Marketers often face the ne to quickly assess the market size. Understanding the market size helps determine the potential of a product or company, plan a marketing strategy and prict growth prospects. Calculating the market size depends on the niche in which the business operates. For example, for construction services, marketers focus on statistics on new housing, the number of square meters of houses already built in the region and the number of households. For the children’s goods market, marketers rely on birth rate statistics and the size of the segments of product users by age. When assessing the dental services market, analysts use data on residents of the region of the appropriate age category, as well as publish official data on the income of the population and involvement in the use of paid mical services.
For quick analysis especially
When working with new projects), TAM, SAM, and SOM are us. In this article, we will look at what these terms mean, how to calculate these indicators, and how to evaluate TAM, SAM, and SOM.
The TAM, SAM, and SOM methodology was first describ in 2001 by Harvard Business School. The method was originally develop to structure market potential analysis and was us by startups during pitches to investors. The approach has become so popular because it quickly helps to clearly demonstrate the size of the target market and the feasibility of the business idea.
What do the abbreviations TAM, SAM and SOM mean and what phrases do they come from?
TAM (Total Addressable Market or Total Available Market) is the entire fully accessible market or the maximum market volume that is theoretically recent mobile phone number data available for a specific product or service. This indicator reflects all possible demand that exists in the market, excluding competition, audience coverage limitations, and the company’s ability to produce and sell products. That is, if there are unlimit production capabilities and no competitors, a business can count on a market volume equal to TAM.
For example, if you manufacture electric bicycles, your company’s TAM would include the entire global market for all electric bicycles available without restrictions.
The TAM indicator is us primarily to assess the potential of a business, forecast possible profits in a specific niche and the attractiveness of a business project. This indicator is also us to calculate market share (for example, the current sales volume of a business refers to TAM).
It is obvious that even monopolists are
Unlikely to cover the entire TAM, due to the taiwan data presence of competitors, limitations of production capabilities and real barriers to covering the entire possible audience of the product. All these factors draw realistic boundaries of the share of TAM that a business can achieve. This share of the market that can be cover is call SAM (Serviceable Addressable Market) – this is the percentage of the market that can be serv by one or more suppliers. Thus, SAM is a serviceable addressable market, that is, the part of TAM that is achievable for a company, taking into account geography, target audience and other factors. This is a more how to avoid email domain blacklisting? realistic assessment of the market in which a business can operate.
For example, for a company that sells electric bicycles only in Europe, SAM would be limit to the European electric bicycle market.
For this reason, the entire SAM (Serviceable Addressable Market) is not available for each product. A new concept is introduc here – SOM (Serviceable Obtainable Market) – the available serviceable market, or the share of SAM that a company can realistically occupy given the competition, its resources and current capabilities. The term SOM is often defin as Target market or “Target market” – that part of the potential audience to which a business directs its marketing efforts.
For example, if a company plans to take 5% of the electric bicycle market in Europe, then that would be SOM.
How to evaluate TAM, SAM and SOM?
Once you have an understanding of TAM, move on to assessing SAM. Ask yourself questions like: “What regions or market segments can you serve?”, “Which consumers are interest in your product?”
For example, a company that produces vegan chocolate bars might limit SAM to only countries where there is high demand for vegan products.
Although the TAM, SAM and SOM method is widely us, it has a number of shortcomings and is often criticiz.
Opponents of the method consider it too simple: the methodology often simplifies complex market realities. For example, the TAM estimate may be bas on overly optimistic data.
When analyzing a product for a highly specializ industry, determining TAM can be problematic due to the lack of available data.
In addition, new companies may overestimate SOM, which leads to inflat expectations and disappointment among investors. Some analysts also note that the methodology is more suitable for investor presentations than for real business analytics. However, it is important to consider its limitations and use additional tools for more detail analysis.