D

Explanation:
With a differentiation strategy, a higher price can be charged provided that the differentiation creates added perceived value for the customer and offers a unique value proposition. This allows the company to distinguish its product from competitors, justifying a premium price. Option A is incorrect because differentiation does not inherently reduce the threat of new entrants; barriers to entry depend on other factors like capital requirements or brand loyalty. Option B is incorrect as substitutes can still exist, though differentiation may reduce their appeal. Option C is incorrect because cost leadership is a separate strategy focused on minimizing costs, not achievable through differentiation, which often involves higher costs to create unique features.