SAM (Serviceable Available Market)
SAM (Serviceable Available Market) is a business term for the part of the total market that can realistically be reached by a company's products or services.
Definition
SAM, or Serviceable Available Market, is a term used in business and marketing to refer to the section of the total available market that can actually be reached or serviced by a company's products or services. It is a subset of the Total Addressable Market (TAM), which includes all potential customers, and the Served Available Market (SOM), which includes only the customers that a company is currently serving.
Usage and Context
In business planning and marketing strategy, understanding the size of the SAM is crucial. It provides a realistic assessment of the potential market size that a company can target, given its current resources, capabilities, and business model. It helps to identify the most promising segments of the market and to prioritize marketing and sales efforts. The SAM is typically calculated by estimating the number of potential customers in the target market and multiplying it by the average revenue per customer.
FAQ
What is the difference between TAM, SAM, and SOM?
TAM refers to the total market demand for a product or service, SAM is the segment of the TAM targeted by your products and services which is within your geographical reach, and SOM is the portion of SAM that you can capture given your product features and competitive landscape.
How is SAM calculated?
SAM can be calculated by identifying the total number of potential customers in the target market and multiplying it by the average revenue per customer.
Related Software
There are several business intelligence and market research tools that can help companies estimate their SAM, such as Nielsen, IBISWorld, and MarketResearch.com.
Benefits
Understanding the SAM can help companies prioritize their marketing and sales efforts, allocate resources more effectively, and make more informed strategic decisions. It provides a more realistic assessment of a company's potential for growth compared to the broader TAM.
Conclusion
In conclusion, SAM is a vital concept in business and marketing strategy. It provides a realistic estimate of the potential market size that a company can actually service given its current resources and capabilities.
Related Terms
Target Market
A target market refers to a specific group of potential customers that a business aims to reach with its products, services, and marketing efforts.
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