Abstract: Quality efforts and sales efforts play an important role in enhancing market demand and competitiveness. Despite the importance of synchronizing marketing activities with manufacturer's quality decisions, little research has been done. Furthermore, the impact of manufacturer's willingness to invest in sales efforts and retailer’s willingness to invest in quality efforts remains unclear. Along with these issues, a Stackelberg game for manufacturer and retailer is adopted to study the effect of quality efforts and sales efforts cost borne by different supply chain members on product pricing and profits. Previous studies and industry practices have shown that manufacturer and retailer have incentives to invest in quality efforts and sales efforts.Therefore, three investment decision models are developed: the investment is made by themanufacturer and retailer respectively, only the manufacturer, or only the retailer. A question that arises naturally is which one is preferred by the manufacturer, the retailer, and the chain. It is found that themanufacturer prefers to have the retailer make the investment. However, the retailer may be reluctant to let manufacturer invest. Moreover, it is concluded that retail price, order quantity, quality efforts level and sales efforts level all decrease with the increase of quality effort and sales effort cost. Meanwhile,the results show that in the case that retailer bear the cost of quality efforts and sales efforts, supply chain members’ profit as well as quality efforts and sales efforts levels are higher than that in others. The results are applied to supply chain management and some new insights are gained. More attention should be paid to retailers’ incentives to invest.Manufacturers should strengthen cooperation with retailers and design contracts to encourage retailers to invest in quality and sales promotion.

Key words: quality efforts; sales efforts; Stackelberg game; supply chain management