Marketers need to know their TAMs, SAMs and SOMs

Total addressable market – aka TAM – is the total market for your product. This includes everyone globally who could purchase your product, regardless of competition.

But to find your competitive position in the mix, you have to look at the bigger picture. For example, if you sell running shoes, while globally the number of people who could use a pair of shoes may number in the hundreds of millions or more (think anyone who would wear running shoes for any reason), your competitive position could be for your region only, and hence is much smaller. And you cannot assume you will sell to everyone in your region who needs running shoes – you have competition, after all.

So you need to look at the SAM (serviceable addressable market) and the SOM (serviceable and obtainable market – or share of market). Your key considerations are, therefore:

  • Market penetration rate
  • Competitor offerings
  • Financial reports to understand the market and competitors’ business strategies
  • Conservative estimates of market potential