What is TAM SAM SOM?
TAM SAM SOM are marketing tools used to assess the total market size and identify potential opportunities for a business’s products or services.
TAM, SAM and SOM are abbreviations representing key market metrics within this framework:
- TAM (Total Addressable Market): The total market demand for a product or service.
- SAM (Serviceable Addressable Market): The portion of TAM that a business can realistically target.
- SOM (Serviceable Obtainable Market): The share of SAM that a business can capture.
These three metrics are always analyzed together to determine whether a market has enough potential for a new product or service. By applying TAM SAM SOM framework, businesses can set clear KPIs and identify realistic market share opportunities. This approach provides data-driven insights, helping businesses align their goals with the actual market conditions.
The Importance of TAM SAM SOM
For new entrepreneurs, TAM SAM SOM are essential tools for market analysis. They help businesses understand the size of the market they are entering. Knowing these metrics enables companies to make informed decisions and develop their products based on accurate and up-to-date data.
For investors, TAM SAM SOM serve as key indicators that clarify investment decisions. Accurate assessment of these metrics helps determine how resources should be allocated and provides insight into potential returns. By understanding the overall market size, investors can better evaluate the speed and likelihood of achieving a profitable return on investment.
How to calculate TAM SAM SOM
For calculate the total market potential (Market Size), follow these steps:
1. Calculate TAM (Total Addressable Market)
To calculate TAM or Total Addressable Market can be calculated by multiplying the total number of potential customers in the niche market by the average selling price per unit of the product or service.
Formula: Total Potential Customers × Average Selling Price per Unit = TAM
2. Filtering TAM to Calculate SAM
To calculate SAM or Serviceable Addressable Market, filter TAM (Total Addressable Market) using relevant criteria by Geographic factors such as provinces where the business can operate. Or Interest-based data or Demographic factors such as age, gender, education level, religion, and other key characteristics. These insights are gathered from research studies, national statistical databases and global market analysis platforms such as Statista, TDRI and the National Business Census. These sources reference credible surveys and reports from trusted organizations.
3. Refining SAM to Calculate SOM
To calculate SOM or Serviceable Obtainable Market, This is done by further refining SAM (Serviceable Addressable Market) using key factors such as Actual sales figures from competitors. And market statistics, including brand reputation and customer loyalty and marketing budgets of competing brands, which influence their market reach. This process provides a clearer picture of the realistic market share a business can capture.
So that you can assess competitors’ brand reputation and estimate a percentage for filtering by using Social Listening Tools, tracking industry sales reports, or analyzing financial statements of competing companies. Public financial data can be accessed through platforms like SEC Market for preliminary financial analysis.
TAM SAM SOM framework operates as a step-by-step market filtering process. TAM represents the total market, which is then refined into SAM and further narrowed down to SOM. This structured approach helps businesses fully explore all potential market opportunities and assess their realistic market size.
TAM SAM SOM Online Calculator
or those looking to perform a basic TAM SAM SOM calculation, you can use our TAM SAM SOM Calculator here:
The free online TAM SAM SOM calculator we provide is designed to give you a clearer understanding of your business potential before making investment or expansion decisions. Many entrepreneurs tend to assess market conditions based on intuition or unstructured calculations.
By offering this TAM SAM SOM online calculator, we hope to set a standard for data-driven decision-making, helping business owners in Thailand make more informed and strategic choices.
Thank you, and best of luck with your business!
