Calculating these metrics involves a combination of market research, industry reports, and competitive analysis.
- TAM: Often derived from industry reports, government statistics, and market studies. For example, if you are in the electric vehicle market, you might look at the total market size of the global automobile industry.
- SAM: Refines the TAM to focus on the specific market segments that your business can potentially serve. For instance, if your electric vehicles are designed for urban use, your SAM would be the urban automobile market.
- SOM: A realistic assessment of how much of the SAM you can capture, taking into account factors like competition, market penetration strategies, and your own capabilities. You might project that you can capture 2% of the urban automobile market in your first five years.