Subject areaMetrics and measurement
The total addressable market (TAM) is the overall value of demand for a product or service if a company served every possible customer.
It comes with two narrower measures: the SAM (serviceable available market, the part reachable with the current offer and channels) and the SOM (serviceable obtainable market, the share that can realistically be won).
It helps decide whether a market is worth the investment and to size the ideal customer profile: a small TAM with a few high-value customers points towards account-based marketing.
An example
A manufacturer of sensors for cold rooms counts the Italian food companies with refrigerated warehouses and multiplies by the average value of a system. The result is a TAM large enough to justify a dedicated line, and a SOM that shows how many sellers are needed.
Enrico Giubertoni. Licensed under CC BY-NC 4.0: you may quote, translate and adapt this entry with the author’s name and a link, stating any changes. For commercial use, write to info@enricogiubertoni.com
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