Serviceable Obtainable Market (SOM) is the portion of the market that a company can realistically capture with its products or services. It represents a practical, short-term target by taking into account factors like the competitive landscape, brand awareness, and available resources.
SOM is crucial for developing a focused business strategy and setting realistic short-term goals. It informs financial projections and key operational decisions. This allows companies to create achievable growth plans and allocate resources more effectively.
Analyzing your SOM provides a clear view of your place within the competitive landscape. This insight helps management select strategies that better position the firm. A well-defined SOM is also vital for attracting investors by demonstrating a tangible and realistic market opportunity.
This is how you calculate your serviceable obtainable market.
While both metrics measure market size, they serve different strategic purposes.
Here are a few hypothetical scenarios showing how SOM is applied across different industries. These examples illustrate how companies set realistic targets based on their market conditions and internal capabilities.
Estimating your serviceable obtainable market is challenging due to several key factors.
How often should I recalculate my SOM?
SOM should be recalculated regularly, such as quarterly or annually. This ensures your strategy remains aligned with changing market dynamics, competitive shifts, and your company's evolving capabilities, keeping your short-term goals relevant and achievable.
Can my SOM grow over time?
Yes, your SOM can grow. As your company expands its resources, improves brand recognition, and refines its products, it can realistically capture a larger percentage of the Serviceable Available Market (SAM), thereby increasing its SOM.
Is SOM only useful for startups?
No, SOM is valuable for businesses of all sizes. While crucial for startups seeking funding, established enterprises and mid-market companies use it to set realistic sales targets, allocate resources effectively, and guide short-term strategic planning.
Serviceable Addressable Market (SAM) is the portion of the market your business can realistically serve with its current products and sales channels.
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