This is particularly critical during the maturity phase when market saturation can make it challenging to achieve a return on investment. Hence, while differentiation can be a valuable strategy, it requires careful consideration of the associated costs to avoid undermining financial performance.