The Hallmarks of Market Sizing Explained
Among many aspects of the journey to marketing success, we often need to think about simple ways, like buying followers. Visit https://www.paisley.org.uk/2023/05/5-best-sites-to-buy-tiktok-followers/. And some go for the most effective ways, and one of them is market sizing. It involves understanding the potential and limitations of your market to determine the best next step in approaching the market. But what exactly does market sizing mean?
In this blog post, we’ll take a closer look into the hallmarks of market sizing, including TAM (Total Available Market), SAM (Serviceable Available Market), and SOM (Share of Market). Regardless of your marketing level, understanding these three concepts will help you achieve success in today’s competitive marketplace. So let’s get started.
TAM (Total Available Market)
TAM, or Total Available Market, is a concept that refers to the total demand for a certain product or service within a specific market. It represents the entire universe of potential customers who could enjoy the benefits of your product or service. This includes both existing and potential customers who may not yet be aware of your offering.
To calculate TAM, you need to take into account factors such as population size, demographics, and economic conditions in the target market. By understanding these variables and estimating their impact on demand for your product or service, you can arrive at an overall estimate of TAM. You can even minimize the risk associated with launching new products/services in crowded markets.
SAM (Serviceable Available Market)
SAM refers to the portion of the TAM that your business can realistically serve, given its resources and capabilities. Identifying your SAM requires taking a closer look at your target audience and analyzing their needs, preferences, and behaviors. It also involves identifying any specific geographic or demographic segments where you have a competitive advantage.
The calculation requires you to factor in pricing strategy, distribution channels, marketing efforts, and sales capacity. By doing so, you’ll be able to conclude the potential demand for the product in a specific segment of the market.
SOM (Share of Market)
Share of Market (SOM) is a crucial metric determining the percentage of sales or revenue a company has captured within its target market. It represents the portion of the market share owned by a particular business. Calculating SOM is beneficial for determining how competitive your business is and identifying growth opportunities. To determine SOM, you need to take into account your TAM and SAM figures. Once established, you can then calculate your current revenue or sales figures in relation to these markets. This calculation will give you an accurate representation of how much market share you currently own.
The importance of calculating SOM should not be underestimated as it allows businesses to identify areas where they may be underperforming against their competitors. By comparing your Share of Market with your competitors in the same industry, you can identify gaps in performance and gain insights on ways to improve.
Market sizing is a crucial process for any business looking to enter or expand in a particular market. Note that accurate market sizing requires careful research and analysis of relevant data sources. With this information at hand, businesses can confidently move forward with their growth plans knowing that they’ve got a solid foundation on which to build.…