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As a product manager, it is essential to understand the difference between Total Addressable Market (TAM), Serviceable Available Market (SAM), and Serviceable Obtainable Market (SOM) in order to effectively plan and execute your product strategy. These three terms are often used in business and marketing, but they have distinct meanings and uses.
What is Total Addressable Market (TAM)
Total Addressable Market (TAM) refers to the total market demand for a product or service. It is the total revenue opportunity that exists in a given market. For example, the TAM for organic baby food would be the total revenue opportunity for all organic baby food products in the market, including all brands and distribution channels. Understanding the TAM allows product managers to estimate the potential size of the market and plan accordingly to maximize revenue opportunities.
What is Serviceable Available Market (SAM)
Serviceable Available Market (SAM) is the portion of the TAM that a company can realistically reach and serve with its current and planned resources. It is the subset of the TAM that the company can address.
For example, a company that produces organic baby food may only be able to sell their products through certain retail channels such as specialty stores and online retailers, and not all grocery stores. Additionally, the company may have a limited budget for marketing and advertising, which could limit their ability to reach all parents of infants and young children who are interested in organic baby food. Understanding the SAM allows product managers to identify the portion of the market that their company can realistically serve, and plan accordingly to target and serve that portion of the market.
What is Serviceable Available Market (SAM)
Serviceable Available Market (SAM) is the portion of the TAM that the company can realistically reach and serve with its current and planned resources. In other words, it's the subset of the TAM that the company can address.
For example, the company that produces organic baby food may only be able to sell their products through certain retail channels such as specialty stores and online retailers, and not all grocery stores. Additionally, the company may have a limited budget for marketing and advertising, which could limit their ability to reach all parents of infants and young children who are interested in organic baby food.
What is Serviceable Obtainable Market (SOM)
Serviceable Obtainable Market (SOM) is the portion of the SAM that a company can realistically capture with its current and planned resources. It is the subset of the SAM that the company can realistically win as customers.
For example, a company that produces organic baby food may have a strong brand reputation and high-quality products, but may face strong competition in the market. In this case, the SOM would be the portion of the SAM that the company can realistically capture as customers despite the competition. Understanding the SOM allows product managers to identify the portion of the market that their company can realistically capture as customers, and plan accordingly to target and capture that portion of the market.