jerryking + marketing + market_sizing   1

Addressable Market: Not Market Size
Jul 31, 2007 | Mark Peter Davis | by Mark Davis.

The addressable market is the total amount of revenue that your company could generate if it acquired every potential customer. The entire group of potential customers is often referred to as the addressable population.

Market Analysis Definitions
Type
Total Potential Market
Addressable market
Serviceable Market

Description
* Market without competition or competing solutions
* Market given unlimited (in capital, personnel, mkt. infrastructure) resources & Full product line.
* Market which is attainable with planned resources & product plans.

The addressable market is unique to your narrow industry focus and therefore is often different from the high-level market size numbers that analysts quote about that sector of the economy. If you are an ecard company - your addressable market is not the same as the online advertising market size. Your addressable market is a sliver of that market. Getting this wrong is bad.

Since the addressable market is often much smaller than the market size, using the market size as your addressable market typically means that you are over-stating the opportunity.

* TAM stands for total addressable market, or total available market. That’s the entire potential market. For a movie theater, that’s probably a total population over the age of two and under 85 or 90. It’s a large and essentially useless number.

* SAM substitutes serviceable for total. Serviceable addressable or serviceable available, So that’s a more useful number. I would define a movie theater’s SAM as the number of theater tickets sold per month or year in its geographic area. Others might make it the whole population, based on the assumption that even people who didn’t go to the movies during that time period could still choose to go tomorrow.

* SOM stands for share of market. People often refer to market share. I would divide a theater’s tickets sold per month or year by the total tickets sold in the whole area for a month or year. So for example, if this theater sold 30,000 tickets last year and all the theaters in the area sold 100,000, then this theater had a 30% share.

Remember to revisit the ILD Business plan in Google Docs.
Not every number matters.
Think about stories
Look for supporting narratives.
Market sizing can be wildly incorrect.
definitions  marketing  market_sizing 
december 2011 by jerryking

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