TAM SAM SOM - What it means and why it matters?
Having viewed several business plans over the years, a common (and very important) item missing from most plans is a breakdown of the company’s TAM, SAM, and SOM in the marketing section of their plan.
Wondering what these acronyms mean? You’re not alone—many entrepreneurs are not familiar with these terms.
Here’s a quick explanation of what they mean, followed by an example:
- TAM : Your Total Available or Addressable Market (everyone you wish to reach with your product) : Know More
- SAM : Your Segmented Addressable Market or Served Available Market (the portion of TAM you will target)
- SOM : Your Share of the Market (the subset of your SAM that you will realistically reach – particularly in the first few years of your business)
Identifying your TAM, SAM, and SOM requires some market research (levels of research vary depending on your product and market potential), but once you gather the research you’ll have a better of idea of the percentages that coincide with each area.
TAM SAM SOM :
Example :