Abstract: Pricing and promotion are two important issues for the successful launch of new products. Some products have already been promoted before pricing, while other products are promoted after their prices are determined. The sequence of decisions on pricing and promoting may be different in different supply chain. A supply chain consisting of a manufacturer and a retailer with demand depending on the price and the effort, in which the manufacturer sets the price and the retailer determines the effort of promotion is considered. Three decision sequences:(i) pricing first,(ii) promoting first,(iii) pricing and promoting simultaneously are studied in the paper. A contract, which combines revenue sharing and promotion cost sharing, to coordinate the supply chain is proposed. Moreover, game theoretic models, Stackelberg game and Nash equilibrium, are developed to demonstrate the effects of the three decision sequences on the manufacturer, the retailer and the supply chain. The results show that pricing and promoting simultaneously is the worst case for supply chain. Besides, for manufacturer and retailer, deciding first has more initiative and could get more profit, but when demand elasticity and promotion cost are high, deciding later could help to get more profit. Finally, numerical experiments are presented to give some sensitivity analysis. From the sensitivity analysis results, it's found that with the increase of revenue sharing ratio, the manufacture's profit is increasing while the profit of retailer is decreasing. A rise in price sensitivity of demand and promotion cost coefficient will diminish the manufacture and retailer's profit. The main contribution of the paper is that three decision sequences are considered and the supply chain profit among these three decisions sequences is compared. In addition, a contract which can coordinate the supply chain in all the three decision situations, which are not considered in previous research is designed.

Key words: new product, supply chain coordination, pricing, promotion, Nash equilibrium