Quick Definitions

Acronym	Full Form	What It Represents
TAM	Total Addressable Market	The entire revenue opportunity for a product or service if the company could capture 100 % of the market with no resource or competition constraints.
SOM	Serviceable Obtainable Market	The realistic share of the market that the company can actually capture given its current resources, distribution channels, geographic reach, and competitive landscape.

Both metrics are part of a three‑tier market‑sizing framework that also includes SAM (Serviceable Addressable Market), which sits between TAM and SOM. The hierarchy is:

TAM > SAM > SOM

1. Total Addressable Market (TAM)

• Scope: All potential customers worldwide (or within a defined segment) who could benefit from the product/service.
• Assumptions: Unlimited resources, no competition, and 100 % market share.
• Purpose: Gives investors and planners a sense of the maximum size of the opportunity.

2. Serviceable Obtainable Market (SOM)

• Scope: The portion of the TAM that the business can actually reach and serve today (or in the near‑term).
• Factors Considered:
  • Current product fit and pricing
  • Distribution and sales capabilities
  • Geographic or regulatory limits
  • Competitive positioning
• Purpose: Provides a realistic revenue target for short‑ to medium‑term planning and helps justify go‑to‑market strategies.

How the Three Tiers Relate

Tier	Definition	Typical Use
TAM	Total market demand if there were no constraints.	High‑level market sizing, investor pitches.
SAM	Segment of the TAM that the company’s products/services can serve (e.g., specific regions, customer types).	Mid‑level planning, product‑market fit analysis.
SOM	Portion of the SAM that the company can actually capture now.	Short‑term sales forecasts, budgeting, KPI setting.

Why Distinguish TAM and SOM?

• Strategic Clarity: TAM shows the potential; SOM shows the realistic opportunity.
• Resource Allocation: Helps decide whether to invest in expanding capabilities to move from SOM toward a larger share of SAM/TAM.
• Investor Communication: Investors expect both a big‑picture view (TAM) and a grounded, achievable target (SOM).

Practical Example (Illustrative)

Market	Size
TAM (global market for fitness trackers)	$30 B
SAM (U.S. consumers aged 18‑45 who buy wearables)	$10 B
SOM (company’s projected share in the U.S. segment over 3 years)	$500 M

In this scenario, the company acknowledges a huge overall opportunity (TAM) but focuses its immediate goals on a modest, attainable slice (SOM).

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Key Takeaway:

• TAM = the theoretical maximum market size.
• SOM = the practical market size the business can capture now, given its current capabilities.

These metrics together enable realistic growth planning and clear communication with stakeholders.

Sources: ¹, ², ³, ⁴, ⁵, ⁶, ⁷, ⁸, ⁹, ¹⁰