Uncertain demand and optimal offer in a retail channel

We consider a manufacturer introducing a new product into a retail channel facing uncertain demand, and formulate the mechanism that manufacture and retailer used to estimate the market demand. By constructing a multistage game to study the manufacturer how to make an optimal offer of slotting allowances, wholesale price and promotion budget, we show that the key forces contributing to manufacture offering slotting allowance are the uncertainty about market demand. This study also proof that manufacturer uses wholesale price and promotion budget to signal information.