Price promotions are frequently used to increase the sales volume of a product. however, it is not always true that price promotions increase profits. This paper summarizes key factors that make price promotions profitable for retailers and Manufacturers. There can be some significant problems with the implementation of effective price promotion policies due to conflicting incentives of manufacturers and retailers. The conditions under which promotions are the most attractive to the Manufacturers are often the conditions in which retailers are least likely to provide suPPort for the promotion, and vice versa.