Serviceable Addressable Market
demystifying startup statistic
«My sincere apologies to some subscribers who were on the Mailchimp system before and were not receiving my blogs. I have attempted to add them to the new substack email system here. If it is in error or you no longer wish to receive my blogs please let me know »
Another startup statistic you should be aware of is the serviceable available market. It is also known as a serviceable addressable market.
It is a part of TAM (Link) that you can reach here
It is akin to discovering a smaller and specific niche of the market by looking at specific customer segments be it by age, gender, demographics, geography, income etc and then having a mechanism to grow within those niches. If your software product is in a language, it will mean that it is a subset of TAM speaking the language.
Another example could be selling premium tea to Australian tea drinkers. Of course, it is assumed that you can attain 100% of this niche. But practically you can’t (competition could be a reason)
It is a subset of TAM. SAM is of interest to potential investors as it can reflect the sales potential.
Effectively, a serviceable available market is a market that you think you can potentially target and service
Key points to ponder here are that:
1. Service can be offered to the market - are you capable, have a business model that can cater to the market and have the necessary approvals in place?
2. Is it available - keeping in mind the geographic constraints, do you go to people or do people come to you? Is it available during part of the day or season or throughout?
3. Is there are market of buyers and sellers who are willing to transact at a price? This will need to ensure that demand and supply both exist.
The picture is an example of a geographic reach/catchment area of a business ( marked as a star) and each coloured zone (a suburb in this case) suggests income potential - green - higher and red lower.
We are still guesstimating and if you read my TAM article you will know that market shifts are imminent however you have to choose between being vaguely precise and precisely vague to head in the right direction.
Hope this article has been of help. Please share and spread the love if it has been helpful
© Sameer Babbar
sbabbar@sameerbabbar.com
Disclaimer: This is for information only. It does not take into account your own objectives, financial situation or needs. Author, his company his associates, his directors, his staff, his consultants, and his advisors do not accept liability for any loss or damage, including without limitation, any loss, which may arise directly or indirectly from the use of or reliance on the information provided.