Goater, who netted 101 goals during five seasons with City, believes Manuel Pellegrini's side must take advantage of United's transitional period and become England's leading force.
"When United were dominant they were winning and bringing the silverware back," Goater told the Daily Star.
"It is not just important to dominant derbies, but to win trophies.
"By doing this, not only can City become the dominant team in Manchester, but in England as well."
Goater added: "It is important City exploit United's failings.
"City have got the resources to attract the best players and the ability to continue to win trophies which will leave a marker.
"And what they achieve, United will have to suffer until they can return to challenging City."
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