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Serviceable Obtainable Market

What is a Serviceable Obtainable Market?

The Serviceable Obtainable Market (SOM) is an estimate of the portion of revenue within a specific product segment that a company can realistically capture. It represents the market share a company can expect to garner, considering factors such as competition, market size, and product specifics. SOM is crucial for businesses in making financial projections, operational decisions, and evaluating market opportunities or gaps, thereby facilitating strategic planning and investment decisions.

Calculating Serviceable Obtainable Market

Calculating Serviceable Obtainable Market (SOM) involves considering factors such as market size and reach, product specifics, competition, historical performance, and external research. One method to estimate SOM is by dividing your last year's revenue by your industry's serviceable addressable market (SAM) from the same period to find your market share. Then, multiply this market share by your industry's SAM for the current year.

Key Factors Influencing Serviceable Obtainable Market

  • Market Size and Reach: The size of the geographical area's market for the product and the company's projected reach within that area directly impact SOM.
  • Product Demand: The demand for the product within the market, considering factors like growth and consumer sentiment, influences the achievable market share.
  • Competition: The presence and strength of direct and indirect competitors in the market affect the portion of the market a company can realistically capture.
  • Historical Performance and External Research: For established companies, past performance can guide SOM estimates. For startups, industry and geographic research is crucial.
  • Economic Factors: Market landscape, brand awareness, and advertising budget are influenced by economic factors, determining the portion of SAM a business can capture.
  • Geographical Location: Geographical factors play a significant role in defining SAM from the broader TAM, affecting the regions a business can effectively operate and market its products.
  • Cultural and Social Factors: These factors influence consumer preferences, product relevance, and ultimately, the market size a business can serve, impacting both SAM and SOM.

Serviceable Obtainable Market vs. Total Addressable Market

Serviceable Obtainable Market (SOM) and Total Addressable Market (TAM) are two distinct metrics used to estimate market potential and guide business decisions. SOM represents the portion of the market a company can realistically capture, considering factors like competition, market size, and product specifics.

On the other hand, TAM refers to the total market demand for a product or service, representing the maximum revenue a business could generate in a perfect world scenario, without considering market constraints or competition.

Strategies to Maximize Your Serviceable Obtainable Market

To maximize your Serviceable Obtainable Market (SOM), consider implementing the following strategies:

  1. Understand market size and reach: Analyze the geographical area's market size for your product and your company's projected reach within that area.
  2. Evaluate product demand: Assess your product's demand within the market, taking into account factors like growth and consumer sentiment.
  3. Analyze competition: Examine the strength and presence of both direct and indirect competitors in the market to estimate the market share you can capture.
  4. Utilize historical performance and external research: Use past performance data and external industry research to make realistic estimates of market size and share.
  5. Understand your target audience: Tailor your product to meet the specific needs and preferences of your target market, increasing the potential market share you can capture.
  6. Implement effective marketing techniques: Employ targeted advertising based on market research, competitive analysis to position your product advantageously, and leverage historical performance data to inform marketing strategies.

Other terms

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