SOM, or Serviceable Obtainable Market, is an economic term that refers to the portion of the total market that a company or product can realistically reach. This includes considering factors such as geographic reach, distribution capabilities, price point, and competition.
SOM is often used in business planning and strategy development. It helps businesses identify their potential market share and size their operations appropriately. It is a subset of the Total Addressable Market (TAM) and the Serviceable Available Market (SAM). While TAM refers to the total market demand for a product or service, SAM represents the segment of TAM targeted by your products and services which is within your geographical reach. SOM, however, is the portion of SAM that you can realistically serve.
SOM is crucial for businesses as it helps them understand their realistic market reach. It helps in strategic planning and resource allocation.
SOM is calculated by assessing the company's resources, capabilities, and competition in the target market.
There are several market analysis software like Nielsen, MarketSight, and Statista that can help in calculating and analyzing SOM.
Identifying SOM helps businesses in strategic planning, resource allocation, and risk management. It also assists in setting realistic sales targets and optimizing marketing strategies.
Understanding SOM is vital for any business to realistically understand its potential reach and to strategize accordingly. It forms a crucial part of market analysis and business planning.