Total Addressable Market (TAM) Measure
A Total Addressable Market (TAM) Measure is a micro-economic measure that estimates the economic opportunity available for a product or service.
- Context:
- It can refer to the percentage of a demographical population that could benefit from services offered by an entity.
- It can range from being a Revenue-based TAM to being a Demographic-based TAM.
- It can range from being an Absolute TAM to being a Relative TAM.
- It can be composed of Serviceable addressable markets (SAMs) and Serviceable obtainable markets (SOMs).
- ...
- Example(s):
- a DCT Clinical Trials TAM.
- the food service part-time worker demographic within cities which Shiftgig services. (Saltus, 2016)
- ...
- See: Serviceable Available Market, Revenue, Business Opportunity, Performance Indicator, Steve Blank, Steve Blank#The Startup Owner.27s Manual.
References
2022
- (Wikipedia, 2022) ⇒ https://en.wikipedia.org/wiki/Total_addressable_market Retrieved:2022-11-14.
- Total addressable market (TAM), also called total available market, is a term that is typically used to reference the revenue opportunity available for a product or service. TAM helps prioritize business opportunities by serving as a quick metric of a given opportunity's underlying potential.[1]
One approach is to estimate how much of the market any company can gain if there were no competitors. A more encompassing variation is to estimate the market size that could theoretically be served with a specific product or service. TAM can be defined as a global total (even if a particular company could not reach some of it) or, more commonly, a market that one specific company could serve (within realistic expansion scenarios). This focuses strategic marketing and sales efforts and addresses actual customer needs. The inclusion of constraints such as competition and distribution challenges then modifies the strategy to frame it with realistic boundaries, reducing the market down to the serviceable available market (SAM), the percentage of the market that can be served (either by that company or all providers) out of the TAM.[1] This is occasionally referred to as PAU (Potential Active Use).
- Total addressable market (TAM), also called total available market, is a term that is typically used to reference the revenue opportunity available for a product or service. TAM helps prioritize business opportunities by serving as a quick metric of a given opportunity's underlying potential.[1]
- ↑ 1.0 1.1 Steve Blank and Bob Dorf, The Startup Owner's Manual, K & S Ranch, first edition (March 1, 2012),
2021
- https://pipeline.zoominfo.com/marketing/how-to-calculate-total-addressable-market
- QUOTE: Questions to Ask When Defining Your TAM:
- What are the characteristics of current and potential customers?
- What industries have we historically sold into?
- Where are those companies located?
- How big are those companies?
- How is the market growing? Are there new entrants? Bigger budgets?
- Where can we expect growth?
- QUOTE: Questions to Ask When Defining Your TAM:
2021
- https://www.definitivehc.com/resources/glossary/total-addressable-market
- QUOTE: ... The three methods to calculate TAM are value theory, top down and bottom up. Value theory depends on the value a product provides a customer and how much a customer would pay for the product. Top down is based on market reports, industry data and research studies. Bottom up relies on past pricing and sales data.
Within TAM, there are serviceable addressable markets (SAMs) and serviceable obtainable markets (SOMs). ...
- QUOTE: ... The three methods to calculate TAM are value theory, top down and bottom up. Value theory depends on the value a product provides a customer and how much a customer would pay for the product. Top down is based on market reports, industry data and research studies. Bottom up relies on past pricing and sales data.
2016
- (Saltus, 2016) ⇒ Braden Saltus. (2016). “A Case Study: Calculation of Total Addressable Market and Client-Side Economic Advantage of an On-Demand, Temporary Staffing Agency’s (Shiftgig) Food Service Sector."
- ABSTRACT: Total addressable market refers to the percentage of a demographical population that could benefit from services offered by an entity. For the purpose of this study, total addressable market refers to the food service part-time worker demographic within cities which Shiftgig services. Economic advantage refers to the added value provided to the consumer resulting from using one service provider rather than another. This study aims to quantify these metrics conveniently and understandably. Total available/addressable market was calculated by dividing total hours worked (by Shiftgig-staffed workers) by total hours worked by the demographic. Economic advantage was calculated by taking all expenses of hiring a part-time worker and his or her hourly costs of employment (FUTA, etc.) compared to the costs of ordering a parttime worker through Shiftgig and hourly billing costs of this service. Results of total addressable market shows a current market occupancy of 0.11%. Results of economic advantage show the average breakeven point of economic advantage being 22 hours (hiring and ordering a worker for a 22 hour period has equal economic viability). Total market occupancy tracking enables the potential of new branches of a company to be approximated. Additionally, economic advantage analysis enables new consideration in revenue maximization.