What is a Market Size?

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A flower that represents business with the text "Market Size" beneath it.

A market size describes the number of potential customers and can be measured by three terms: TAM, SAM and SOM.

As part of taking a product, service or experience (i.e. an initiative) to market or deciding whether it is worth pursuing, companies and individuals need to determine the market size that is available for the initiative and how much it is worth (i.e. the market value)

Defining a market size is be broken down into the following three terms: TAM, SAM and SOM.

Total Addressable Market (TAM)

The maximum customer base that a company could achieve if it were to capture 100% of the market share.

Serviceable Addressable Market (SAM)

The portion of the TAM that aligned with the company's resources, capabilities and vision.

Serviceable Obtainable Market (SOM)

The portion of the SAM that a company can get at its current scale.

This may consider budget, marketing and sales strategies, competitive positioning and demand.

Looking to learn how to calculate a market size?

Consult our guide below to learn how to calculate a TAM, SAM and SOM.

Looking to learn more about Innovation, Project Management, Design, Technology and Strategy?

Search our blog to find educational content on innovation, project management, design, development and strategy.

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