Market Evaluations- Easily explained – TAM SAM SOM

Why Understanding Models of Business Is so Important

What does Tam Sam Som stand for?

Before you enter the market with your product, you have to keep 3 important questions in mind.
What is the TAM SAM SOM for my product?

Here the definition:
Tam: Total Available Market
(Focus on total market / size)
Example: Total LED Market

Sam: Served/Serviceable Available Market
(Focus on your own technology/ services)
Example: Living colors LED market < segment of total LED market

Som: Serviceable Obtainable Market
(Which realistic market share can be obtained by myself, considering competition, countries, my sales/distribution channels and other market influences? )
Example: My realistic goal to sell Living Color Products into the LED market.

Here a deeper explanation to TAM SAM SOM
in terms of OEM/ODM business model:

Example:
I am company XYZ
> an OEM Manufacturer & supplier entering the LED Living Colors Market:

TAM: From my market research and reports which I have read, I found out that the total number of LED Living Colour Lamps being sold in 2011 in Europe will be approximately 1 Million pieces.
< Total Available Market
The TAM Question:
What is the Total Achievable Sales Amount incorporating all market players together?

SAM: Philips has the highest market share of the LED Living Colour lamps with 800.000 units a year. The remaining 200.000 units are being sold by other brands.
>Philips SAM (Servable Available Market) is 80% of the total market of 1 Million LED Living Colours lamps.
The SAM Question: What can Philips achieve in 2011 in sales?

SOM: My strategy as OEM manufacturer is to focus and work together with the Top Market Player, in this case Philips only. As I am a new customer to Philips, they agree to test me out and ask me to produce only 200.000 pieces of the 800.000 that they expect to sell in 2011.
The remaining 600.000 units are being produced by their current suppliers.

In this case my SOM (Serviceable and Optainable Market) will be 200.000 pieces (a share of 25%) of the 800.000 pieces from Philips. This SOM is my realistic and reachable target for 2011.
The SOM Question: What can I (as company XYZ) achieve in 2011 selling to Philips?

 

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