UNIVERSITY OF FORT HARE

DEPARTMENT OF BUSINESS MANAGEMENT

SEMESTER ASSIGNMENT 2
2021
BUSINESS RESEARCH
(BEC324 and BEC324E)

Internal Examiner: Angela Pike-Bowles & Dr Tendai Chimucheka

External Examiner: Prof Mornay Roberts-Lombard
Marks: 75 (mark will be given out of 100)

INSTRUCTIONS

1. Write your student number and name below:

First Name

Surname

Student Number

2. Complete all the tasks

3. All answers must be typed onto this answer document.
4. Clearly indicate the question/task number # you are answering.
5. The document must be completed and then returned as an attachment via
Blackboard.
6. Please read the case study and answer the questions/tasks set out in the
assignment and set out below in the space provided. (Use as much space as you
like.)
7. The assignment requires you to answer both theoretically and practically. The
theory parts of your answers therefore need to be in-text referenced and a reference
list must be provided at the end of your assignment. Use the APA referencing style.
8. Complete the plagiarism declaration below:

I hereby declare that I am fully aware of the University of Fort Hare’s Policy on
Plagiarism and I have taken every precaution to comply with the regulations.

Signature__________________________ Date______________________
ASSIGNMENT 2

CASE STUDY 1

The evolution of direct selling and the birth of the pyramid scheme

Face-to-face retailing experienced two obvious changes during the twentieth century. The first
occurred when door-to-door selling displaced the travelling salesman in an environment where
household income started to rise. The travelling salesperson was somebody who would
typically travel long distances to sell wares and was absent from home for long stretches of
time, whereas the direct seller was typically somebody that sold in the immediate environment
like to family and neighbours.

The second change happened when a ‘business opportunity’ via Multi-Level Marketing (MLM)
altered single-level commission-based direct selling. MLM offered an alternative business
model, lowered fixed costs, and added a business opportunity. No longer is it all about
commission-based selling. The MLM model operates on a dual premise of retailing products
through a network of independent contractors also responsible for recruiting new distributors.
Distributor income is primarily derived from purchases undertaken by downline recruits. The
huge success of traditional direct selling pre- World War II caused great concern for store
retailers. Post-World War II, this growth continued, with more women entering direct selling
and the birth of the ‘party-plan’ phenomenon. However, during the 1980s, with more women
entering the formal workforce and improved store retailing, direct selling growth started to stall.
Over a relatively short period of time, direct selling companies offered the household
consumer: brushes, groceries, radios, sewing machines, phonographs, musical instruments,
vaccums, cosmetics, chinaware, cooking utensils, books, televisions and furniture – even
motor vehicles. However, many unscrupulous individuals manipulated the MLM system, which
gave rise to pyramid schemes. In general economic terms, a pyramid scheme is an
organisation that hinges on the continual recruitment of new members – no product sales are
considered – all of whom need to recruit others to recoup their own initial investment. The
primary benefit – and often the only benefit – from ongoing recruitment is that the participants
receive a certain portion of the entry moneys paid by the subsequent recruits. This refers to
the to the persons ‘down-line’ and refers to all the direct and indirect recruits of a given person,
sitting on top of the pyramid. Monetary returns are tied to an ongoing ability to recruit others
in the same venture. This creates a situation a situation in which the desired recoupment will
not and cannot come true for the vast majority of participants.

2
Throughout history, several forces of change have been identified that that have an impact on
sales – the so-called sale revolution. For Traditional direct selling , MLM and pyramid
schemes, the impact has varied from bringing a wide range of products literary to the
consumer’s door, to struggling to maintain consumer connections in the face of changing
lifestyles and demographics, to restructuring of business models and to trigger a series of
ongoing regulatory actions in the face of consumer fraud.

The WFDSA (World Federation of Direct Selling Associations) have a code of conduct that all
DSAs across the world must adhere to in order to be affiliated to this main body. Section 1.6
of this code deals with local regulations and stipulates that…’Companies and Direct Sellers
must comply with all requirements of law in any country in which they do business …
compliance by Companies and Direct Sellers with laws that pertain to Direct Selling is a
condition of acceptance by or continuing membership in DSA’ and section 2.1 deals with
prohibited practices and stipulates that ‘…Direct Sellers shall not use misleading, deceptive
or unfair sales practices.

Source: Kotler, Armstrong, Tait, Beneke, Bhowan, Botha, Cassim, de Jager, George, Gerber,
Struweg, Mazibuko, Mpinganjira, Perks, Rootman, Rugimbana, Tait & Wait, 2014: 516-517.

Assignment Question

1. Develop a marketing research proposal to investigate factors affecting sales for

businesses using the direct selling method within the context of South Africa.

Assignment tasks

Tasks Guidelines Marks

(Arial 12; 1.5 line allocated
spacing)
1 Formulate an appropriate research topic Maximum of 20 2
for the study to be conducted. This words.
should be concise and convey the
essence of the study
2 Provide a brief introduction and Maximum of one 8
background to the study to be and half pages.
conducted.

3
3 Discuss the marketing research Maximum of half 5
problem. The statement of research a page.
problem should at least include a short
discussion of exactly what is to be
researched. The statement of the
research problem must cumulate into a
clear statement of the research question
or questions that need to be addressed
in the research.
4 Formulate specific and relevant research Maximum of 6
objectives based on the marketing three objectives.
research problem
5 The next section of the research Maximum of 5
proposal deals with the statement of three
research hypotheses. The research hypotheses.
hypotheses need to flow logically from
the problem statement and objectives.
6 Conduct a brief literature review on the Maximum of 3 10
topic. pages.
7 Discuss the research methodology Maximum of 3 17
relevant for the study (research pages.
approach, research design, data
collection and data collection instrument,
population and the sampling plan).
8 Discuss the data analysis and how you Maximum of 1 10
will assess the hypotheses identified and half pages.
above (in particular discuss the relevant
statistical tests that you will use in
analysing data for this study).
9 Discuss the ethical issues that need to Maximum of half 6
be addressed in the study. page.
10 References. All literature 6
sources used in

4
 the proposal
should be
indicated in-text
as well as on the
list of references.
Total marks (but mark will be given out of 100) 75

Answer Sheet
Task 1 (2 marks)

Task 2 (8 marks)

Task 3 (5 marks)

Task 4 (6 marks)

Task 5 (5 marks)

Task 6 (10 marks)

5
Task 7 (17 marks)

Task 8 (10 marks)

Task 9 (6 marks)

Task 10 (6 marks)

END