I also prepared the video takeaways.
Takeaways:
When building a product, it’s important to understand the potential market that you can address with it. Calculations won’t give you a reliable answer about the market size but they will give you a better idea of your position.
- SAM stands for Serviceable Addressable Market.
- The SAM is the portion of the TAM that can realistically be reached and served.
- To calculate the SAM, look into who among the potential market can realistically be serviced and take aspects that can affect the size of the SAM into consideration.
- Some things can affect the size of the SAM, such as the time zone they are based in and the languages they can support.
- TAM stands for Total Addressable Market.
- The TAM is the total market demand for a product or service.
- To calculate the TAM, research the potential market and take assumptions to reduce it to a realistic number.
- SAM stands for Serviceable Addressable Market.
- The SAM is the portion of the TAM that can realistically be reached and served.
- To calculate the SAM, look into who among the potential market can realistically be serviced and take aspects that can affect the size of the SAM into consideration.
- Some things can affect the size of the SAM, such as the time zone they are based in and the languages they can support.
- SOM stands for Serviceable Obtainable Market.
- The SOM is the portion of the SAM that can be captured or attained.
- The SOM is challenging to estimate and involves guesswork.
- To estimate the SOM you need to consider factors such as the scalability of the product or service, marketing efforts, and the time period for capturing the market
- Take a “Bottoms Up” approach instead of a “top-down” approach to understand the market potential.
- Using the bottom-up approach to estimate the TAM and SAM is recommended by considering the target market’s characteristics, limitations, and demand.
- The top-down approach that estimates the TAM without considering the target market characteristics could lead to unrealistic market potential estimates.