Should the mulch promotion continue?

A home-improvement retailer is running a seasonal promotion on bagged mulch. ### Business context - Regular price: **$3.50 per bag** - Promo price: **$2.00 per bag** - Variable cost: **$2.40 per bag** - Therefore, the promoted item currently has **negative item-level contribution margin**. - The company has **6 weeks left** in the spring selling season. Over the last 4 weeks: - Weekly mulch unit sales increased from **10,000** to **26,000** bags. - Management believes the promo may also drive larger baskets and more store traffic. - However, some of the observed lift may be due to **seasonality, weather, competitor pricing, stock-up behavior, or cannibalization** of other landscaping products. You have access to: - store-day sales, - transaction baskets, - loyalty/customer identifiers for some shoppers, - ad spend, - inventory and stockout data, - competitor price checks, - store region and weather data. ### Questions 1. Should the retailer continue the mulch promotion for the rest of the season? 2. What metrics would you use to make the decision, and why is item-level margin alone insufficient? 3. How would you estimate the **incremental** impact of the promotion rather than relying on raw observed sales lift? 4. If leadership still decides to continue the promotion despite negative item-level margin, what business reasons could justify that decision? Be explicit about causal inference issues, segmentation, tradeoffs between revenue and profit, and how you would present a persuasive recommendation to a business leader.