TAM-SAM-SOM stands for Total Addressable Market, Serviceable Available Market, and Serviceable Obtainable Market, respectively. This framework is used to assess the potential market size at three different levels, helping businesses to strategically plan their product development, marketing, and sales efforts. It provides a clear view of the market from the broadest to the most directly reachable customers, thus aiding in resource allocation and strategy formulation.
Identify the Total Addressable Market (TAM): Estimate the total market demand for a product or service. | Define the Serviceable Available Market (SAM): Focus on the segment of TAM that is within your geographical reach and can be served by your products or services. | Determine the Serviceable Obtainable Market (SOM): Identify the portion of SAM that you can capture in the short to medium term, considering competition and other limiting factors.
Use reliable and updated market data for analysis | Regularly update the TAM-SAM-SOM analysis to reflect market changes | Align the framework with specific business goals and strategies
Provides a structured approach to market analysis | Helps in strategic planning by identifying market potential at different levels | Aids in setting realistic sales and growth targets
Estimating market sizes accurately can be challenging | May not account for rapid changes in the market | Relies on the availability of accurate and current data
When entering a new market | When launching a new product or service
In highly volatile markets where data changes frequently | When detailed market data is not available