Case study
Using interactive audio ads to increase branded searches
Guide
TAM SAM SOM includes three key market-size metrics that can help businesses of all sizes—from startups to medium-sized businesses to established enterprises—understand their market potential, set realistic goals, and make informed strategic decisions.
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TAM stands for total addressable market. It’s the total revenue opportunity for your product or service if it were to capture 100% of the market. TAM is calculated by multiplying the total number of potential customers by the average revenue per customer.
SAM stands for serviceable addressable market. It’s the portion of TAM that is reachable and relevant to your business. SAM is calculated by filtering TAM based on factors such as geographic location and demographics.
SOM stands for serviceable obtainable market. It’s the portion of SAM that your business can reasonably capture. SOM is calculated by filtering SAM based on factors such as market landscape, brand awareness, and advertising budget.
TAM SAM SOM represents important metrics for businesses of all sizes. Think of these as powerful tools that can help you make better decisions and achieve greater success.
Imagine that you’re starting a new business. You have a great idea for a new product or service, but you’re not sure how big the market is or who your ideal customers are. By understanding these metrics, you can make better decisions about your marketing and sales strategies, set pragmatic revenue goals, and measure your progress over time.
TAM SAM SOM can give your business an understanding of how much revenue they potentially generate in a given market. This information can be used to set workable goals and make key decisions when creating your go-to-market strategy.
TAM SAM SOM can help you find new ways to grow your business identify new opportunities for growth within your existing market or in new markets. For example, a business might realize that it has the potential to expand further into its SAM, by reaching new geographic regions or by developing new products and services.
TAM SAM SOM can help you optimize your budget. For example, a business might decide to invest more in marketing and sales in order to increase its brand awareness and market presence in its SAM. Making these decisions early on can help you manage your brand more effectively.
TAM SAM SOM represents important metrics for investors to consider when evaluating potential investment opportunities. Large and growing TAM SAM SOM can indicate that a business has a significant market opportunity.
To calculate TAM SAM SOM, you’ll need to gather insights on your market of interest, including the total number of potential customers, the average revenue per customer, and other relevant factors such as geographic location, demographics, market landscape, brand awareness, and marketing budget.
Let’s say you’re a startup launching a new line of kitchen storage products. Your market is all households in the U.S. with an annual income of more than $50,000. You estimate that there are 40 million households in the U.S. that meet your criteria. You also estimate that the average household spends $100 per year on kitchen storage solutions. Based on this information, your TAM would be $4 billion.
To calculate your SAM, you would need to filter TAM based on factors such as market landscape—meaning the number of players in this market offering products that are similar to yours—brand awareness, and marketing budget. For example, you might estimate that you can realistically engage 10% of SAM, which would give you a SOM of $400 million.
TAM SAM SOM can be used to grow your business in a number of ways. For example, you can use TAM SAM SOM to explore new markets, gain confidence and support in your business plan, and tailor your marketing and sales strategies.
TAM SAM SOM can help you identify new opportunities for growth within your existing market or in new markets.
TAM SAM SOM can help you validate your business idea by providing you with a clear-sighted understanding of the market size and potential revenue opportunity.
TAM SAM SOM can help you develop a go-to-market strategy by identifying the most attractive market opportunities and ideal customers, and developing strategies to reach and engage those customers.
TAM SAM SOM is important for investors to consider when evaluating potential investment opportunities. A large and growing TAM SAM SOM can indicate that a business has a significant market opportunity.
TAM SAM SOM can be used to measure your progress over time and your success in expanding further into your existing or new markets.
Overall, TAM SAM SOM is an essential tool for businesses of all sizes to understand their market potential, set realistic goals and KPIs, and make informed strategic decisions when expanding into new territories.
Case Study
Learn how Amazon Ads helped a Brazilian furniture company expand its global presence. Pedro Cini, CEO of Madesa Móveis, led the company through a digital transformation, and, with the help of Amazon Ads solutions, reached new audiences in 10 countries.
Case Study
Find out how a family-owned Italian coffee roasting company used Amazon Ads solutions to bring high-quality coffee to customers across Europe. For small and medium-sized businesses looking to expand internationally, Caffè Vergnano CEO Carolina Vergnano advises, “Create a Store and keep it alive and up to date.”
If you have limited experience, contact us to request services managed by Amazon Ads. Budget minimums apply.