Serviceable Obtainable Market (SOM), also known as Share of Market, is the portion of the Served Addressable Market (SAM) that a company can realistically capture within a specific timeframe, considering its current resources, capabilities, and competitive position.
While SAM represents the total market opportunity that a company can target, SOM focuses on the portion of that market that the company is likely to acquire in the short to medium term.
SOM helps businesses prioritize their efforts and set realistic sales and revenue goals.
What does SAM involve?
SAM takes into account factors such as:
- Market share: The company’s current or projected market share, based on its competitive position and the size of its target customer segments.
- Product or service differentiation: The extent to which the company’s offerings stand out from competitors in terms of features, quality, or pricing, influencing its ability to capture a larger share of the market.
- Distribution channels: The availability and effectiveness of the company’s distribution channels, which can impact its reach and ability to serve customers within the SAM.
- Sales and marketing capabilities: The company’s capacity to promote its products or services and convert prospects into customers, affecting the share of the market it can realistically capture.
- Resource constraints: Limitations in the company’s financial, human, or technological resources, which may restrict its ability to fully exploit the market opportunity.
To calculate SOM, companies typically analyze their historical sales data, market share trends, and competitive landscape. They may also consider their growth plans, such as new product launches or market expansions, which could influence their market share in the future.
Understanding SOM is crucial for businesses as it helps them develop realistic revenue projections, allocate resources efficiently, and set achievable growth targets. It also allows companies to monitor their progress and adjust their strategies as needed to achieve their desired market share within the targeted market segment.