TAM, SAM, and SOM are frameworks for representing market size.
TAM, SAM, and SOM are inclusive, with SAM being within the larger category of TAM, and SOM being within the larger category of SAM.
Each of the three has the following uses of twitter meaning. Let's take a look at them one by one!
TAM (Total Addressable Market)
Total: Total / Available: Available / Market: Market
The maximum addressable market size refers to the total demand for a product or service in a market.
SAM (Serviceable Available Market) (Target market)
Serviceable / Available / Market
This refers to the market size that can be provided with services.
This refers to the demand targeted within the service provision area within the TAM.
This is the maximum potential that your company can achieve.
SOM (Serviceable Obtainable Market) (expected target market)
Serviceable / Obtainable / Market
This refers to the market size that can be expected to produce sales and acquire (approach) customers within SAM.
The SOM value is also an ideal indicator for assessing business potential, such as the current situation and future revenue projections.
This is the maximum sales that a company should aim for within the current realistic scope of its service provision and marketing capabilities.
How to calculate TAM SAM SOM
Representative calculation methods for TAM, SAM, and SOM include "top-down," "bottom-up," and "Fermi estimation."
Top-down (calculate TAM)
This is a method of analyzing and calculating the demand for your business by excluding markets that are not the target demographic of your business from the total market you are planning to enter. It is a method of thinking from a macro perspective, and is mainly used when calculating TAM.
Bottom-up (calculate SAM, SOM)
It is a method of analyzing and calculating the size of demand for your business from the data of each individual customer. It is a method of thinking from a micro perspective, and is mainly used when calculating SAM and SOM.
With a bottom-up approach, it is common for a company to collect data by actually conducting surveys of its customers, rather than using existing data published by specialized research organizations as is the case with a top-down approach.
Fermi Estimation
Simply put, Fermi estimation
is an estimation that combines "unknown numbers" with "known numbers."
More specifically, it is a method of quickly and logically estimating numbers that are difficult to investigate or measure, based on one's own knowledge and given clues.
Fermi estimation allows one to quickly and logically infer elusive quantities that are difficult to investigate based on a few clues and roughly estimate them.
Today, we will briefly introduce "top-down" and "bottom-up" methods and then delve deeper into "Fermi estimation."