Serviceable Obtainable Market (SOM)
As product managers navigate the complex landscape of market analysis and strategy development, understanding the Serviceable Obtainable Market (SOM) becomes crucial. SOM is a valuable concept that helps product managers identify the specific portion of the Total Addressable Market (TAM) that a company can realistically serve and capture. In this article, we will explore the significance of SOM, its definition, key principles, and implementation process, supported by real-world examples to highlight its practical relevance.
Serviceable Obtainable Market (SOM) refers to the subset of the Total Addressable Market (TAM) that a company can effectively serve and achieve with its existing resources, capabilities, and market positioning.
- Market Segmentation: Product managers conduct a thorough analysis of the TAM and segment it based on various factors like demographics, customer needs, and market trends to identify the SOM.
- Resource Assessment: Understanding the company’s resources, expertise, and capabilities is essential to determine the realistic market opportunity it can pursue.
- Competitive Analysis: Product managers evaluate the competitive landscape to identify the areas where the company can effectively compete and gain market share.
- TAM Evaluation: Product managers begin by calculating the TAM, which represents the total potential market demand for a product or service.
- Resource and Capability Assessment: By assessing the company’s strengths and limitations, product managers can identify the segments within the TAM that align with the company’s capabilities.
- SOM Calculation: Using data from market analysis and resource assessment, product managers calculate the SOM to define the realistic market potential for the company.
- E-commerce Retailer: An e-commerce retailer specializing in fashion may focus on a specific segment of the TAM, such as women’s activewear, as its SOM, considering its expertise in this category and the potential demand.
- Software Company: A software company developing project management tools might identify SMEs in the technology sector as its SOM, leveraging its industry-specific expertise and available resources.
Serviceable Obtainable Market (SOM) is the portion of TAM a company can realistically serve with its existing resources and capabilities. Key principles involve market segmentation, resource assessment, and competitive analysis. Real-world examples include e-commerce retailers and software companies in SOM identification.
Serviceable Obtainable Market (SOM) allows product managers to move beyond the broad TAM and zero in on the practical market opportunity. By conducting thorough market analysis, assessing company capabilities, and understanding the competitive landscape, product managers can make informed decisions and develop targeted strategies for growth.