Serviceable addressable market (SAM)

Serviceable Addressable Market (SAM) is a subset of the Total Addressable Market (TAM). While TAM provides an estimate of the maximum revenue opportunity available in a given market, SAM narrows down the focus to the segment that is relevant, reachable, and aligns with the company’s capabilities and resources.

SAM takes into account factors such as geographical reach, target customer segments, distribution channels, and competitive landscape. By assessing these factors, a company can identify the segment of the TAM that it has a realistic chance of capturing with its current or planned offerings.

Understanding the SAM is crucial for businesses when making strategic decisions about market entry, product development, resource allocation, and marketing strategy. By focusing on the SAM, companies can allocate their resources more efficiently, target their marketing efforts to the most relevant customer segments, and set more realistic goals for market share and revenue growth.

To calculate SAM, you can use a combination of top-down and bottom-up approaches, analyzing market research data, industry reports, and sales data to estimate the size of the relevant market segment.

It’s important to note that SAM still represents an ideal scenario and doesn’t account for the company’s actual market share.

To estimate the company’s realistic market share, businesses often use another metric called the Serviceable Obtainable Market (SOM), which considers the company’s current or projected market share within the SAM based on its competitive positioning and growth strategy.


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