Kaspersky Lab: from Russia with anti-virus
I will analyze the study case by putting focus on three important questions and points. First I will perform the internal and external environment analysis that Kaspersky Lab faced in year 2011. The internal environment can further be categorized in strengths and weaknesses of the company. It is inevitably that such a successful, fast growing company relies on many strengths. KL had initiatives and tendency to attract and retain qualified employees. Their skills and competences helped to delivering high-quality services and products. The products and services offered are technologically superior. Beside quality, their abilities also contribute to early detection of various threats. It was the first company to identify major shift in hackers behavior. The company ability to motivate and reward its employees is just a one piece of the strength puzzle. Another key strength is innovation. The constant updates and their pace with the changes and trends in the market is a key advantage over the other competitors. Furthermore, KL was the first company to introduce hourly anti-virus updates, leaving the competitors lacking with only daily updates. An important strength which helped KL to be successful in foreign emerging markets were the localized solutions. KL has great ability to launch products which will satisfy the needs of a certain market. Another strength is their webpage, which offers free trials, information and guidance for the customers. I personally believe that the great amount of money should also be classified among their strengths. In comparison with so many strengths, I was able to find and analyze only one internal weakness of the company. The one area, or I better say the one segment that the company could do better and improve is the business market. KL has much stronger competitive position in the consumer market compared to the business market. So, this is an area they should put a focus and strength it more. The external environment analysis shows all the positive and negative factors which are operating outside the company, but yet have an important influence over it. It could again be split in two categories- analysis of opportunities and analysis of threats for KL. An opportunity to develop and growth is to follow the trends in the industry. For example the secure content and threat management sector is expected to increase from 15.1 billion dollars in 2007 to 21 billion dollars in 2011. Another great opportunity is to follow the global technology developers' business models based on open innovation and open source trend. For example Google created an open environment for Android. The opportunity created for KL is to sign up to the Android Marketplace and develop software. Also KL has an opportunity to use its technical expertise to expand market, due to the rapidly transforming cybercrime landscape. The company also faced certain threats. Due to the weak intellectual property laws and enforcement mechanisms, KL was faced with the threat of employees leaving the company with valuable information. Also, the lack of proper government initiatives led to a brain drain. This is a threat of having lack of well trained professionals on your disposal. Another well known issue is that Russia had the world's best computer hackers, who are capable of performing sophisticated operations with limited computer power and inexpensive software. This issue might also be considered as an opportunity to attract those talented engineers.
Another issue that I am going to tackle is related with segmentation of the market. I will analyze the segmentation by looking from two different perspectives. One segmentation perspective is segmenting the market by the customers who purchase the products and services. From this points of view KL is facing two large segments- individual consumers and business entities. The company has stronger competitive position on the consumer market. According to the statistics, KL was the third largest vendor of consumer IT security software in 2010. The top consumer products for 2010 were Kaspersky Internet Security and Kaspersky Anti-virus. KL was performing extraordinary on this individual consumer market, adding 50,000 new users every day. In 2009, about 250 million consumers around the world used their products and services and in 2010 this number increased to 300 million users. KL targets individual consumers who are willing to pay a little extra for a high quality security program. The segmented users are consumer who put greater focus into results rather than cheap price. The other segment groups are the business entities which compose the corporate or business market. Compared to the previous, KL is lagging in this market. Based on the statistics from 2010, KL is the fifth largest vendor of enterprise endpoint protection. Kaspersky Lab's anti-virus engine was used by many original equipment manufacturers through licensing. In 2010, KL's products and services were used by approximately 200,000 organizations. KL is trying to improve the performance in the corporate market. This segment is not completely utilized and there is still room for improving the performance and gaining more share. Eugene Kaspersky once said that the main reason about the IPO plan is to improve the company's performance on the corporate market. The other segmentation perspective is based on the geographic region. KL has strong and stable performance in its domestic market- Russia. In 2011, was Europe's largest anti-virus company. KL did not only focused on the European market. They also entered in major emerging markets and in each has established its performance. For example, KL has stable and fast growing performance in Asia. Beside China, which had 100 million users in 2010, KL has good performance also in other growing markets such as Philippines, Singapore, Indonesia and Thailand. On the other hand, the KL's performance is not that strong and great in the US market. The company had late start in this market and they mainly present themselves indirectly through the above mentioned original equipment manufacturers. KL took several measures to improve its performance on this market. For example. they recruited important retailers and distributors and offered them attractive profit margins. This resulted in drastically increasing the sales and improving the performance.
The last issue which is from great importance to KL is the negative COO. Russia is famous as being one of the world's cybercrime hotspots. This was a great concern for a large mass of consumers. Not only KL, but many other companies suffered from this negative reputation. This issue led to fear for the consumers to purchase and use KL's products and services. Of course, KL did not let this negative COO reputation to decrease it sales and become a huge barrier between building customers relationships. They took several activities in order to overcome this issue. In order to create and maintain a positive brand image, KL decided to offer additional quality cues. KL's frequent updates, notification and efficiently solving of the software problems had a positive effect in the road of building positive brand image and overcoming the bad reputation barrier. Another important activity was co-branding with well established brands. KL first started cooperation and sponsorship with Ferrari, followed by several other sponsorships. KL undertook changes in the branding, communication and marketing the company and its products. It also changed the name of the flagship and introduces a new trademark. I believe that these activities were solid for improving the brand image of the company. I would also suggest three proposals that KL can take, in order to strengthen its brand globally. For example, first the company should consider merger with some other important IT security player in the world, or perhaps have a joint venture. This is an easy way for improving performance, gaining bigger market share, sharing knowledge and developing more innovative solutions. I think that this proposal can result in great success and the negative COO effect can be easily forgotten. The other proposal is to focus to the internal situation in the company and try to win as many awards and recognitions possible. Although KL has won many awards, now when they want to position themselves globally, they should prove that their products and services are recognizes by being with great quality and innovative on international level. I believe that winning prestigious global competitions will create positive brand image and strengthen the global position. The third proposal is to do contrast marketing, meaning instead of proving and promoting the good side of the company, KL can promote the good side of Russia and try to change the perception of the consumers. I think that this step can be challenging and it requires a lot of time, money and effort.