Serviceable Obtainable Market (SOM)

Definition

Serviceable Obtainable Market (SOM) refers to the portion of the total addressable market that a company can realistically capture within a specific timeframe, considering its resources and competitive positioning. It helps businesses focus their marketing and sales efforts by providing a more achievable target than the entire market, allowing them to better allocate resources and strategize effectively.

5 Must Know Facts For Your Next Test

1. SOM is crucial for setting realistic sales goals and forecasting revenue based on the actual market share a company can achieve.
2. Companies often use market research to determine SOM, analyzing factors like competition, customer needs, and distribution channels.
3. SOM can change over time as businesses grow, markets evolve, or new competitors enter, making it important for companies to regularly reassess their SOM.
4. Understanding SOM helps organizations prioritize their efforts and investments in specific markets or segments for maximum impact.
5. By focusing on SOM rather than the entire market, companies can develop tailored marketing strategies that resonate more effectively with their target audience.

Review Questions

• How does understanding the Serviceable Obtainable Market (SOM) help businesses make better strategic decisions?
  • Understanding the Serviceable Obtainable Market (SOM) allows businesses to identify a realistic target for their sales efforts, which in turn aids in effective resource allocation. By focusing on a specific segment of the market that they can realistically capture, companies can create tailored marketing strategies and set achievable sales goals. This understanding helps avoid overextending resources on an unattainable total addressable market and enables companies to concentrate on areas where they can make significant impacts.
• Discuss how SOM interacts with TAM and SAM in defining market opportunities for a business.
  • SOM, TAM, and SAM are interconnected concepts that help businesses define their market opportunities. While TAM represents the total potential revenue if a product captures 100% of the market, SAM narrows this down to the segment of the market that is reachable based on business capabilities. SOM further refines this by identifying what portion of SAM a company can realistically achieve within a specific timeframe. This structured approach allows businesses to focus their strategies and resources effectively.
• Evaluate the implications of accurately assessing SOM for long-term business growth and competitive advantage.
  • Accurately assessing Serviceable Obtainable Market (SOM) has significant implications for long-term business growth and competitive advantage. By knowing their true market potential, companies can make informed decisions about product development, marketing investments, and scaling operations. This clarity allows businesses to capitalize on opportunities while minimizing risks associated with overestimating their reach. Moreover, consistently monitoring and adapting their SOM assessments helps organizations stay agile in a dynamic market landscape, positioning them ahead of competitors who may lack this insight.

Related terms

Total Addressable Market (TAM):

Total Addressable Market (TAM) is the overall revenue opportunity available if a product or service were to achieve 100% market share in a given market.

Serviceable Available Market (SAM):

Serviceable Available Market (SAM) is the segment of the TAM targeted by a company's products or services that is within their reach based on business capabilities.

Market Segmentation: Market Segmentation is the process of dividing a broader market into smaller, more defined groups based on shared characteristics, allowing for targeted marketing strategies.